I thought I would see if I could have some fun with accounting acronyms. There are so many that accountants must have fun inventing them.
Take GA, an accounting favourite meaning ‘generally accepted’. We, of course, have the famous GAAP used liberally in the USA and UK. Just to confuse everyone, this means Generally Accepted Accounting Principles in the USA and Generally Accepted Accounting Practice in the UK. Auditors have developed their own variations of GA. They have their GAAS: Generally Accepted Auditing Standards with a board that controls them, which they logically call GAASB. Not to be confused with a seemingly close cousin the GASB, which is no relation at all. This board has not chosen ‘generally accepted’, but a more official ‘governmental accounting’ giving us the Governmental Accounting Standards Board. I don’t know which board came first, but whoever came second was out to create trouble.
Not only do the government have a board, they have an office, the GAO. But there’s GA and there’s GA. This is not the Generally Accepted Office, but the Government Accountability Office, obviously. They have written a yellow book with a double GA: the GAGAS: Generally Accepted Government Auditing Standards. Thank goodness they added the ‘S’! These gallant games lead me to gape and gasp in surprise.
Luxembourg has copied the USA and UK and adopted LUXGAAP, whereas New Zealand has chosen IFRS for their accounting principles. They call them New Zealand International Financial Reporting Standards, NZIFRS or NZ IFRS with a space. So the race is on, with the score at ‘one-all’ for now. Which countries will choose GAAP and which IFRS? Most ignore both because they cause confusion.
Another favourite in accounting acronyms is ASB, this time as an ending. Again there are two famous ones: FASB and IASB. The Americans have chosen F with their Financial Accounting Standards Board, and the other is the more logical I for international. And would you believe the Australians and Canadians both have AASBs. The Australian Accounting Standards Board is as obvious as you can get. The Canadians call theirs, the Auditing and Assurance Standards Board which doesn’t quite perform the same task as the Australian equivalent, and, lacking a ‘C’, will not be recognised as Canadian except by Canadian accountants.
Two ASBs used to exist too. Luckily in 2012 the Financial Reporting Council (FRC) in the UK took over the functions of the ASB. Now only the Auditing Standards Board, ASB, exists as part of the American Institute of Certified Public Accountants. With some relief, I see that the Accounting Standards Board in Japan chose not to follow the trend by calling itself JASB; instead they stuck the J after the ASB giving us ASBJ: ASB of Japan.
But others abound. The IAASB and the IIASB appear connected, while in reality, they as far apart as chalk and cheese. The International Auditing and Assurance Standards Board, IAASB, is connected to the Canadians mentioned above, but internal auditors also have a board and use the initials IIASB, International Internal Audit Standards Board, developing standards for internal auditing, under the Institute of Internal Auditors, IIA.
How deep does the confusion have to go before it all becomes meaningless? Take for instance the FASAB. Impossible to imagine what this could be for ordinary mortals. The Federal Accounting Standards Advisory Board publishes a handbook with, as they explain, the ‘concepts, standards, interpretations, technical bulletins, technical releases, and staff implementation guidance’ for their federal accountants. What a mouthful.
Let’s now have a look at the trendy accounting acronyms; those including X, Y or Z. Five are so well known they are no longer trendy. Internationally accountants recognise CAPEX, OPEX and YTD (year to date, commonly used in financial reporting). American accountants have to learn SOX (the Sarbanes-Oxley Act) and in the UK, few accountants can work without knowing the payroll acronym, PAYE, Pay as you earn.
Others use X, Y or Z to get attention. ZBB or Zero-Based Budgeting, a budgeting method where expenses must be reinvented, could have been called NBB using nil or nought instead of zero. Blank sheet of paper planning could also have been chosen – BSOPP – but this might have evolved into BISHOP – easier to say and remember but potentially unfortunate religious connotations. Another is XIRR. Accountants recognise Internal Rate of Return, but they have invented an extended one, and instead of calling it EIRR as in Extended Internal Rate of Return, they call it an illogical XIRR. And then there is XYZ Analysis, a method used in cost accounting and inventory management for classifying items. Accountants explain that this is complementary to an ABC analysis. Wouldn’t DEF have been more complementary to ABC? Or even CBA?
Accounting taught me to be logical, which is somewhat ironic given the irrational way accountants approach their acronyms. To be fair, when accounting, auditing, accountability, advisory and Australia all begin with an A, when generally and government both begin with a G, and International and Internal with an I, is it any wonder accountants appear befuddled, bemused and bewildered, but not gaga, at least, not yet?