A Quote by Charlie Munger
Creative accounting is an absolute curse to a civilization. One could argue that double-entry bookkeeping was one of history's great advances. Using accounting for fraud and folly is a disgrace. In a democracy, it often takes a scandal to trigger reform. Enron was the most obvious example of a business culture gone wrong in a long, long time.
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You have to know accounting. It's the language of practical business life. It was a very useful thing to deliver to civilization. I've heard it came to civilization through Venice which of course was once the great commercial power in the Mediterranean. However, double entry bookkeeping was a hell of an invention.
Don't ever let your business get ahead of the financial side of your business. Accounting, accounting, accounting. Know your numbers.
Go is to Western chess what philosophy is to double-entry accounting.
You have to understand accounting and you have to understand the nuances of accounting. It's the language of business and it's an imperfect language, but unless you are willing to put in the effort to learn accounting - how to read and interpret financial statements - you really shouldn't select stocks yourself
I would argue that a majority of the horrors we face would not have happened if the accounting profession developed and enforced better accounting.
I also want to raise the possibility that there are, in the very long term, "virtue effects" in economics- for instance that widespread corrupt accounting will eventually create bad long term consequences as a sort of obverse effect from the virtue-based boost double-entry book-keeping gave to the heyday of Venice. I suggest that when the financial scene starts reminding you of Sodomand Gomorrah, you should fear practical consequences even if you like to participate in what is going on.
The great myth is the manager as orchestra conductor. It's this idea of standing on a pedestal and you wave your baton and accounting comes in, and you wave it somewhere else and marketing chimes in with accounting, and they all sound very glorious. But management is more like orchestra conducting during rehearsals, when everything is going wrong.
I got fired from a job years ago. It was an accounting job. They were basically trying to cut corners, so they employed a bunch of temps to do proper accounting. And it just caused absolute bedlam and I did get fired.
Enron had already collapsed and filed for bankruptcy protection by the beginning of 2002. But despite complaints from short sellers that corporations had used accounting gimmickry to inflate their profits, many investors thought the crisis at Enron was an isolated case.
My first profession was public accounting; I became a CPA. I was three years into public accounting - great profession, great skill set, but I didn't want to do it forever.
I studied finance and accounting in college, and I worked at a massive accounting firm out of graduation.
Aggressive accounting does not mean illegal accounting.
Proper accounting is like engineering. You need a margin of safety. Thank God we don't design bridges and airplanes the way we do accounting.
Economists get very uncomfortable when you talk about virtue and vice. It doesn't lend itself to a lot of columns with numbers. But I would argue that there are big virtue effects in economics. I would say that the spreading of double-entry bookkeeping by the Monk, Fra Luce de Pacioli, was a big virtue effect in economics. It made business more controllable, and it made it more honest.
It is always right to detect a fraud, and to perceive a folly; but it is very often wrong to expose either. A man of business should always have his eyes open, but must often seem to have them shut.
I do think that in many cases, where crimes have been covered up and perpetrators can escape justice, history can provide some accounting. It can identify the killers, ensure that their names are remembered, and it can give voice to and record the victims, and make sure, even more importantly, that their voices and their stories are remembered and heard. And I don't think there's justice, but I do think history can play an important role in that accounting.
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