Should managers adopt this viewpoint, they would ask what are the needs of the customer and attempt to meet those needs. If new disclosures are needed for a particular area, managers should make them. If new measurements would improve the process, then managers should determine how they could make these quantifications. If readers need documentation about the estimation process of some accounting, then managers should eagerly provide that explanation. If a sensitivity analysis would improve the communication process, then managers should undertake that sensitivity analysis. In short, managers should treat investors and creditors as if they were part of the business community because in fact they are.
 
The authors begin with four axioms:

Building on these four axioms, Miller and Bahnson claim that managers and their advisors too often commit "the seven deadly sins of financial reporting." These include:

Miller and Bahnson then discuss how to improve financial accounting and reporting by overcoming these seven sins with this new attitude that they term quality financial reporting. They include some chapters on how to do quality financial reporting and how not to, using Enron as a case study.
 
I highly recommend the book because it presents some new ideas and breathes some fresh air into the stagnant accounting that is all around us. If this new attitude were adopted, then confidence could be restored to the capital markets.
 
Finally, I would like to acknowledge that I did indeed write 100 "Spirit of Accounting" columns with Paul Miller, including a few on this concept of quality financial reporting. That plus the fact that we are good friends does not possibly preclude my maintaining an objective position on this analysis. As auditors say, there is no conflict of interest, and I am completely independent.

J. EDWARD KETZ is associate professor of accounting in Penn State's Smeal College of Business Administration. Check out his column, where you'll find more articles on controversial, cutting-edge topics.