chair's corner.

• Author: Elliott, Robert K.
• Position: Robert K. Elliott on accountancy profession - Brief Article

The New Economy can be dated from the invention and subsequent miniaturization of the semi-conductor, resulting in cheap and abundant information. This information dramatically improves coordination in virtually every facet of our lives:

* Political power has shifted from governments to citizens--with a worldwide outbreak of democracy and market economies.

* Military power has flowed from the brutally strong to the technology savvy.

* Well-informed markets better allocate resources--reducing waste and increasing wealth.

* Consumers have seized power from producers--improving quality, usability and customer satisfaction.

These forces have radically reshaped companies, markets and countries--in other words, the world we now live in.

Now consider our own neighborhood. A shift of power from producers of financial information (CPAs) to consumers (managers and investors) forces us to rethink our own marketplace. The situation can be simplified graphically (see figure). The business information value chain starts with business events and ends with wealth-creating decisions. Higher activities (running a company) are exponentially more valuable than lower ones (data entry). CPAs are licensed to attest to financial statements--the middle of the value chain--though we certainly do far more than just the job that we're licensed to do! Market forces (technology and customer demands, as reflected in our Vision and the "XYZ" designation project) are pushing us up the chain while regulatory forces would confine us to the licensed function.

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These conflicting forces are typical in regulated industries. Market forces, rooted in technology, make old regulations obsolete. They can be repealed or modernized to the benefit of economic progress (cf. transportation, telecommunications and financial services), or they can be left in place or made more rigid, even without evidence or demonstrable cause, leaving...