By FCPA Jim McFie, a Fellow of ICPAK
A Core Aspect of Wisdom Is the Understanding Of “Why” Things Are the Way They Are
Wisdom can be defined as the ability to apply knowledge, experience, and good judgment to navigate life’s complexities. It is often associated with insight, discernment, and ethics in decision-making. Solomon, considered to be a wise man, claimed that wisdom’s value goes beyond that of silver, gold, and rubies: wisdom’s rate of return is higher than the greatest investment you could imagine; wisdom offers a “long life” and “riches and honor”; wisdom “is a tree of life” with “pleasant ways” and “paths of peace”. It is a pity that Solomon ignored wisdom later in his life. Solomon lived from approximately 990 BCE (before the common era) or BC (before Christ) to 931 BCE, although his exact birth and death dates are debated by historians. A man who lived 600 years later was the Greek philosopher Aristotle, arguably the greatest intellectual mind of Ancient Greece. who lived from 384 to 322 BCE: Aristotle was a student of Plato and later became the tutor of Alexander the Great. Although Alexander was the king of ancient Macedonia for less than 13 years, he changed the course of history. One of the world’s greatest military generals, he created a vast empire that stretched from Macedonia to Egypt and from Greece to part of India.
When he died in Babylon at just 32 years old, he ruled a territory that spanned three continents and covered nearly 5 million square kilometers: Kenya’s land area is 582,646 square kilometers. Not only was he the king of his native Macedonia, but he was also ruler of the Greeks, the king of Persia and even an Egyptian pharaoh. Alexander became king at the age of 20 after his father Phillip was assassinated in 336 BCE. He inherited his father’s army that had already crushed Macedonia’s rivals on the Greek mainland and was rolling toward Persia. Alexander, with his army of 50,000 men defeated king Darius of Persia, with an army of 2,5 million, twice, in 333 BCE and again in 331 BCE. After his second defeat at Gaugamela, Darius fled east. Alexander pursued him, but Darius’s own cousin and provincial governor of Bactria, Bessus, betrayed and assassinated him before Alexander could reach him. Alexander later gave Darius a royal burial and had Bessus executed. Alexander founded more than 70 cities during his eight-year 17,700-kilometer march throughout the Middle and Near East, but none compared to the grandeur that was Alexandria in Egypt. Although Alexander chose the spot for the coastal city that bore his name, he did not design it nor live long enough to see it flourish. After Alexander’s death, the Macedonian Empire was chopped into three and ruled by each of his generals. Egypt fell under the control of Ptolemy and became known as the Ptolemaic Dynasty. The Ptolemies spoke Macedonian Greek and filled Alexandria with Greek-style public buildings, including the famous library, which once held an estimated 700,000 scrolls, the greatest repository of knowledge in the ancient world. The brilliant Greek mathematicians Euclid and Eratosthenes called Alexandria home, and the Ptolemaic navy commanded a huge fleet that pushed Alexandria’s discoveries out into the wider world. When Alexander died suddenly in Babylon from a fever at just 32 years old, the Ptolemies intercepted his funeral procession on the way back to Macedonia and built a glass coffin in Alexandria where subjects could pay tribute to Alexander’s mummy for centuries.
But back to Aristotle. Aristotle distinguished two main forms of wisdom: the first is theoretical wisdom (Sophia in Greek), which is a deep, scientific knowledge combined with an intuitive reason about the most fundamental and eternal truths in nature. It is the highest form of intellectual virtue, dealing with abstract and metaphysical truths rather than immediate practical matters. The second form of wisdom is practical wisdom (Phronesis), which is the ability to deliberate well and make sound decisions in practical matters and human affairs. It is the virtue of knowing how to achieve a given end and choosing the right means to do so. Both theoretical and practical wisdom form the complete picture of human flourishing. Wisdom allows one to understand the fundamental causes of things and is pursued for its own sake.
A core aspect of wisdom is the understanding of “why” things are the way they are. It is about knowing the principles and causes behind phenomena. FCPA Sammy Onyango, a former senior partner in the Nairobi office of Deloitte and Touche, like Aristotle, points out that theoretical wisdom is a free pursuit, not sought for any other purpose than the acquisition of wisdom itself. Sammy states that if I give you Kes 1,000, I am poorer by Kes 1,000 and you are better off by Kes 1,000. But if I give you an explanation so that you learn and understand something you did not previously know, both of us are better off – you know something that you did not know previously, and I know it better because my revealing it to you has made it clearer in my mind. A PhD is meant to be a contribution to human knowledge. I believe the PhD I earned is false because my study did not make a contribution to knowledge. But the PhD that an American, Stephen Meyer, earned at the University of Cambridge, England, is genuine. His PhD is in the History and Philosophy of Science, and his dissertation was titled “Of Clues and Causes: A Methodological Interpretation of Origin-of-Life Research”. He earned this doctorate in 1991 after obtaining an M. Phil. from Cambridge in 1987, studying the methods and practices of the historical sciences. His most famous videos are entitled “By Design: Behe, Lennox, and Meyer on the Evidence for a Creator” at https://www.youtube.com/watch?v=rXexaVsvhCM watched by more than 3.1 million people, “Big Bang just disproven?! Joe Rogan & Stephen C. Meyer” at https://www.youtube.com/watch?v=8zMGnwszxgY, watched by more than 2.4 million people and “Stephen Meyer on Intelligent Design and The Return of the God Hypothesis” at https://www.youtube.com/watch?v=z_8PPO-cAlA&t=453s watched by more than 2 million people.
But what is the connection between wisdom and the accountant? Wisdom in accounting involves using accumulated experience, critical thinking, and sound judgment to interpret financial data, understand its broader context, and provide actionable insights that drive strategic, ethical decisions for stakeholders. It transforms raw financial information into strategic advantage by combining technical expertise with a deep understanding of business objectives, risk management, and ethical considerations. Wisdom allows accountants to become trusted advisors, contributing to organizational success through informed guidance and effective collaboration across departments. In strategic planning and forecasting, wisdom enables accountants to move beyond simple number-crunching to provide strategic guidance by connecting financial data to overarching business goals and market trends.
In risk management, accountants can use their wisdom to assess and manage financial risks by applying their knowledge of complex situations and understanding potential consequences. In ethical decision-making, wisdom involves strong ethical sensibility, ensuring that accountants uphold integrity and make sound choices even under pressure, which is crucial for maintaining trust and credibility. In turning data into insights, the wise accountant understands the value of financial data and can transform it into consumable information and actionable insights, helping businesses make higher-level strategic decisions. In collaboration and communication, the accountant can combine financial and non-financial data and use wisdom to communicate findings in simple terms and connect them to business decisions, fostering collaboration across departments. Even in technology integration, wisdom guides the adoption of new technologies, such as AI and data analytics, to streamline operations, enhance decision-making, and empower accountants to focus on more strategic, value-added tasks. In leadership, accountants leverage wisdom to become reliable advisors and strategic partners, providing guidance that goes beyond the numbers to influence business strategy and outcomes. And finally, in investment decision-making, by understanding concepts like the time value of money and risk assessment, wisdom helps accountants make informed and smart investment decisions.
Wisdom, in both its forms, is essential for human happiness and flourishing. Acting in accordance with wisdom is a path to a virtuous life. And how can one develop wisdom? Practical wisdom is gained through experience, learning, reflection, and critical dialogue. To develop wisdom, one has to reason with logic, impartiality, integrity and choose the most appropriate action after deep analysis and reflection for a given situation. While the accountant with only experience may know how to do something, and the accountant with only theoretical knowledge may know why, true wisdom requires both – understanding the principles and the ability to apply them effectively.
The International Code of Ethics for Professional Accountants, published by the International Ethics Standards Board for Accountants (IESBA), sets out the fundamental principles, values, and standards of ethical conduct that accountants must uphold. It applies to both professional accountants in public practice (auditors, consultants, tax advisors, etc.) and professional accountants in business (those working in companies, government, academia, or other organizations). Accountants must comply with five fundamental principles: (1) Integrity – Be honest and straightforward in all professional and business relationships. (2) Objectivity – Avoid bias, conflict of interest, or undue influence of others that could override professional judgment. (3) Professional competence and due care – Maintain professional knowledge and skill to ensure competent service, and act diligently in accordance with professional standards. (4) Confidentiality – Respect the confidentiality of information acquired through professional and business relationships and do not disclose it without proper authority, unless there is a legal or professional duty to do so. (5) Professional behavior – Comply with relevant laws and regulations and avoid any conduct that discredits the profession. Accountants must identify threats to compliance with the fundamental principles (e.g., self-interest, self-review, advocacy, familiarity, intimidation), evaluate the significance of those threats, apply safeguards (if available) to eliminate the threats or reduce them to an acceptable level.
If threats cannot be eliminated or reduced to an acceptable level, the accountant must decline or end the engagement.
Clearly, every accountant must increase her/his wisdom.
The writer is a Fellow of ICPAK
