Creative Accounting

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Creative Accounting

January 14, 2009. By Peter Lloyd

In 1532 Francisco Pizarro came before the court of the Inca, seemingly in peace, but set on conquest. He noticed that certain members of the Incan court wore knotted ropes around their waists. Assuming these ropes were rosaries, he ordered his men to ambush the men who wore them.

Kill the priests, he thought, and their civilization will crumble. It worked, but not for the reason Pizarro had in mind. The knotted ropes contained the complete record of the empire's fortune. Pizarro had wiped out the Incan accountants and with them went their empire.

With the this event in mind, it's not too difficult to imagine how creative accountants might wage and win a war. But that would mean leaving war to the accountants. Bean counters we call them. So low is the accountant's standing among so-called creative people that creative accounting is considered a crime.

In their paper, "The Ethics of Creative Accounting," authors Oriol Amat, John Blake, and Jack Dowds define creative accounting as, "a process whereby accountants use their knowledge of accounting rules to manipulate the figures reported in the accounts of a business." A strict application of this definition makes no moral judgment about creativity in accounting. As in every other creative pursuit, crime and creativity stand independent of each other.

Mihaly Csikszentmihalyi quotes the financial leader John Reed declaring, "There's no such thing as reality. There are widely varying descriptions of reality, and you've got to be alert to when they change and what's really going on." Reed certainly doesn't sound like he's spent his career counting beans.

It's clear that the age-old profession of accounting owns its share of creative thinkers. It's also clear that no profession or occupation should be excluded from creativity.

Peter Lloyd is co-creator with Stephen Grossman of Animal Crackers, the breakthrough problem-solving tool designed to crack your toughest business problems.

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