Changing Accounting Principles For The New Economy

Not much has changed in general accounting principles and reporting requirements for companies in decades. Baruch Lev, Professor at New York University, Stern School of Business, strongly believes that things need to change to reflect transformations that have occurred in how business is now conducted. Baruch Lev shares his thoughts on benefits that could occur if accounting practices were updated to reflect how companies are valued.

 

This course includes discussions on the tectonic change in how companies are doing business today and how these changes are a result of a shift from an industrial age to knowledge and information focused businesses. Professor Lev shares his definition of a knowledge-based economy. He explains why today’s financial accounting principles are out of date and elaborates on three major reasons why current financial accounting rules and required reports have become less useful in determining the health of a company or an industry. He talks about the “conservative principle” and the part it plays in current accounting financial rules. He discusses what it would mean for businesses and the stock market if accounting practices took into consideration a company’s intangible assets such as brand strength.