Sir David Tweedie addressed the Institute of Chartered Accountants of Scotland (ICAS) on 4 September 2008. The full speech can be downloaded below.

Beancounters or Market Drivers? – The Role of the Reporting Accountant

Two thoughts:

1. The tide of unfavourable criticism directed towards our profession has been rising of late and this has made many practitioners unhappy. They feel that things can never again be quite what they were.
   
   For a profession whose acknowledged standing is its sole raison d’être any criticism, however absurd, can cause unpleasant twinges of anxiety. (Arthur Morison)
   
   A major criticism is the measurement of profit.
   
2. In accountancy the term profit has no absolute meaning. It is simply a measurement of the success or failure of a business to achieve what it has set out to achieve.
   
   The measurement is a subjective one in so far as it depends upon the view taken as to what the business has in fact set out to achieve. Thus the term profit as used by accountants can never have that absolute meaning which lawyers, economists and Revenue officials seek to attribute to it.

The absence of any absolute meaning to the term profit in accountancy, however, does not absolve the accountant from explaining what the word purports to mean in relation to the statement which he produces. On the contrary, the acknowledged empiricism of accountancy makes it absurd for accountants to talk of profit without definition.

Moreover the very flexibility of the term profit as used in accountancy makes it essential for the accountant to have some personal [emphasis added] conception of how the success or failure of any particular business should be measured, some simple guide by reference to which it can be seen whether the chosen conventions are operating satisfactorily.

The test which accountants apply for this purpose, I suggest, is simply that of commercial common sense, the test of considering whether the pattern of profits thrown up over a period of years by the chosen conventions in fact reflects how the business ‘is doing’ during that period. The choice of conventions is subordinate to that test and no convention can over-rule it… (Robert Morison)

I have just given you two quotes from the Institute’s Summer School (of happy memories) in 1970. These were the words of the Morison brothers, Arthur and Robert, partners of Thomson McLintock and giants of the profession.

The criticism to which Arthur referred was the threat to the independence of the reporting accountant—the threat of the introduction of accounting standards. Robert believed in a personal conceptual framework in deriving his conception of how profit should be calculated.

[Read the entire speech by downloading the PDF.]