Chess and accountancy

Posted by Christie Malry on May 3, 2012 at 8:56 pm

I like to play chess. I'm not really that good at it, but I still have a good time trying to overwhelm my opponent's king before he (or she) gets too close to mine.

Chess, in its way, is a lot like accountancy. Firstly, they're both very very old. Chess is thought to be some 1,500 years old. Accountancy claims to be even older, with the earliest forms of writing being records of ownership from an incredible 8,000BC. Secondly, each deals with a battle between two sides. Chess, obviously, pits White against Black. Double entry bookkeeping pits debit against credit. Thirdly, they're can both be fiendishly complex. From a small number of pieces and some simple rules, chess very quickly becomes too hard for the average brain to comprehend beyond a couple of moves for each side. Similarly, accountancy has spawned ferocious debates about the 'best' way to account for particular types of activity. Some of the problems, such as revenue recognition, leasing, provisioning and financial instruments, are so intractable that they continue to rage today.

I was reading an article about Levon Aronian, an Armenian Grandmaster and one of the best players in the world. And he made a very interesting comment about chess:

There is a loneliness to chess played at the highest levels. It goes deeper than the mechanics of competition, the sitting in silence for hours. These men are part computer, part artist. Show them a particular distribution of pieces for a split-second and they can memorise the configuration and reproduce it at will. Most have exceptional memories. Many are musical; in this tournament Aronian listened to Bach before each game. They all have language skills—conversation glides from Russian to English to German. But, said Aronian, what they create can be grasped by very few. In that sense, it differs from music or football. We may not be able to compose like Mozart but we can enjoy his compositions. We may not be able to bend it like Beckham, but we can marvel at his striking of the ball. “To understand the beauty of the games played at our level,” Aronian said, “you have to be rated 2,200 or higher.” In Britain, only a couple of hundred people are at that level. Aronian made this point with regret rather than arrogance.

He's right: in almost all spheres of life, you don't need to be a genius to understand genius. But top rank chess is virtually incomprehensible to the average person, even if there's a clever Grandmaster on hand to explain it. Even for the most famous games, such as Kasparov vs Deep Blue, most people can't appreciate the intricacies of each move, even if the pitfalls of some of the more obvious looking alternatives are set out.

And, unfortunately, it's becoming clear to me that financial reporting is the same. Ordinary people simply don't understand it, even when there's someone on hand to explain the financial reporting standards to them. There is evidence everywhere, but it's most acute in the way that the media report on financial reporting. Because journalists, even business journalists, don't understand accounting concepts such as deferred tax or share-based payments, they print complete rubbish about it. I, for one, would gladly explain any accounting standard to any journalist to the best of my abilities, and I'm sure the Big 4 and the main professional institutes would do the same. But the offer remains untaken. And it means that the general public, who don't tend to read annual reports or financial reporting standards, are being misled. Even if they are fortunate enough to have an "accountancy" rating of 2,200 or higher. Sadly, these days it seems that there are only a couple of hundred people at that level of accounting expertise too.

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