When Forbes asked me to write a blog for them they asked that I give it a title. I settled on Above and Below the Line.
I’m a professional accountant. OK, I’ve been trained in economics too. And I’ve done my fair share of entrepreneurial activity, writing, lobbying and other things besides, but when it comes to writing my occupation on a form I usually describe myself as a chartered accountant.
Accountancy is not a neutral activity. Accountants record and report on activity. But they can and should do more than that. As physicists noted a long time ago, when you observe something you change it. That is inevitable. Accountants have a choice about what they observe. They have a choice about how they describe it. They can attribute emphasis, or not, to different activity. And in the process they reveal their own preference when judging the process of adding value.
Where is that divide? In my career as an accountant I have two particular focuses of attention. As the creator and manager of businesses I have unashamedly sought to generate profit, and will apologise to no one for having done so, and for having helped create what was I hope quite a lot of value for others along the way. As a practitioner I focused more on tax than anything else, and that’s the focus of much of my work, albeit at a policy level, today.
Profit is ‘above the line’ in the profit and loss account: it’s about the process of resource management to deliver a surplus. Tax is below the line drawn at profit before tax. It’s not a residual. To get tax right requires careful management. To account for it properly is an issue of significance, but it remains ‘below the line’. My career has been above and below the line. This blog will be about both, and more.
Not least it will be about where to draw the line. Because whether above or below the line an accountant is daily faced with choices about what and what may not be of value, may be appropriate, may be ethical and may even at its bluntest be either permitted or legal. Those issues have been too often ignored, or not even noticed by too many accountants I have encountered along my path. I make no pretence that I have got every call right in what I’ve done. Only a fool would claim that. Like everyone I’ve had to learn from mistakes. But that’s been one of the most interesting parts of my career, and if there’s a theme to what will follow those questions will be the issues I’ll be addressing.
