Alan Nelson reports from day one of the World Congress of Accountants down under in Sydney, where economics historian Niall Ferguson brought the room to its feet with his keynote on the importance of accountancy.
There was a moment at the end of Niall Ferguson’s keynote presentation where the room of 5,000 accountants responded as one.
Commenting on how heartening he found it to see representatives from so many countries, and particularly from so many developing economies, he shared that his wife is Somali. What came next was clearly a matter close to his heart.
“Accountancy may not sound glamorous,” he said, “But it is so important.” He went on to explain that the single greatest barrier to growth in developing countries is corruption. If an event like this can further the rollout of international accounting standards, that can make a real difference. If accountants can create a fairer system by laying out the rules of the road, and thereby create a cleaner economic environment and cleaner government, it can have a real significance.
The 5000-strong watching audience broke out into spontaneous applause. That’s why the work of IFAC and events like the World Congress are so important.
That wasn’t of course what he was there to talk about. His chosen subject, and one on which he is perhaps the acknowledged world expert as an economics historian, was the causes of the financial crash and what that told us about the likelihood of a repeat.
Here he was less optimistic. Of the six causes he listed in his bestseller, “The Ascent of Money”, only one has really been solved - the undercapitalisation of the banks. Of the rest, three have been addressed only partly. The securities market is still as prone to wrongly rated CDOs and there is no reason to believe we would be any better at spotting them. The derivatives market is still there to create contingent liabilities. And the channelling of Asia’s glut of savings into the US economy may be halted by a trade war but that seems like a pretty dubious tactic.
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The final two causes of the 2007 financial crisis - the bubble in the US housing market and the looseness of monetary policy - are in as parlous a state as they were back then.
The depressing conclusion is that we are well set for another crash, and this time we are not in a position to combine the fiscal expansionary policies and monetary easing that kept us out of anything as bad as a Great Depression the last time.
The only crumb of comfort Ferguson could offer was that whether the news is good, bad or catastrophic, there will still be work for accountants!
About Alan Nelson
Alan Nelson is the Founder and Managing Director of Nelson Croom which publishes accountingcpd.net – the award winning, online CPD resource for accountants.
He is passionate developing CPD that genuinely equips accountants to face the challenges of the future, as well as keep them up to date and informed. Nelson Croom and accountingcpd.net has won several Elearning Awards.
Alan is currently Chair of ICAEW’s Practice Assurance Committee. He has also been a Director of the e-Learning Network and a member of ACCA’s SME Committee. Before founding Nelson Croom, Alan was CEO of the leading educational publisher, Thomson Learning.