Dear David,

OK, something's rotten in the State of Denmark. I am not as closely involved
in the Examinership matters as you are since I don't teach at schools or
equivalent colleges any more.

Let me try to defend business studies and accounting from a technical point
of view. I accept what you are saying, for example about break even analysis
(cost volume profit analysis). No one disputes that linearity is assumed to
start with and no one argues that the assumption of linearity can be
limiting. However, assuming linearity helps get the message across: it's a
useful starting point, it helps to highlight some really important
information ... even though it's not the bee's knees.

However, in reality, when such a study is done, it will tend to be based on
data taken from the firm's relevant range: the range of information for
which the firm has real data or for which it has forecast data ... AND a
study by Johnson at Manchester University in the early 1960s demonstrated
empirically that the accountant's assumption of linearity does not
necessarily lead to [massive] errors. That is, over the relevant range, most
cost and revenue functions tend to linearity. As a matter of interest, I
discuss this very point in my book!

As a matter of interest, over the last year or so, I have been working with
around 40 small and medium sized enterprises on their cost accounting
systems by way of making spreadsheet models of their production processes
and costs ... we worked over the relevant range and lo and behold things
really are linear.

Even with hindsight, therefore, linear analysis is not always a bad thing.

With Capital Budgeting, again, I think there is nothing wrong with leaving
out sensitivity analysis in the early stages since the purpose of teaching
the methods to very young people is to introduce the topics and let them use
them ... sensitivity analysis is for the older, more experienced ones.

Again, in reality, capital budgeting can be hideously badly done, even by
qualified accountants. Our famous Millennium Dome must effectively have been
set up by way of DCF, for example, and although I'm not a critic of most
things to do with the Dome, I don't think they did their sums entirely
accurately with or without sensitivity.

What should concern us, though, is something like the story of the kinked
demand curve in oligopolies. I am not an economist but I remember hearing
about this debate a long time ago and am shocked that you are still able to
raise the issue.

I should ask again, where is the quality control? What is the role of the
Universities and the DFEE ... ?

Overall, whilst the sin of omission can be as great as any other, don't we
have to admit that we have to stop somewhere? However, if by sin of omission
you mean that because something is missing, the whole pack of cards falls
down, that's a different matter. Can't fault you there.

I'll search out the relevant bits for the accounting side of this discussion
and follow up with the publishers and see where I get. Could take a while
but I'll try.

Re ZBB, I'll send along a few notes later today and see if it helps!

Happy Christmas to everyone



Duncan Williamson


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-----Original Message-----
From: For teachers and lecturers interested in curriculum issues
affecting the te [mailto:[log in to unmask]]On
Behalf Of david haynes
Sent: 30 November 2000 21:51
To: [log in to unmask]
Subject: Re: 5* New site for Economics and Business


> Thanks for the extensive reply, David.

I return the thanks...


>
> I'm sure I'm not alone in being horrified at the
> philosophy of "teach what's
> in the book and be quiet" Any examiners out there
> should make a note to
> respond to such accusations.

My experience is that Chief Examiners never become
engaged in public debate. If you check the archives to
this discussion you will see only one occasion when a
Chief Examiner did become embroiled in a discussion
and his own 'team' at the Board contradicted what he
said. They were then 'contacted' and had to change
their view. It's all there in the discussions
archives.



>
> Accepting what you say at face value, I would ask
> who validates the chief
> examiners' work? Where is the quality control? I've
> asked this question
> before in various fora and don't think I've had an
> answer yet. I will repeat
> (I think) that I am an examiner for something other
> than A level and our
> systems are checked and double checked for such
> errors .. GCSE and A level
> the same? If so, how come we still have these
> apparent errors?

There's several answers to this:

a. laziness
b. stupidity
c. arrogance ('teachers won't complain')
d. carelessness
e. apathy

None of the above are particularly attractive I am
sure you will agree.






>
> This is the first time I have come across Zero
> budgeting; and although I
> didn't need to, just to be on the safe side, I
> checked my dictionary of
> accounting terms and didn't find it!
>
> > Thus in the A-Z dictionary ZBB is not listed
> though zero budgeting is.
>
> Which A-Z dictionary?


The one by the Chief Examiners! hence my point.

>
> > It was much the same with a Peter Fearns book on
> Business Studies. Gearing
> was shown as
> > shares: borrowed funds. When the board were
> telephoned about this (Fearns
> was the chief
> > examiner) the caller was told to teach what was in
> the book.
>
> Is this true and to whom did the caller speak?


The caller spoke to the subject officer at the time.
(1984)

 If
> true, is it any wonder
> that Universities seem to pour scorn on BS
> qualifications?
>
> > So what does ZBB stand for then?
> > The definitions and descriptions of ZBB on both
> sites are woefully
> inadequate and deserve a > more treatment despite
> the fact that they are
> relative rarities in practice.


Please explain what ZBB stands for then!

>
> > I disagree as the market is a Business Studies
> rather than an Accounts
> candidate. Take for > example Break Even. It ignores
> economies of scale -
> but a Business Studies candidate has to > accept
> that. The BS candidate
> accepts one method of depreciation. A Business
> Studies
> > candidate ignores sensitivity analysis for DCF.
>
> You are making a good point, of course. There is a
> difference, though,
> between having to make things simpler vis a vis
> getting things wrong, or
> understating them, I'm sure you'll agree.


Yes agreed.

However something can be wrong by omission too.




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