A 4 Billion Dollar OOPS!

Certain business stories just make you scratch your head. Here’s one from Forbes during the last week: “Bank of America’s Stock Plunges by 6% after $4 Billion Capital Plan Blunder.” Ufta! (that’s Scandinavian for “whoa!” and “wow!”) http://www.forbes.com/sites/nathanvardi/2014/04/28/bank-of-americas-stock-plunges-by-6-after-4-billion-capital-plan-blunder/

Now this may seem like a lot of moola to you and me, but I guess in the B of A world of $2.2 trillion in assets you can lose track of a few billion here and there. Well, they did. Apparently the financial wizards goofed on adjusting some “regulatory capital.”

It could make you wonder, how can you have an accounting for taste in running a mega bank if you lack a taste for accounting? To be fair, let’s not be too hard on B of A peeps. It is happening EVERYWHERE!

I now direct your focus to an important New York Times piece that came out the DAY BEFORE the B of A story. This one is headlined, “No Accounting Skills? No Moral Reckoning.” Quite eye opening. http://opinionator.blogs.nytimes.com/2014/04/27/no-accounting-skills-no-moral-reckoning/?_php=true&_type=blogs&emc=edit_th_20140428&nl=todaysheadlines&nlid=68618012&_r=0

From the story, we learn that Americans in particular are growing woefully ignorant about finance. More and more of our citizens cannot do basic accounting, nor do they know what to do with a balance sheet. In other words, we’re financially off balance. And get this…there is a MORAL consequence!

The simple mechanism to keep us honest—and from making $4 billion boo boos—is accurate double entry bookkeeping. Properly done, it gets your debits and credits balanced. In financial matters, it keeps everyone and everything accountable.

I recommended reading the Times article since it gives some valuable history on the Italian Renaissance and why this topic is such serious business. And while most of us remember the Dutch East India Company from history classes, they were credited with the invention of modern capitalism. In fact, in the early 1500s the Netherlands became the center of accounting education. The Dutch boys were right on target!

Jacob Soll, who authored the Times story I’ve referenced, believes that the strength of a capitalistic society lies in the citizenry understanding the basics of finance. He believes double-entry accounting should be required in schools along with other basic accounting classes. Pencils and erasers unite!

As for the moral equations at stake, no one likes being cheated. Nor does God like us cheating each other. Here’s what’s on His balance sheet. Proverbs 11:1 states: “A false balance is an abomination to the LORD, but a just weight is his delight.” After all, “A just balance and scales are the LORD’s; all the weights in the bag are his work.” (Proverbs 16:11 ESV)

God holds His people accountable when it comes to money and finances. Financial integrity is basic to good relationships. Right? Give it some thought. You’ll see. It all adds up.

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