Poland began its transition to capitalism upon the collapse of the Soviet Union in 1991. At the time, the Polish Securities and Exchange Commission (PSEC), established in the spring of 1991 and since replaced by the Polish Financial Supervision Authority, was responsible for developing regulations covering the public trading of securities, including certain operations of the Warsaw Stock Exchange. For much of 1991, the PSEC embarked on an ambitious program to establish regulations applicable to formerly state-owned companies scheduled for privatization. The PSEC sought the help of a number of experts from Western countries, including France, Germany, the United Kingdom, and the United States.
My role in the process was to assist in the development of a comprehensive set of accounting standards for such companies. I spent the better part of the first six months of 1991 commuting to and from Warsaw. By June of that year, the PSEC was prepared to showcase its work at a conference comprising delegates from many of Poland’s Eastern and Central European neighbors that were also attempting to make the transition to a capitalist economy.
As part of the lavish three-day conference, each of us from the West who had been part of the development process was to address the conference about various aspects of Poland’s new financial reforms. I was to speak on the topic “Accounting in a Free-Market Economy.” In all, there were approximately 100 delegates representing more than two dozen (mostly Slavic-speaking) nations. As required, I submitted my remarks to translators about a week in advance of my presentation.
The main theme running through my 30-minute lecture was: “Bookkeeping in a centrally planned economy is no longer applicable; rather, in a free-market system, it is accounting that matters.”
About 10 minutes in, I noticed that many of the delegates had removed their ear pieces and were actually staring at them as if they were broken. Finally, an English-speaking delegate from what was then Czechoslovakia made his way to the podium to explain that in most Slavic languages, the word for “bookkeeping” and “accounting” is identical. Thus, the takeaway from my presentation was that “bookkeeping” no longer mattered; instead, it was “bookkeeping” that mattered!
Who knows? The confusion I imparted nearly 25 years ago may have lasted to this day.
Editor’s Note: In celebration of our 85th anniversary, The CPA Journal will look back at the personal experiences of our readers and contributors. Their impact and influence on the accounting profession have made a permanent mark in history.
One of my favorite stories is the following humorous tale told by Allan B. Afterman. Allan served for many years in the national office of one of the largest international accounting firms, including as assistant to the director of the firm’s national SEC practice. He is a former adjunct professor at the University of Chicago’s graduate-level Booth School of Business and is the author of numerous textbooks and treatises on the SEC’s regulation of public companies, SEC financial reporting and disclosure, and international financial reporting and analysis.
To set the scene: After the Soviet Union collapsed 25 years ago, Allan was invited to help open capitalist-based markets and develop financial reporting standards in the former Eastern Bloc.