AWARENESS OF CONFIDENCE ACCOUNTING AMONGST ACCOUNTING LECTURERS IN NIGERIA
REVIEW OF RELATED LITERATURE
Confidence accounting is a new, interesting and radical approach to accounting. Confidence accounting is of utmost importance to the academia, it is more
of a probabilistic approach instead of the traditional way of teaching accounting in schools and colleges. Confidence accounting is a probabilistic approach as
opposed to the traditional deterministic one used before hand. Confidence accounting is gradually evolving based on the promise that It might lead to better
financial decisions by enabling decision makers to take a imager term view or an balance the odds as well as the books (Long 2012).
According to Mox (2011), confidence accounting has the capacity of being worked up into a method which might give insight into the accounts of complex
companies. Sharing from this varying view, it can be deduced that the debate on confidence accounting is high and still ongoing. The argument is based on
the fact that confidence accounting stands to enhance financial reporting majorly in developed countries of the world though the concept is still very new in
developing countries such as Nigeria and other West African countries. Accountants should adopt a more scientific approach to measurement and diicultto-assess
figures according to Professor Micheal Mainelli FCCA who makes the case of confidence accounting.
A decade ago, a series of failure embarrassed auditors. Large firms with successful-looking financial statements collapsed. Today, the audit process is under
fore once more as questions are asked about why problems at large financial institutions were not spotted earlier, surely, this is a good time to rethink auditing.
People who move from science to accounting are stunned to find that auditors do not practice measurement science. Measurement is about both accuracy
and precision. Accuracy – how closely a stated value is to the actual value. Precision – how likely it is that repeated measurements will produce the same
results. A measurement system can be accurate but not precise, precise but not accurate, neither, or both. Scientists view measurement as a process that
produces a range. Scientists express a measurement as X, with a surrounding interval.
There is a big difference between point estimation and interval estimation. Auditors provide point estimates while scientists are well equipped with the
provision of interval estimates. For example, physical scientists report X±, social scientists report interval estimates for an election poll and state how confident they are that the actual
value resides in the interval. Statistical terms, such as mean, modem, median, deviation, or skew, are common terms to describe a measurement
distribution’s look and feel. The key point is that scientists are trying to express characteristics of a distribution, not a single point finance should be no
different. For want of a term that distinguishes the use of distributions from the use of points or discrete values, let’s use confidence accounting. In a world of
confidence accounting, the end results of audits would be presentations of distributions for major entries in the profit and loss, balance sheet and cash-flow
statements. The value of freehold land in a balance sheet might be stated as an interval, €150.000.000 + 45.000.000, perhaps recognizing a wide range of
interesting properties and the illiquidity of property holdings. Next to each vale would be confirmation of the confidence level, e.g. 95% confidence that
another audit would have produced a value within that range.
Counter-charges to confidence accounting are complexity and gaining. But audit is complex and the profession needs to worry about members ignorance of
scientific measurements. Managers are already using a system that provides too many get-outs based on the unfairness of reporting on single members.
Under confidence accounting, difficult single numbers, such as exploration asset of environmental liabilities, become ranges.