It is becoming increasingly urgent for the accounting profession in general to take sides in the debate that in some academic stages, not very publicized, by the way, is advancing around the issue of the adoption or adaptation of international accounting standards in Colombia. And such a party cannot be made apart from the in-depth and careful study of the normative content and, beyond it, of the economic, financial, social and political aspects that such a decision implies since it cannot be adopted independently of those aspects. which constitute both cause and consequence of the accounting information process.
The debate becomes more important and relevant after the recent but successive scandals in the international financial media, mainly in the United States but with worldwide repercussions, regarding the accounting permissibility contained in the national standards of the United States and some European countries, as well as of the international, and to the little or no ethical quality shown by some of the large auditing firms, defenders and promoters of the NIC model. This issue is also related to the deregulation processes promoted from the neoliberal barriers as an adoption of international accounting norms or standards, without taking into account the economic and political particularities of the country,it would be in line with the requirements of various international organizations that promote globalizing dynamics such as the FTAA for the Americas.
This paper aims to provide some arguments that enrich the debate, addressing for this some important points such as: historiographic background of the accounting standard at the international level, macroeconomic elements related to the environment in which accounting information is manifested, ethical foundations of business activity and of professional practice and, finally, socio-epistemological criteria of accounting that we consider essential for a conscious take on the side of the announced debate.
MACROECONOMIC ELEMENTS THAT CONDITION THE ENVIRONMENT OF THE ACCOUNTING STANDARD.
The accounting standard is not harmless. Its role is to support the preparation of information aimed at determining the magnitude of the wealth created in production processes and to establish the allocation of such result among the various agents participating in the distribution process. Its product conditions the decisions that are made in the economic and financial environments. Such role is fulfilled by accounting based on the conditioning elements previously established as rules of the game in the macroeconomic environment.
Consequently, it is important to determine which are the conditions of the economic game that have been established in the national environments and which are the ones that dominate the international environment.
From a very general theoretical perspective, the ideological bases that support the dominant economic model in the international arena, and therefore in most nations, is based on Walrasian criteria oriented towards general equilibrium, such as: a) The capitalist economy tends to a stable equilibrium situation; b) such balance corresponds to a full use of productive resources; c) the allocation of resources is optimal and, therefore, leads to the maximization of the social dividend.
It has not mattered that such principles do not withstand the decisive test of empirical contrast; they are still maintained and presented as valid with some variants by the defenders of the unique model. There is always the position "if such conditions are met… then…" With this, anything can be affirmed.
For more than twenty years a wave has traveled the world. With various arguments, which some authors have described as siren songs, the adoption of an economic model that would supposedly lead to the solution of the growth and employment problems of all the economies that adopt it has been justified; And, of course, those countries that did not do so were going to be left out of the long-awaited solution to their problems.
The unique model is mounted on various requirements. One of them is the assumption that each offer creates its own demand. This statement is supported by Say's famous (for economists) law. This law, derived from Smith's conceptions of market efficiency, has been, throughout history defended and attacked by many economists, among the first we can mention Ricardo and the economists belonging to the so-called neoclassical school; Malthus and Keynes appear between the seconds. Say's law acquired scientific connotations during the 19th century, and although it was not empirically corroborated, its validity was taken for granted; Whoever doubted her was taken as ignorant. Finally it was Walras who clarified and polished his conception from the general equilibrium formulations.
Theoretically, the argument is defended that when markets are liberated, supply and demand are equalized and the economic system is oriented towards full employment, maximizing its production. However, it has not been considered that not all economies can function under ideal conditions; the economic facts of the last decade, lived by most of the Latin American economies, not to go any further, show a harsh reality that falsifies the postulates of the general balance that should have been achieved by the free market game.
n
(Sum) pi xi + xm = 0
i = 1
The validity of Say's law can be established by simply inspecting Walras's Law.
Say's Law (Sum) pi xi = 0
where x i is the excess demand, p i are the prices and x m is the excess demand for money.
According to her, Say's law is only fulfilled when the money market is in equilibrium. The excesses of supply would have equal excesses of demand as a counterpart and Say's law would be fulfilled in the following terms:
It is also required, for compliance in realized terms (not only notional), that prices be flexible; closed economy, that is, balance in the trade and payments balance; and the presence of a tattoo artist, that is, of a mechanism that converts excess supply and demand into price changes, that is, that transforms planned demand into effective.
This means that only under certain conditions, which are not those of most environments, Say's law can be fulfilled, and that is, only for economies that are not subject to restrictions that prevent the functioning of markets. If there is a current account deficit, if there is excess supply or demand, if there are rigidities in prices, Say's law is not followed.
Economies, like Colombia, are subject to a number of interferences, which prevent their free functioning. Salaries and prices of goods and services are agreed based on economic policies and not by economic factors, excess supply and / or demand occurs, there are rigidities in prices. Thanks to monopolistic circumstances, many prices remain above the market's opinions. Under these conditions Say's law is far from being fulfilled.
Faced with Say's law non-compliance, economies have chosen to establish intervention mechanisms to make it a reality, such as protecting markets to create effective demand, directed credit to finance production and also to finance demand. In the Colombian case, this modality in economic policy guaranteed a continuous growth process that ranged between 4 and 5% of GDP for more than five continuous decades from the 1930s to the 1980s when growth indicators began it has dropped to negative or close to zero figures between the years 1999-2001 and so far in 2002. This decreasing growth trend is concomitant with the application of liberalizing market measures, coinciding with the governments of Gaviria and its successors.
The imposition of economic openness has meant the elimination of intervention measures that made it possible to comply with Say's law. Without such mechanisms, the economy is subject to the action of market forces, which in real (not theoretical) conditions, generates a large number of dysfunctions. Analyzing the Colombian economy in this sense, Sarmiento Palacio says, “The liberation drastically modified the selective scheme that had prevailed as an alternative to breach of Say's law. The mechanisms to generate effective demand were dismantled. Protection, directed credit, fiscal deficits and support prices for agriculture were eliminated. Thus, state intervention to create effective demands was replaced by Say's law in the historical concept.Market stimuli were supposed to mobilize resources toward more productive activities that, in turn, would be responsible for creating their own demand. It did not happen that way. The change in structure towards comparative advantage activities was not matched by an expansion in demand; Imports grew more than exports and unemployment increased. Thus the increases in productivity did not have as a counterpart an equal increase in production and, instead, caused a reduction in employment. The financial liberation gave rise to high interest rates that impeded the financing of production and favored the shift towards speculation. In the case of housing financing, it resulted in financial costs higher than the productivity of capital and, therefore,the construction did not mean the expansion of the demand that would guarantee its acquisition. ”
This outlined panorama for the case of Colombia is valid for a good part of the Latin American economies that have been subjected to the conditions of the “multilateral” financing organizations, circumstances that have led to a general crisis situation, whose indicators are the high rates unemployment, poverty and misery, the reduction of international reserves, the increase in imports, the reduction of exports and therefore the deficits in the trade and payment balances.
Another assumption that supports the new free market model is expressed by the neutrality of money. There are two opposite positions in this regard. One, the neoliberal that supports the single model, postulates that money is harmless over the real sector and that its management, consequently, does not affect production and employment. This statement is supported by the fact that in a state of economic equilibrium, the money supply is equal to the demand and, consequently, its effect disappears and the solution of the goods market is independent of what happens in the money market. In the equation that expresses Walras's law, x mIn other words, the excess demand for money disappears. Based on this concept, the financial sector is left free to increase active interest rates much more than passive ones, consequently increase intermediation margins and increase its profits in percentages much higher than those of the real sector of the economy. On the contrary, there is another position that argues that monetary policy has a great impact on the real sector, since by increasing interest rates the cost of money becomes more expensive, thus reducing investment, lowering public spending, affecting production and exports, gross product decreases and unemployment increases. Theoretically, this position is supported by the fact that the economies do not remain in the ideal equilibrium and, therefore,being in imbalance the money and real markets are related; the excess of savings over investment plus net exports is equal to the excess demand for money.
The application of the first orientation in the country's monetary policy has created an oligopoly situation in the financial sector, made up increasingly of foreign banks, led by the Banco de la República, which with its supposedly independent measures transfers the profits from the real to the financial sector. High interest rates, a large intermediation margin, government financing operations mediated by this sector, are measures that have produced the decreasing result of GDP and other disastrous consequences, such as the continuous growth of external debt, both private and public, unemployment and recession.
Another measure, derived from monetary policy, which is promoted, from neoliberal barriers, as a beneficial alternative to get out of the problems of the economic crises suffered by third world countries, is that of the dollarization of their economies. Similar to this extreme measure is to establish narrow bands of change or unchangeable exchange rates. These are guidelines that reduce the room for maneuver of monetary policy and generate, particularly dollarization, significant losses of resources, which must be replaced either through increased exports, decreasing international reserves or increasing external debt, by requiring the allocation of a significant amount of dollars for the current course of monetary operations (means of payment).It is a profoundly contractionary measure of effective demand that to counteract it requires allocating resources that in any case reduce the productive capacity of the economy, increase unemployment and leave the economic system without the possibility of gambling by completely depending on a currency that originates solely due to internal operations, that is, the possibility of alleviating problems through monetary issuance is definitively eliminated.in other words, the possibility of alleviating problems through monetary issuance is definitively eliminated.in other words, the possibility of alleviating problems through monetary issuance is definitively eliminated.
Let's see what Sarmiento Palacio says about it: “Dollarization is a good example of ignorance of basic principles. In the traditional system, money for transactions is generated outside the economy; that is, it does not come from economic agents. If this money supply were equal to the demand, the income will be equal to the effective demand. If instead of this, dollarization is used, the money for the transactions does not come from outside but from income, or if you want from savings. In this sense, dollarization, from the outset, would mean a loss of income equal to the means of payment, which is usually called seigniorage, corresponding to around 5% of GDP. It is a valuable loss that will occur the moment the system is implemented and will tend to grow in the future with the demand for money.In the Colombian case, it is equivalent to half of the international reserves ”.
From our point of view, dollarization is but another measure that would deliver national sovereignty, in this case of the monetary system, which would leave the country at the mercy of the “multilateral” financing organizations, whose mission, as evidenced by the experiences lived For the majority of Latin American countries, it is to seek the conditions for the strongest economies to prevail, regardless of whether the rates of unemployment, poverty-misery, illiteracy, etc., are increasing, arguing that the liberalization of markets will bring global progress.
The free market model is also supported on the assumption that growth is a direct function of taking advantage of comparative advantages. This is another fallacy. Based on this argument, a policy of elimination of cereal crops that are produced under better conditions of quality and price in other countries has been promoted in the country. It is said that being Colombia a tropical country, it must dedicate itself to the region's own products, leaving other countries that have better climatic and technical conditions to produce what is expensive and of low quality here. Thus, wheat, corn, barley, beans, among others, have been sown, placing the country in a state of food emergency. The argument is completed by saying that if we take advantage of the comparative advantages of a tropical country,We must cultivate much more economically and advantageously products such as African palm, banana, coffee and flowers whose international markets can be dominated by our goods. It is said, then, that it will be much more profitable for tropical countries, that they dedicate themselves to what they can do with advantage since this way they will take advantage of the land more productively, and with the product of exports, they will be able to import under much more conditions economic, cereals and products stopped growing.and with that produced from exports, it will be possible to import in much cheaper conditions, cereals and products that are no longer cultivated.and with that produced from exports, it will be possible to import in much cheaper conditions, cereals and products that are no longer cultivated.
Today certain crops and products such as potatoes, rice, sugar, chicken, milk remain, but this is because they are protected with tariffs. Between the years 2005 and 2015, given the commitment that the country has acquired with the WTO (World Trade Organization) to enter the FTAA (Free Trade Area of the Americas), such tariffs must disappear. If this happened, the country would enter a food emergency, since a large number of our people would not be able to acquire imported products. But this has a national security connotation. If Colombia does not produce its own goods for basic agricultural consumption, it would be at the mercy of the countries that do so, making it another weapon of domination, as they have already done with financial resources through the IMF and the World Bank.The alternative that they leave us is to feed ourselves with our tropical products, as Professor Jorge Enrique Robledo says, “a nation that only eats bananas, chocolates and coffee cannot imagine, leaving them the option of defining which of these they add the oil and with what flowers decorate the table.
A LOOK AT THE INTERNATIONAL ACCOUNTING WORLD FROM THE BUSINESS AND PROFESSIONAL ETHICS.
3.1 The current international financial and accounting landscape.
A crisis comparable only to that of the 1930s is experienced by the countries that hold the power of big capital. Black clouds that announce economic depressions and business failures threaten stock market activity. Financial indicators show a downward trend for months. What is happening in the financial markets that move through the most representative stock exchanges in the world? What is the phenomenon causing this anomalous behavior that is causing nervousness and pessimism in one of the bastions of financial capitalism, such as the stock market? Business managers of major industry and trade consortia are questioned; also are the auditors,which has led to the crisis and liquidation of one of the most traditional audit firms, Arthur Andersen; politicians with the same president Bush in the lead are questioned; in short, the capitalist system itself seems to be in crisis. Well, the phenomenon is caused by a crisis of confidence in accounting reports and messages that serve as the basis for decision-making when investing in securities and when carrying out large financial operations. If we accept this hypothesis, we should ask ourselves, therefore, why accounting reports and messages are not worthy of the usual credibility? Who is behind this phenomenon? Who does such behavior favor? Is there a proposal for your solution? How does this situation affect underdeveloped countries like Colombia?Arthur Andersen; politicians with the same president Bush in the lead are questioned; in short, the capitalist system itself seems to be in crisis. Well, the phenomenon is caused by a crisis of confidence in accounting reports and messages that serve as the basis for decision-making when investing in securities and when carrying out large financial operations. If we accept this hypothesis, we should ask ourselves, therefore, why accounting reports and messages are not worthy of the usual credibility? Who is behind this phenomenon? Who does such behavior favor? Is there a proposal for your solution? How does this situation affect underdeveloped countries like Colombia?Arthur Andersen; politicians with the same president Bush in the lead are questioned; in short, the capitalist system itself seems to be in crisis. Well, the phenomenon is caused by a crisis of confidence in accounting reports and messages that serve as the basis for decision-making when investing in securities and when carrying out large financial operations. If we accept this hypothesis, we should ask ourselves, therefore, why accounting reports and messages are not worthy of the usual credibility? Who is behind this phenomenon? Who does such behavior favor? Is there a proposal for your solution? How does this situation affect underdeveloped countries like Colombia?the capitalist system itself seems to be in crisis. Well, the phenomenon is caused by a crisis of confidence in accounting reports and messages that serve as the basis for decision-making when investing in securities and when carrying out large financial operations. If we accept this hypothesis, we should ask ourselves, therefore, why accounting reports and messages are not worthy of the usual credibility? Who is behind this phenomenon? Who does such behavior favor? Is there a proposal for your solution? How does this situation affect underdeveloped countries like Colombia?the capitalist system itself seems to be in crisis. Well, the phenomenon is caused by a crisis of confidence in accounting reports and messages that serve as the basis for decision-making when investing in securities and when carrying out large financial operations. If we accept this hypothesis, we should ask ourselves, therefore, why accounting reports and messages are not worthy of the usual credibility? Who is behind this phenomenon? Who does such behavior favor? Is there a proposal for your solution? How does this situation affect underdeveloped countries like Colombia?Well, the phenomenon is caused by a crisis of confidence in accounting reports and messages that serve as the basis for decision-making when investing in securities and when carrying out large financial operations. If we accept this hypothesis, we should ask ourselves, therefore, why accounting reports and messages are not worthy of the usual credibility? Who is behind this phenomenon? Who does such behavior favor? Is there a proposal for your solution? How does this situation affect underdeveloped countries like Colombia?Well, the phenomenon is caused by a crisis of confidence in accounting reports and messages that serve as the basis for decision-making when investing in securities and when carrying out large financial operations. If we accept this hypothesis, we should ask ourselves, therefore, why accounting reports and messages are not worthy of the usual credibility? Who is behind this phenomenon? Who does such behavior favor? Is there a proposal for your solution? How does this situation affect underdeveloped countries like Colombia?Why are accounting reports and messages not worthy of the usual credibility? Who is behind this phenomenon? Who does such behavior favor? Is there a proposal for your solution? How does this situation affect underdeveloped countries like Colombia?Why are accounting reports and messages not worthy of the usual credibility? Who is behind this phenomenon? Who does such behavior favor? Is there a proposal for your solution? How does this situation affect underdeveloped countries like Colombia?
Let's take a tour of some of the latest news produced by international news agencies and published in newspapers, to get a closer idea of this worrying issue and, from there, to propose other hypotheses about the first or nodal causes that have motivated by this phenomenon that profoundly affects the role of accounting as a discipline and public accounting as a profession and that they try to answer the questions asked above.
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