Interview with Baruch Lev: The End of Accounting
Accounting statements are like bikinis: “What they show is interesting, but what they conceal is significant.” According to Baruch Lev and Feng Gu, in their new book, The End of Accounting, “Today’s financial reports provide a trifling 5-6 percent of the information relevant to, and used by, investors.” Generally Accepted Accounting Principles and traditional financial statements are suffering from what philosophers call a deteriorating paradigm: the theory gets more and more complex to account for its lack of explanatory power. Baruch Lev and Feng Gu want to change this sorry state. Their seminal book is divided into four parts: 1) Relevance Lost; 2) Why Is the Relevance Lost?; 3) So, What’s to Be Done?; and 4) Implementation. The End of Accounting is the most important book that has been written on the irrelevance of the accounting reporting model in recent times. If you are an investor, or accountant, you don’t want to miss this show.