An interesting article in Canadian Accountant ponders Why accountants should spend less time on the numbers and more time explaining the results.

Written by Philip Maguire, it notes that “The combination of historical and current valuation requirements in the balance sheet, income statement and statement of cash flows have resulted in financial statements that are too difficult to understand without explanations. These explanations are contained in the notes to the financial statements, management discussion and analysis, press releases, conference calls with analysts, annual reports and so on. Furthermore, new accounting standards require explanations from the standard setters and guidance by the accounting firms in order that filers can comply with the requirements.”

The article generates the following conclusions:

• As the complexity of financial reporting has increased so too has the volume of words. Unfortunately in many cases the narrative only adds to the confusion… 
• The goal of every accountant should be to simplify, rather than complicate, the narrative. As Steve Jobs said, “Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.” 
• Too many accountants try to impress the reader with their vast comprehension of the issues. However, the accountant who can write a report in one page, for example, has to focus on the issue, alternatives and recommendation. There is no room for unnecessary or fancy words. 
• One of the most impressive observers of human nature in the workplace, Cyril Parkinson, noted that “Work expands according to the time available for its completion.” This is known as Parkinson’s Law. This Law explains why so many organizations become burdened with administrative tasks at the expense of productivity…
• Only by writing concise explanations can the accountant direct all levels of management to focus on those essential, two or three at most, business drivers. In this manner the accountant can take charge of the numbers and the narrative and be seen as essential to the well-being of the organization. 

There’s clearly some truth to this: it’s often been noted for instance how breakthroughs in technology frequently fail to yield the expected increases in productivity. There’s certainly no virtue in being “fancy” for its own sake. But the Trump administration is currently giving us a pretty comprehensive case study in complexity-avoidance, with dire results. As Esra Klein put it (I concede, we gravitate to the quotes that suit us): “One of my general critiques of the Trump administration is they want to make complex problems into simple problems. They want to take complex forces that we don’t even really fully know how to track and turn them into one thing that you can grab in your fist and squeeze.” And to quote Parul Shegal on story/narrative, as I have before, storytelling “encourages us to overlook the fact that it is, first, an act of selection. Details are amplified or muted. Apparent irrelevancies are integrated or pruned. Each decision is an argument, each argument an imposition of meaning, each imposition an exercise of power.” Sehgal suggested instead “(putting) ideas and images into productive tension, with no reassurance of closure or comfort,” or the alternative notion of a “swarm,” which “doesn’t contain, like a story (but rather) allows—contradiction, dissonance, doubt, pure immanence, movement, an open destiny, an open road.” Such thoughts seem relevant in grappling with the complexity of corporate performance and its context. But of course, it’s the very opposite of simplification.

Given the multiplicity of the economic, political, social and other forces acting on the average business, it seems to me extraordinarily perilous to advise focusing on “two or three at most” (implying that the preferred number would be just one?) business drivers. Someone has to grapple with the implications of all that information and disclosure, don’t they? If not accountants, if not financially-literate management, then who? (Or do we completely surrender this area to AI?)

Even if we accept that “the goal of every accountant should be to simplify, rather than complicate, the narrative,” it can only be acknowledging that “the narrative” is a navigation tool of no inherent predictive power (as any boiler plate cautionary language will tell you, past results are not necessarily indicative of the future, probably less now than they ever were). Again, there’s no virtue in an accountant who seeks to obfuscate with excessive detail, and overblown words like, uh, obfuscate. But we should be exceptionally wary about overly defining ourselves with reference to our mastery of simplicity. After all, there’s plenty of competition in that space already…

Still, while I may not entirely agree with Maguire’s short piece, it’s more stimulating than many longer ones. So in that sense he’s made his point!

The opinions expressed are solely those of the author.