Open-book accounting
Encyclopedia
Open-book accounting is an extension of the principles of Open-book management to include in an organisation's accounts all those with an interest in the organisation, not merely its employees and its shareholders (including those whose shareholding is managed indirectly, for example through a mutual fund
). This effectively means all members of the public.
Since almost all accounting records
are now kept in electronic form, and since the computers on which they are held are universally-connected, it should be possible for accounting records to be world-readable.
This is an aspiration: at present, organisations run their accounts on systems secured behind firewalls and the release of financial information by publicly-quoted companies is carefully choreographed to ensure that it reaches all participants in the market equally.
Advocates of open-book accounting argue that full transparency in accounting will lead to greater accountability and will help rebuild the trust in financial capitalism that has been so badly damaged by recent events such as the collapse of Lehman Brothers
, the federal rescues of AIG
, Fannie Mae and Freddie Mac, and the fire-sale of Merrill Lynch
to Bank of America
, not to mention earlier scandals such as the collapse of Enron
and Worldcom.
Mutual fund
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...
). This effectively means all members of the public.
Since almost all accounting records
Accounting records
Accounting records are all sources of information and evidence that are used in preparing, verifying and or auditing financial statements. Accounting records also includes documentation to prove ownership of assets creation of liabilities and evidence of monetary and non monetary...
are now kept in electronic form, and since the computers on which they are held are universally-connected, it should be possible for accounting records to be world-readable.
This is an aspiration: at present, organisations run their accounts on systems secured behind firewalls and the release of financial information by publicly-quoted companies is carefully choreographed to ensure that it reaches all participants in the market equally.
Advocates of open-book accounting argue that full transparency in accounting will lead to greater accountability and will help rebuild the trust in financial capitalism that has been so badly damaged by recent events such as the collapse of Lehman Brothers
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
, the federal rescues of AIG
AIG
AIG is American International Group, a major American insurance corporation.AIG may also refer to:* And-inverter graph, a concept in computer theory* Answers in Genesis, a creationist organization in the U.S.* Arta Industrial Group in Iran...
, Fannie Mae and Freddie Mac, and the fire-sale of Merrill Lynch
Merrill Lynch
Merrill Lynch is the wealth management division of Bank of America. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill Lynch & Co., Inc., prior to 2009 the firm was publicly owned and traded on the New York...
to Bank of America
Bank of America
Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina...
, not to mention earlier scandals such as the collapse of Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
and Worldcom.