REVIEW PAPER
RECEIVED: MAY 2015
REVISED: JULY 2015
ACCEPTED: JULY 2015
DOI: 10.1515/ngoe-2015-0016 UDK: 657.1:338
JEL: M40, M41, M48
The Role of Accounting in a Society: Only a techn(olog)ical solution for the problem of economic measurement or also a tool of social ideology?
Robert Horvat
University of Maribor, Faculty of Economics and Business, Slovenia robert.horvat@um.si
Bojana Korošec
University of Maribor, Faculty of Economics and Business, Slovenia bojana.korosec@um.si
Abstract
The contribution juxtaposes the traditional neutralistic view on the role of accounting in a society as an activity of independent and unbiased measurement and presentation of real economic phenomena with the extended view on accounting as a socio-political practice and ideology. It also shows how the latter view impacts the understanding of the role of accounting and its reactions in light of the recent global financial crisis.
Keywords: accounting, auditing, social practice
1 Introduction
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The onset of the latest global financial and economic crisis has promoted the formation of a number of critical views on accounting together with the appeals for thorough changes. These views and appeals have come not only from the government representatives of the strongest world economies (see, for example, Zhang & Andrew 2014) and world-renowned economists (see, for example, Krugman, 2009), but also from within the accountancy profession itself. Both pressures for changes of individual accounting solutions and questions regarding the (co)responsibility of the profession for the very emergence of the crisis have arisen, particularly regarding the roles of fair value accounting, auditing, off-balance sheet financing, and accounting regulation (see, for example, Arnold, 2009; Cooper, 2015; Laux & Leuz, 2009; Magnan, 2009; Sikka, 2009). In addition, the confidence in the competence of accounting standard setters worldwide has been seriously undermined (Walker, 2010).
The profession has responded to critics and pressures triggered by the crisis with changes directed mainly toward greater reporting transparency, better operation-alization of existing solutions (e.g., regarding fair value measurements), and the strengthening of the harmonization processes for the internationally most influential conceptual accounting solutions (see, for example, Arnold, 2012; Cooper, 2015; Henry & Holzmann, 2009; Mala & Chand, 2012; Nolke, 2009; Power, 2010). The fundamental question of our contribution related to these issues is how
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Robert Horvat, Bojana Korošec: The Role of Accounting in a Society:
Only a techn(olog)ical solution for the problem of economic measurement or also a tool of social ideology?
to understand the role of accounting in the context of this crisis and its response to it. The easiest way would probably be to simply reject the reproaches against accounting in relation to the latest crisis by concluding that "it merely played the role of the proverbial messenger that is now being shot" (Turner, 2008, and Vernon, 2008, as cited in Laux & Leuz, 2009, p. 826). However, this is only one of many possible views based on the premise of accounting as an independent and unbiased observer and reporter of economic reality. Apart from this view, a number of other, alternative views based on much broader definitions/understanding of accounting as a social and institutional practice exist. One of them sees accounting as an active social agent in terms of politics and ideology (see, for example, Burchell, Clubb, Hopwood, Hughes, & Nahapiet, 1980; Cooper & Sherer, 1984; Dillard, 1991; Francis, 1990; Gomes, 2008; Tinker, 1980; Walters, 2004). From this perspective, the perception of the role of accounting in the crisis may be quite different. The aim of this paper is, therefore, to juxtapose traditional representative realism's views on accounting with the alternative socio-political views and, thus, to broaden the understanding of its role and actions in relation to the recent global financial and economic crisis.
2 Role and Importance of Accounting in a Society: Traditional views
According to the accounting profession and the widespread and prevalent definitions, accounting is understood primarily as an unbiased observer and the objective reproducer of some independent economic reality that is important to its users (Solomons, 1991). This is an explicitly technical-mechanical view that understands and defines accounting as a mere techn(olog)ical solution (accounting as method/ methodology, accounting as technique/technology, etc.) for the techn(olog)ical problem of measurement and control of business operations (Gomes, 2008). It is thus presented as a fundamental factor that provides rational and independent market participants with the economic information needed for their decision making, and, consequently, plays a decisive role in efficient functioning of markets by directing them toward their optimum balance (i.e., balance in the case of perfect information) (Arnold, 2009). In addition, the roles of confirming or providing assurances about the "true and fair view" of market participants' financial data and of the provision of data and information for the needs of national accounts are emphasized (see, for example, Laux & Leuz, 2009; Mala & Chand, 2012). Within the management accounting framework, the support for management in business operations analysis, business planning, and budgeting as well as in the preparation of business decisions in times of uncertainty are highlighted (see, for
example, Anthony & Govindarajan, 2006). Of course, the list of potential uses of accounting is long, but the stated ones here present the core of what we usually think of when we talk about accounting.
Accounting theory and accounting practice as reflections and applications of a certain (predominant) economic thought (see, for example, Klamer & McCloskey, 1992) are thus defined mainly as neoclassical and as based on marginalist theory, highlighting their classical political and economic foundations and the nature/status as an economic science. The economic explanation of an accounting phenomenon is thus the only correct one and, consequently, accounting is perceived primarily as an economic decision-making model. In the words of Dillard (1991, p. 12) "[t]he functionalist paradigm is the dominant perspective for looking at accounting, as well as the dominant one in social science. The language in which we think about, and communicate, accounting is that of functionalism" (see also Napier, 2006, pp. 451-452). The ideology of abstract, non-contingent, context-free, and value-free variables is the primary focus of this positivistic research tradition (see, for example, Parker 1999, p. 17). Accounting is thus perceived as merely the task of techn(olog)ical transformation of some independent, objective economic reality into accounting data and information. The fundamental ontological assumption of the prevailing conceptual frameworks of financial accounting is therefore "that the relationship between financial accounting and economic reality is unidirectional, reflecting or faithfully reproducing relationship: economic reality exists objectively, intersubjectively, concretely and independently of financial accounting practices; financial accounting reflects, mirrors, represents, or measures this pre-existing reality" (Hines, 1991, pp. 315-316).
In essence, we deal with the neutralist perception of accounting, which can be ontologically best defined also as realism/objectivism (regarding both the nature of the world that accounting is to present and the nature or status of accounting itself). Within this framework, accounting is predominantly presented and understood as a mathematical model (variables, relations between variables, etc.) and a methodology for the measurement and analysis of independent economic reality, while any other impacts of accounting are not taken into consideration. From this perspective, the reaction of the profession to the criticisms of accounting during the financial crisis as "it merely played the role of the proverbial messenger that is now being shot" (Turner, 2008, and Vernon, 2008, as cited in Laux & Leuz, 2009, p. 826) is totally logical and understandable.
Furthermore, if we consider that the societal orientation of the functionalist view is a status quo preservation, presuming that the momentum of society is moving toward
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equilibrium and conflict is viewed as a temporary local disruption (Dillard, 1991), we can understand how accounting grounded in a functionalist paradigm reacts in times of crisis. Indeed, it reacts by mere touch-ups within the existing conceptual solutions in order to make them function better (Cooper, 2015). A good illustration of this is the concept of fair value measurement. Although the credibility of the efficient market theory as the foundation of a substantial part of accounting theory (including the fair value measurement) has been shaken in the latest financial crisis (see, for example, McSweeney, 2009), it still remains one of the key premises on which the proposals for changes and the reactions of accounting professionals to these changes are founded (Arnold, 2009; Cooper, 2015). Regarding the institutional accounting solutions, the concept of fair value has not only been retained, but also actually been strengthened with more detailed specifications of its determination and measurement (see IASB, 2011; Laux & Leuz, 2009; Mala & Chand, 2012). A higher level of transparency and more detailed rules of measurement would help establish the desired social balance. In times of crisis, mainstream accounting, which is based on this perception, can merely—as expressed nicely by Arnold (2009, p. 805)—"cling to the disfunct notion that more transparency will somehow revive confidence in financial markets and enable them to function efficiently once again."
An in-depth social critique within such understanding of accounting is extremely difficult to make because this view makes it impossible to define accounting as having any (autonomous) stakeholder interest given that it is perceived as only a technical solution for a technical problem. The mistakes or irregularities in the implementation (e.g., accounting fraud, negligence) are the only areas that can be subject to criticism. Thus, there is very little room for any deeper social discourse. The dimensions that can most likely carry the biggest social potential of accounting are not identified. They might be revealed only by a fundamentally different and broader view on accounting as a social and institutional practice, particularly a view that perceives accounting as a political practice and ideology.
3 Accounting as Political Practice and Ideology
Since the late 1970s, alternative views on accounting have emerged in accounting research, perceiving accounting not as a mere technical solution for a technical problem, but rather as a cultural phenomenon, a product of social relationships, frictions and interests, and simultaneously as an active participant in their creation. Accounting is thus regarded as a social and institutional practice (Miller, 1994, and Hopwood, 1992, in Potter, 2005).
Among the metaphors used in the discussions of accounting as a social practice, we emphasize those that describe accounting as social construction (Hines, 1988), history (Morgan, 1988), economics (Klamer & McKloskey 1992; Morgan, 1988), politics (Burchell et al., 1980; Cooper & Shere, 1984; Francis, 1990; Lehman & Tinker, 1987), ideology and domination (Tinker et al., 1982, as cited in Bryer, 2012; Cooper & Sherer, 1984; Dillard, 1991; Francis, 1990; Walters, 2004), legitimization (Tinker et al., 1982, as cited in Arnold, 2009; Richardson, 1987), or partisan (Arnold, 2009; Neu & Taylor, 1996; Tinker, 1991). These approaches to the accounting research are all characterized by a more critical, often reformist thinking about its role, significance, and functioning in society (see, for example, critical accounting or radical accounting).1 They are based on the critical theory tradition,2 which serves as the foundation of and driving force behind their thinking.
One of the most important findings emerging from this extension of the understanding of accounting to the social and institutional practice is undoubtedly the one that perceives accounting as essentially a political practice (Arnold, 2009). As Cooper and Sherer (1984, p. 208) asserted,
any accounting contains a representation of a specific social and political context. Not only is accounting policy essentially political in that it derives from the political struggle in a society as a whole but also the outcomes of accounting policy are essentially political in that they operate for the benefit of some groups in society and to the detriment of others.
Consequently, one of the main themes in the socio-critical accounting research is the research of political and economic foundations of modern accounting and the revelation and criticism of accounting as a type of political and economic thought itself (see, for example, Laughlin, 1999). When we consider accounting as a political and economic thought, we primarily consider its fundamental socio-political and economic stance as depicted in the reasoning and the activities of its main protagonists regarding the issues related to the (optimum) social order, the fairness of relations, and distribution within society (see, for example, Sikka, 2012), the issues related to (optimum) social development paradigms, the fundamental economic purposes, goals and factors, issues of ethics (Dillard, 1991), and the attitude
1	For a detailed definition of critical (previously terms as "radical") accounting, see Laughlin (1999).
2	The school of thought founded in the idealism of Kant and Hegel. In terms of accounting, it is well depicted in the following quotation: "A critique indicated from whence accounting is coming from and therefore provides an opportunity to break the cycle of the dominant social system producing accounting, and accounting in turn reproducing and reifying the dominant social system" (Dillard, 1991, p. 9).
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Only a techn(olog)ical solution for the problem of economic measurement or also a tool of social ideology?
toward the environment and social responsibility in general (see, for example, Gray, 2006) as well as issues of power and government (see Cooper & Sherer, 1984; Tinker, 1980) that permeate through all of the above. Critical theoreticians and other researchers of accounting who are inspired by critical theory (Arnold, 2009; Baker, 2005; Bryer, 2012; Burchell, Clubb, & Hopwood, 1985; Burchell et al., 1980; Collison, 2003; Cooper, 2015; Cooper & Sherer, 1984; Dillard, 1991; Funnell, 2007; Hopwood, 1990; Rudkin, 2007; Sikka, 2001; 2012; Tinker, 1980; Zhang & Andrew, 2014)3 explain accounting's political economy primarily as the prevailing value system of the discipline, including its fundamental cultural and ideological foundation, identity, and motivation; through this, a basic social as well as technological and institutional background is necessary for a complete understanding and explanation of accounting as a social and sociological phenomenon. As Dillard (1991, p. 9) put it: Accounting is a technology [...] that is not ideologically sterile [...]. For accounting, in spite of its apparent objectivity, there are no 'physical absolutes' upon which to base, and verify, the technology. The framework is a social construction. The technology is framed by ideology. The interpretation of events, and even the specification of what constitutes an event, are functions of the socio-political point of view.
Consequently, we can understand accounting as a partisan practice, implicated in distributive transfers of wealth between social classes (Tinker, 1991), shaping and being shaped by power relations within the political economy in which it operates (Arnold, 2009). By connecting accounting to its broader social context, we can thus see that accounting is deeply ideological (Baker, 2005; Dillard, 1991; Zhang & Andrew, 2014). Or, in the words of Tinker (2012), reviving the critiques of marginalism from the 1990s, "accounting results are decided, not by matters of efficiency, but political and social aspects" (p. 126). Moreover, the rhetoric of the accounting profession itself with regard to their service to the public interest "reveals a type of self-interested ideology, that is principally concerned with maintaining the economic interests of the public accounting profession" (Baker, 2005, pp. 695-696).
The political-economic view of accounting therefore strives primarily to understand and evaluate the functions of accounting within the context of the economic, social, and political environment in which it operates (Cooper & Sherer, 1984) and is influenced directly or indirectly by Marxist thought (Arnold, 2009). Therefore, to better understand the significance, role, and effects of accounting in a society as well as establish the reasons for them being the way they are, we should first understand the very nature and origin
3 This list is by no means comprehensive.
of core methodological solutions, theory, and policy of accounting. In relation to this, Funell (2007, p. 23) asserted that accounting actually "has no virtue outside that which the social, legal and economic frameworks in which it operates allows it... [and that the] relevance of accounting to a society depends upon the aims of that society". Thus, if society is organized around the principles of competition, the sanctity of private property, and self-interest, then the purposes accounting serves will be the same (Funnell, 2007). We do not need to search far to establish that this is actually true. Equations such as capital equals assets minus liabilities, profit and loss equal revenue minus expenses, and profit and loss are added to capital (unless the owners have previously divided it among themselves) are examples of basic mathematics of conventional accounting. Profit maximization, shareholder value maximization, capital as a primary factor of production, and market as the only real and fair measure of value are fundamental economic postulates/ metaphors and the prevailing ideological mantra. There is just a small step from here to the realization that accounting as prevailingly being taught and practiced is actually a capitalist idea/ideology. As Tinker et al. (1982, p. 173, as cited in Rudkin, 2007, p. 13) stated,
The very accounting calculus, assets minus liabilities equals owners' equity [thus] sets about the privileging of capital by accounting and has implied and reinforces [a particular] ordering of society. The accounting equation is expressed in terms of equity as opposed to for example in terms of creditors or labour. It is argued that accounting is exposed as an ideology that fosters capitalism and is complicit in wider social struggles.
Similarly, Collison (2003, p. 861) wrote:
Attention to the interests of shareholders above all other groups is implicit in much of what is taught. [...] The very construction of a profit and loss account [...] is a continual, and usually unstated reminder that the interests of only one group of stakeholders should be maximised. Indeed, it may be very difficult [...] to even conceive of another way in which affairs could be ordered [...] even at the algebraic level, let alone the moral.
Concerning this issue, Cooper (2015, p. 17) concluded that "[a]ccounting is an integral part of the symbolic universe of neo-liberalism [and] accounting technologies animate and inform individual short-term wealth maximising strategies which have served to enrich the few at the expense of the majority." Furthermore, accountancy firms have even been subjected to criticism that, through the sale of tax avoidance schemes, they have facilitated a skewed distribution of income and wealth (Sikka, 2012).
Capitalism is thus instituted as the political and economic foundation of traditional accounting. It is a dominant theoretical
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and ideological influence that decisively determines current accounting thought and practice and, via the latter two, also prevailing economic understanding, thinking, and behavior of people. Accounting is, thus, seen as essentially political (Arnold, 2009) and the language of capitalist accounting as a means of providing the foundation of capitalist ideology (Bryer, 2012). In this respect, accounting is presented as both constructing the society and as being constructed by society at the same time, which "aids to stabilizing the social structures from which it emanated" (Dillard, 1991, p. 9) and "embraces a [capitalist] moral structure in that it embeds a privileging of capital over other interests such as labour or credit in accounting measurement" (Rudkin, 2007, p. 17)). The world views embedded within accounting practices prioritize the interests of capital and have little regard for interests of labor or the state (Sikka, 2012), and the accountancy regulatory structures are captured by the international capital and primary function to advance its interests (Sikka, 2001). Moreover, from this perspective, accountancy is not only captured by financial capital that acts as the tool of the ideology of the governing social elites, but also increasingly acts as a strong interest group of capital. The latter is seen in its increasingly commercial orientation (Baker, 2005; Boyce, 2014; Sikka, 2009).
We see that the criticisms of accounting are numerous and unrelenting. Accounting is being attacked mainly as the tool/instrument/technology of capitalist hegemony and as the means for the dissemination of the principles of capitalism. It is seen as "a symbolic, cultural and hegemonic force, in struggles over the distribution of social income" (Lehman & Tinker, 1987, p. 503), as "an ideological [...] apparatus, helping the hegemony of the capitalist State to reproduce [its] political structure" (Gallhofer and Haslam, 1991, as cited in Funnell, 2004, p. 60), or as "an ideology, a way of rationalising or explaining away the appropriation of the production of one class by members of another [which makes it] an intellectual and pragmatic tool in social domination" (Tinker, 1985, as cited in Dillard, 1991, p. 21). It is therefore becoming increasingly clear that financial capital is a dominant force and that it is given far from negligent support by accounting in its dominance. This is especially apparent in light of the criticisms that the adaptation of global accounting regulations has in part lubricated and legitimized the movement toward neoliberalism and the financialization of the global economy (see, for example, Biondi & Suzuki, 2007; Boyer, 2007; Hopwood, 2009; McSweeney, 2009; Roberts & Jones, 2009, Zhang & Andrew, 2014).
A logical question here is where accounting gets this enormous power and influence from. Where does all this faith in its ability to influence social relationships originate from? Furthermore, how can such a simple technological practice play any significant socio-political role at all as the
level of difficulty of its operations rarely surpasses the most basic operations of addition, subtraction, multiplication, division, and maybe a few other ones?
The majority of theoreticians following the tradition of critical theory are convinced that it actually can play such a role. They also point to some possible explanations. For example, Suzuki (2003, p. 74) stated that
what has been understood as the objective representation of [... ] reality may be, in fact, a rhetorical construct of what has been vaguely recognised as the economy. In other words, no reality is actually re-presented with any accuracy, but rather the economy emerges through the act of accounting rhetoric.
Accounting is thus a language! It is a discourse or communication (Burchell et al., 1980; Francis, 1990; Funnell, 2007), and a rhetoric (Walters, 2004). The representation of economic reality can be viewed as a mechanism for enabling economic discourse with respect to these activities and events (Burchell et al., 1980). Although these representations might seem real, they are in essence accounting interpretations/narratives/metaphors as well as a peculiar ideological pedagogy. The language of accounting and its use in everyday economic communication, which are at the heart of the attention from the poststructuralist views on accounting, are therefore a primary dissemination channel of ideology. As Bryer (2012, p. 513) claimed, it is not only the "language of real life that provides symbolic structures for social action, [that is] a language of praxis in business," but also the language as a possibly integrating and distorting ideology (Bryer, 2012). With reference to the calls for greater control, responsibility, efficiency, and effectiveness, such presentations serve as the prevalent accounting social/ economic rhetoric (or political discourse) and the primary source of its social attraction. Thus, assets, liabilities, costs, revenues and expenses, profit and loss, and capital—as real economic and as linguistic variables/metaphors—decisively determine our understanding of economic matters, direct our thinking, and convey to us what is important and what is not, what is right and what is not, what the goals are, and how to measure them. All of these are social constructs in the sense that they are not based on any natural laws or irreversible reasoning/logic; nevertheless, they are an increasingly important element of our daily economic rationalizations and understanding of the world. They are therefore the products of the agreed-upon technologies, methodologies, theories, and mathematics that enable accounting to communicate a set of values, ideals, expected behavior, and what is approved and disapproved (Funnell, 2007) at least to the same degree as they enable it to communicate independent reality. Thus, accounting is "constructing, sustaining and legitimising political and economic arrangements, institutions and ideological themes" (Guthrie & Parker, 1990, 166,
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Only a techn(olog)ical solution for the problem of economic measurement or also a tool of social ideology?
as cited in Funnell, 2007, p. 23). As Macintosh (2009, p. 168) concluded, "accounting language is not a transparent medium but rather is the material used to manufacture accounting 'truths.'" This mechanism is explained in more detail by Walters (2004, p. 163), who stated that:
the exclusivity of a single metaphor by its favoritism and privilege [...] leads to effacement and forgetting of its metaphorical nature and thereby its eventual 'truth' status. Privileged metaphors become frequently used as a consequence of their exclusivity, familiar and unobtrusive as a result of habitual usage, hard and fixed as a consequence of unwitting compulsion, and ultimately, by custom or convention, are accordingly afforded the status of truth concepts.
Accounting is just such a metaphor. Numbers, spreadsheets, equations, and the like give the appearance of exactness and conviction of absolute reality. One can doubt the implementation only, but never the theoretical and methodological principles because they are scientific. The ideological effect of such a metaphor, therefore, is not just in its fundamental communicativeness, but also in the fact that it "forecloses other narratives and value positions" (Neu & Taylor, 1996, p. 437) with its privileged status. "By restricting the language of discussion, social relations are reified and objectified and thus become viewed as an objective and unalterable environment, within which all action takes place" (Dillard, 1991, p. 19). "[P]revalent accountings displace alternative accountings which might transform the consciousness of many social actors and perhaps contribute to a challenging of the capitalist system of power relations" (Gallhofer & Haslam, 1991, p. 492, as cited in Funnell, 2004, p. 60). This completes the circle of economic truth, and accounting is appointed as its principal and exclusive narrator.
What kind of light does this view shed on the role of accounting in the recent global financial crisis? In essence, it points to yet another agreement between capital and accounting. Due to the fact that the recent crisis was intensified by significant amounts of investment in extreme forms of fictitious capital, the accounting profession's adoption of financial economic rationalities has helped animate the form of financialized neo-liberalism that dominated at the time of the crisis (Cooper, 2015). Thus "accounting—when shaped, employed, and analysed in ways which rely on financial market failure denial—reinforced the conditions which created the crisis" (McSweeney, 2009, p. 844) and accounting technologies "have enabled, legitimised, hidden and animated the [speculative] activities of business in general and financial institutions in particular in the run up to and since the crisis" (Cooper, 2015, p. 1). Correspondingly, the convergence project between the conceptual frameworks and standards of the two internationally most important financial reporting authorities (i.e., IASB and US FASB)
should be understood, according to Zhang and Andrew (2014), "through an emphasis on its ideological underpinnings—its capacity to refocus accounting practice towards the needs of speculators in capital markets" (p. 24). In this regard, actually, as in the field of financial capital, nothing much has changed in the field of accounting (Cooper, 2015). Accounting continues to support and legitimize discourses that erode workers' share of national income and wealth and, thus, fuels the economic crisis (Sikka, 2012). The implemented changes merely reinforce the illusion that they can substitute for stronger forms of oversight and constraints on financial speculation (Arnold, 2012). Furthermore, they still continue to contribute to financial instability by providing ideological support for dangerous levels of financial speculation and minimal regulation (Arnold, 2012). Moreover, as discussed by Arnold (2009, p. 808), "seemingly neutral accounting practices facilitated, and continue to facilitate, the massive wealth transfers that mark this extraordinary financial crisis." Institutional accounting could also be seen as being complicit in this crisis (Cooper, 2015). If we consider that accounting regulations of international scope are set by privately funded organizations, the most important players in financialized capitalism, we should not be surprised in this respect. As Cooper (2015, p. 1) explained, "the institutional structures of accounting mean that it is susceptible of being captured by the most powerful in the society." With regard to the recent crisis, Cooper further commented rather resignedly that "institutional structures of accounting standard setting mean that the kind of rules needed to help regulate markets and curtail some of the more dangerous forms of speculation so desperately needed before (and since the crisis) can never be forthcoming" (2015, p. 13).
4 Conclusion
The recent global crisis, in which accounting was faced both with pressure to change and reproaches for being co-responsible for the emergence of the crisis, offers us the opportunity to reflect on the different possibilities of understanding the role of accounting in a society as well as its political and economic foundations. Mainstream accounting and institutional accountancy have responded to the pressures and challenges induced by the crisis from the traditional, functional, and neutralist view on accountings' role in the society (Arnold, 2012; Cooper, 2015; Henry & Holzmann 2009; Mala & Chand, 2012; Nolke, 2009; Power, 2010). This means persisting on the existence and possibility of faithful representation of the independent and objective economic reality, seeing accountants as innocent messengers of the bad news (Magnan, 2009) and accounting merely as a socially neutral technical solution for a technical problem (Laux & Leuz, 2009).
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Broader views on accounting as a social (and institutional) practice stem from the fundamental idea (Hines, 1991) that there is no such thing as an independent and unbiased accounting and that there is no such thing as an independent and objective economic reality. The political and economic view of accounting (Arnold, 2009; Baker, 2005; Bryer, 2012; Burchell et al., 1980; 1985; Collison, 2003; Cooper, 2015; Cooper & Sherer, 1984; Dillard, 1991; Funnell, 2007; Hopwood, 1990; Rudkin, 2007; Sikka, 2001; 2012; Tinker, 1980; Zhang & Andrew, 2014) thus reveals that the background of accounting technology is always ideological and that accounting both reflects prevailing socio-economic relationships and changes alongside them. This view not only reveals current mainstream accounting as the tool/technology of capitalist hegemony and as the means for the dissemination of the principles of capitalism, but also rather critically draws attention to the entrapment of institutional accounting and the accountancy profession in these principles.
The recent global financial crisis did not represent any major shock for (mainstream) accounting. This crisis probably did not change accounting much as accounting merely received minor touch-ups (Arnold, 2009; Cooper, 2015) in the form of further strengthening of auditing, perfecting of the rules of fair value measurement, and strengthening of the idea about the transparency of reporting with the increasingly
harmonized accounting standards. In essence, this was in fact yet another agreement between capital and accounting. Moreover, the interconnectedness of accounting and capital or the integration of international accounting standard setters and accounting firms in the capitalist business model (Baker, 2005; Boyce, 2014; Sikka, 2001; 2009) is probably one of the reasons why the recent financial crisis is not perceived in major accounting circles as the crisis of accounting. In fact, this crisis actually presents an opportunity for accounting. The debates about more control, more regulation, more transparency, and responsibility (Henry & Holzmann, 2009; Mala & Chand, 2012) are namely the language and the business model of the existing institutionalized accounting (see, for example, Power, 1999). In this respect, accounting is more or less just the reflection of the prevailing social climate and relationships and is focused on the maintenance and support of capitalist control over means of production (Dillard, 1991). In other words, the political economy of accounting always belongs to the elites of the prevailing social order (Dillard, 1991; Tinker, 1980; 1991). If and when they change, accounting will undoubtedly follow suit. By spreading the awareness of the role of institutionalized accounting and through self-criticism concerning its entrapment by capital, a critical stance and the activities of the non-mainstream academic accounting sphere could accelerate such processes a bit. But that is another story.
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Robert Horvat, Bojana Korošec: The Role of Accounting in a Society:
Only a techn(olog)ical solution for the problem of economic measurement or also a tool of social ideology?
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Authors
Robert Horvat is a senior lecturer at the Faculty of Economics and Business at the University of Maribor. He received his M.Sc. degree from the Faculty of Economics and Business at the University of Maribor in 2003. His areas of research are accounting, auditing, and ethics in accounting and auditing. His bibliography consists of 32 articles, conference papers, discussion papers, and other scientific and professional contributions. He teaches several courses at the undergraduate level in the areas of financial accounting, cost accounting and managerial accounting.
Bojana Korosec, Ph.D., is an associate professor for accounting and auditing and, since 2005, has been the chair of the Department for Accounting and Auditing at the Faculty of Economics and Business at the University of Maribor. Her research refers in particular to areas in managerial accounting and financial reporting, valuation of economic categories (including intangibles), and behavioral issues in accounting and auditing.
Vloga računovodstva v družbi: Samo tehnična rešitev za problem ekonomskega merjenja ali tudi orodje družbene ideologije?
Izvleček
V prispevku soočamo tradicionalni nevtralistični pogled na vlogo računovodstva v družbi kot na dejavnost neodvisnega in nepristranskega merjenja in prikazovanja realnih ekonomskih pojavov s pogledom nanj kot na družbenopolitično prakso in ideologijo. Pokažemo tudi, kako takšna razširitev pogleda vpliva na razumevanje njegove vloge in njegovih odzivov v luči zadnje globalne finančne krize.
Ključne besede: računovodstvo, revizija, družbena praksa