The multi-billion write-offs in the banking industry show how much the basic principles of good accountancy have been ignored ... and replaced by what can only be described as a convenient reporting system for the industry.
It has been clear for many years that there was a disconnect between the profits from "banking" and the profits from fee based services ... with the latter being more important than the pure banking business. However, I would argue that the accountancy should have made it a lot clearer what was going on.
The Enron dabacle was big enough to put the accounting firm, Anderson, out of business ... and it is going to be interesting to see whether the melt-down of the global financial sector is going to create casualties in the global accounting industry.
It is difficult to predict what is going to happen ... but the level of "trust" that the accountancy industry has within the general public must be at an all-time low, and perhaps set to go even lower. This is a sad state of affairs ... but really was inevitable given the way in which the industry gave up on its public accountancy responsibilities and took to consultancy and fee making services of all sorts.
Clearly there is a need for "trusted" organizations that can help to confirm that the reported information about corporate performance is correctly stated ... but what organizations are now competent to do this ... and what role is the accountancy profession going to have in rebuilding this trust.
I am very disappointed at this turn of events ... but there might be some hope if a broader concept of social benefit accountancy is developed, and integrated with the profit focus accountancy so that phony profit can never be "booked" and taken into profit in the manner it appears has been commonplace in the past few years.