Crime Against Humanity: the Holy GAAP, 23
Hence, accounting documents facts. It does not take their place. But it appears that some animals are more equal than others, as the Word of the International Accounting Standards Board, and of the legislators adopting it as law, seem to rule otherwise, when it comes to money and finance. After halting in meditation before about the mechanism, scope, perpetrators and victims, one is now easily led to halt in meditation again, this time to confront the question, whom do those individuals answer to?
According to the IAS/IFRS, when a banker gives a loan, in doing so he gives rise to what he loans. According to the IAS/IFRS, when a banker gives a loan, in doing so the accounting tool becomes the asset to be booked: the accounting record for an asset, whose existence and ownership ought to be material and legal facts, from a description of the asset becomes the asset itself.
And according to the IAS/IFRS, there’s even more to it that already meets the eye…
Since the loan contract, as a financial instrument, gives rise to financial assets, that is, to cash, and cash comprises cash on hand and demand deposits, I could be wrong but, in my humble opinion, the IAS/IFRS grant the banker the inconceivable privilege to produce what he creates out of nothing physically, too: as cash on hand just as well as demand deposits.
And since the IAS/IFRS seem to discuss all of the above in terms of finance rather than in terms of money, again I could be wrong but, in my humble opinion, the IAS/IFRS grant all of the above privileges not only to those who loan cash, but potentially to all those who deal with finance as well, dramatically expanding such privileged credit sector. In reviewing the definition of financial instrument from this point of view, we can see that there is probably no limit to the types of contract that can give rise to financial assets and liabilities, as well as to the types of contractual rights to receive cash and contractual obligations to deliver them. Financial products, insurance policies, pension funds are but the first examples that come to mind.
