Art & Bias

In Accounting / Finance
RANDALL S JOBSKI
SIENA HEIGHTS UNIVERSITY
MAY 8, 2016

Agenda
Questions
Art

Discussed

of Accounting / Finance

Biases

in Accounting / Finance

Barriers

in becoming Financially Savvy

Conclusion

Questions Discussed
How

art plays a role in approximating the

companys financial performance reality?

What

numerical biases exist

Common

barriers to becoming financially savvy?

Art of Accounting / Finance

Numbers

are numbers, right? Yes, until recognized

Accountants

dont know . . .

Exactly

what all employees do every minute

Exactly

how long equipment will last

How to allocate these financials?

Reality
Educated

Guess (i.e. Art)!

Allocations

often require significant judgement / estimation

Strive

for best approximation of company performance

Berman, Knight, & Case (2013)

Gavin (2003)

Biases in Accounting / Finance

Biases

introduced via the Art in recognizing

financials

GAAP

provides guidelines, not detailed

recording requirements

Lacking

financially savvy leaders, accountants

control decisions

Bias

vetting challenged with strengthening

personal / professional relationships 1

Berman, Knight, & Case (2013)

Fornelli, & Desmond (2011)

Biases in Accounting / Finance

Examples
Depreciation

airlines increasing their planes

expected life significant profit increase!

Revenue

Recognition copying machine sold

with 1 year maintenance package; which
month(s) is revenue booked?

Berman, Knight, & Case (2013)

Barriers in becoming Financial

Savvy

Four Discussed
Dislike

math

Addition

Finance
Use

Boss

not sharing data

knowledge gained to question assumptions in numbers

doesnt want you to question numbers

Keep

No

/ Subtraction about all needed

going; hopefully will come around

time to learn

Only

takes a few hours to increase financial literacy

Berman, Knight, & Case (2013)

Conclusion
Accounting

/ Finance is more an art than

science
Art

portion introduces financial biases

Accountants

strive to approximate the

businesses financial reality

Overcome
Financial

roadblocks to financial literacy

savvy required for leadership and

business success!

References
Berman, K., Knight, J., & Case, J. (2013). Financial intelligence: A manager's guide to
knowing what the numbers really mean. Boston, Mass: Harvard Business Review Press.
Fornelli, C., & Desmond, A. (2011). What FEI members say about deterring financial reporting
fraud. Financial Executive, 27(7), 67-68,71. Retrieved from
http://search.proquest.com/docview/893847456?accountid=28644
Gavin, T. A. (2003). Improving the financial reporting process. Commercial Lending
Review, 18(5), 10-30. Retrieved from http://search.proquest.com/docview/229675876?
accountid=28644