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A C C O U N T I N G A S R E A L I T Y C O N S T R U C T I O N :
T O W A R D S A N E W E P I S T E M O L O G Y F O R A C C O U N T I N G P R A C T I C E *
GARETH MORGAN Y o r k University, Toronto
Abstract
Accountants often see themselves as objective appraisers of reality, .representing reality "as is". This paper takes a different view, arguing that accountants typically construct reality in limited and one-sided ways. It shows that the idea of objectivity in accounting is largely a myth, and one which stands in the way of interesting future developments in the discipline. The paper develops an alternative perspective on the r~ture of the accounting process, building on insights regarding the interpretive and metaphorical nature of accounting, and arguing that accounting should be approached as a form of "dialogue" through which accountants can construct, "read" and probe situations in a variety of ways.
I ' d like y o u to visualize a n E s c h e r lithograph. P e r h a p s it is H a n d W i t h Reflecting Globe, w h i c h f e a t u r e s E s c h e r l o o k i n g at h i m s e l f i n a crystal ball (Fig. 1). T h e artist has c r e a t e d a n i m a g e o f him- self l o o k i n g at h i m s e l f w h i c h b i n d s t h e v i e w e r i n t o t h e p i c t u r e as if h e o r s h e w e r e a c t u a l l y s t a n d i n g i n E s c h e r ' s shoes.
I n this l i t h o g r a p h t h e artist is m a k i n g a funda- m e n t a l e p i s t e m o l o g i c a l p o i n t . It is that h e as a n artist, a n d w e as e v e r y d a y o b s e r v e r s a n d par- t i c i p a n t s i n life, are a c t i v e p r o d u c e r s o f w h a t w e s e e a n d e x p e r i e n c e . I n a b r o a d sense, all k n o w l - e d g e is a m a t t e r o f p e r s p e c t i v e . J u s t as a n artist m a k e s a l i m i t e d r e p r e s e n t a t i o n o f t h e "reality" c a p t u r e d o n his o r h e r canvas, t h e k n o w l e d g e g e n e r a t e d b y t h e n a t u r a l scientist, b y t h e social scientist, o r b y t h e l a y p e r s o n i n t h e c o u r s e o f e v e r y d a y e x p e r i e n c e , is always a limited, partial k n o w l e d g e . W h i l e this k n o w l e d g e u s u a l l y "says s o m e t h i n g " , it also leaves a g r e a t deal unsaid. A n d w h a t is said o n l y r i n g s t r u e f r o m t h e s t a n d p o i n t o f a l i m i t e d view: j u s t as t h e laws o f p h y s i c s o n l y a p p l y w i t h i n c l e a r l y d e f i n e d p a r a m e t e r s , t
I a m e v o k i n g this i m a g e r y as a basis for t h e ar- g u m e n t that follows, s i n c e I w a n t to focus o n t h e p r o b l e m s faced b y a c c o u n t a n t s i n r e p r e s e n t i n g t h e reality o f t h e s i t u a t i o n s t h e y w i s h to " a c c o u n t for". A c c o u n t a n t s o f t e n s e e t h e m s e l v e s as en- gaged i n a n o b j e c t i v e , value-free, t e c h n i c a l en- terprise, r e p r e s e n t i n g reality "as is". But i n fact, t h e y are s u b j e c t i v e " c o n s t r u c t o r s o f reality": pre- s e n t i n g a n d r e p r e s e n t i n g t h e s i t u a t i o n s i n li- m i t e d a n d o n e - s i d e d ways. T h e y are n o t just t e c h n i c i a n s p r a c t i s i n g a t e c h n i c a l craft. T h e y are p a r t o f a m u c h b r o a d e r p r o c e s s o f r e a l i t y c o n - s t r u c t i o n , p r o d u c i n g partial a n d r a t h e r one- s i d e d v i e w s o f reality, e x a c t l y as a n artist is ob- liged to p r o d u c e a partial v i e w o f t h e r e a l i t y h e o r s h e w i s h e s to r e p r e s e n t .
By a p p r e c i a t i n g a n d e x p l o r i n g this d i m e n s i o n o f t h e a c c o u n t i n g process, a c c o u n t a n t s have a m e a n s o f d e v e l o p i n g a n e w e p i s t e m o l o g y o f ac- c o u n t i n g that will e m p h a s i z e t h e i n t e r p r e t i v e as o p p o s e d to t h e s u p p o s e d l y " o b j e c t i v e " aspects o f t h e d i s c i p l i n e , p e r h a p s i n a w a y that will h e l p b r o a d e n a n d d e e p e n t h e a c c o u n t a n t s ' c o n t r i b u - t i o n s to e c o n o m i c a n d social life.
*Based on an invited address to the Tenth Congress of the European Accounting Association, London, 25 March 1987. I am indebted to Start Davis and Graham Morgan for their help in some of the research leading to this paper.
I have explored this theme at great length in Morgan (1983), showing how different approaches to social research capture inherently limited aspects of the situations to which they are applied.
4 7 8 GARETH MORGAN
Fig. 1. Hand with reflecting globe: self-portrait by M. C. Eschcr (lithograph, 1935).
Reprinted by permission of Haags Gemeentemuseum, The Hague, courtesy of Vopal Gallery, San Francisco and New York City, and by permis- sion of the heirs ofM. C. Escher, c/o Cordon Arts-Baarn, Holland.
THE METAPHORICAL NATURE O F K N O W - LEDGE
If o n e w i s h e s t o g e t a f r e s h v i e w o f o n e ' s dis- c i p l i n e , it is o f t e n a g o o d i d e a to t r y a n d s e e it f r o m t h e o u t s i d e . So l e t ' s l o o k b e y o n d o u r im-
Elsewhere (Morgan, 1980, 1986), I have
suggested that organization theory is a
metaphorical enterprise, and that its history is really a story o f broadening metaphorical de- velopment. For example, early theories of or- ganization built on the image that organizations are machines. Interest focussed on understand- ing relations b e t w e e n structure, technology, goals and efficiency, o n the premise that organi- zations can be rationally designed as structures o f clearly defined parts, coordinated and con- trolled in pursuit of pre-specified goals. This created an internally oriented view of organiza- tions that made efficient organization a question of g o o d bureaucratic design. The theory had strengths, but also limitations requiring n e w metaphorical perspectives to put them aright. Hence, mechanistic theorizing was quickly supplemented by ideas generated through or- ganic imagery focussing attention on the flexible and adaptive properties of organisms. By de- veloping the idea that organizations are m o r e like organisms than machines, theorists began to emphasize that an organization's "environment" was all important, and that the main task facing organizations was that of survival. Like or- ganisms, organizations b e c a m e viewed as o p e n systems with sets of "needs" that must be satis- fied. Looking towards the external environment, it was observed that just as polar bears fare well in cold climates, and camels in deserts, different social, technical and e c o n o m i c environments favour different forms of organization. A contin- g e n c y theory of organization developed, em- phasizing the importance of achieving a g o o d fit b e t w e e n organization and environment, noting that while bureaucracies are able to survive quite well in stable environments, u n d e r condi- tions of turbulence m o r e organic forms are often m o r e appropriate. In the process, modified forms of Darwinism began to replace the prin- ciples o f engineering and mechanism as the primary source of inspiration for ideas o n organi- zation and management.
Since the late 1970s other metaphors have also exerted an increasing influence on organiza- tion theory. For example, m u c h c r e d e n c e is n o w given to the idea that organizations are cultures:
mini-societies with their o w n systems of ideol- ogy, myth, ritual, c e r e m o n y and other forms o f
symbolism. Under the influence of this
metaphor, corporate culture is being viewed as the key factor influencing the success o f organi- zations, and managers, particularly those at a senior level, are e n c o u r a g e d to develop skills in shaping the core values and beliefs that are to guide organizational practice. As witnessed by
the success of books like In Search o f Excellence
(Peters & Waterman, 1982), the m e t a p h o r has captured the thinking o f many practising mana- gers in a major w a y and, at least in North America, is providing the basis for a n e w orthodoxy.
Other metaphors have also been explored to create important insights on the politics of or- ganization, on the cybernetic properties o f deci- sion-making, on the ugly features associated with exploitation and domination, and so on.
This short review is intended to be no m o r e than illustrative. The point is that o u r under- standing of organization is based on the use of metaphors which generate important insights that always have clearly defined limitations. Dif- ferent metaphors grasp and highlight different aspects o f organization but, in the process, tend to hide or distort others. A full understanding of organization thus requires that w e find ways of integrating the many and often paradoxical in- sights that o u r theories and explanations create.
480 GARETH MORGAN
t o c r i t i q u e o r t o r e v o l u t i o n i z e e x i s t i n g s o c i a l re- lations, w e a r e m o r e l i k e l y t o f a v o u r a n d a d o p t ~?et a n o t h e r . Like artists, w e face t h e p r o b l e m t h a t w h a t e v e r p e r s p e c t i v e w e c h o o s e t o a d o p t , o t h e r s a r e s q u e e z e d f r o m view.
A n u n d e r s t a n d i n g o f t h e m e t a p h o r i c a l n a t u r e o f k n o w l e d g e t h u s l e a d s t o a b a s i c p r o b l e m o f e p i s t e m o l o g y . It l e a d s u s t o r e c o g n i z e t h a t h u m a n a g e n c y a n d t h e l i m i t a t i o n s i m p o s e d b y p e r s p e c t i v e a r e f u n d a m e n t a l in t h e g e n e r a t i o n o f k n o w l e d g e , a n d t h a t o u r k n o w l e d g e a l w a y s falls s h o r t in r e p r e s e n t i n g t h e full t e x t u r e o f reality. O u r l o t as h u m a n b e i n g s d e a l i n g w i t h a c o m p l e x , m u l t i - d i m e n s i o n a l a n d p a r a d o x i c a l w o r l d , is t h a t o u r k n o w l e d g e c a n d o n o m o r e t h a n c r e a t e a w e a k a n d r a t h e r u n i - d i m e n s i o n a l r e p r e s e n t a t i o n o f t h a t w o r l d . T h o u g h a c h i e v e m e n t s in t e c h n o l - o g y m a y c o n v i n c e u s t h a t w e a r e m u c h m o r e k n o w l e d g e a b l e t h a n w e a c t u a l l y a r e - - s i n c e t h e a b i l i t y t o m a n i p u l a t e w i t h p r e d i c t a b l e r e s u l t s is n o t a t r u e m e a s u r e o f k n o w l e d g e o r u n d e r s t a n d - i n g - - o u r k n o w l e d g e a l w a y s falls s h o r t o f t h e i d e a l s t a t e w h i c h p h i l o s o p h e r s f r o m P l a t o t o H e g e l h a v e e n c o u r a g e d us t o a c h i e v e .
A C C O U N T I N G AS A METAPHORICAL ENTERPRISE
It m a y s e e m t h a t o u r d i s c u s s i o n has b r o u g h t us a l o n g w a y f r o m t h e t o p i c o f a c c o u n t i n g . But w e a r e r i g h t at its h e a r t b e c a u s e a c c o u n t i n g is ulti- m a t e l y c o n c e r n e d w i t h t h e p r o b l e m s o f r e p - r e s e n t a t i o n a n d " a c c o u n t i n g for". Like organiza- t i o n t h e o r i s t s , a c c o u n t a n t s u l t i m a t e l y h a v e t o r e p r e s e n t c o m p l e x m u l t i - d i m e n s i o n a l r e a l i t i e s t h r o u g h m e t a p h o r i c a l c o n s t r u c t s t h a t a r e a l w a y s l i m i t e d a n d i n c o m p l e t e .
A c c o u n t i n g p r a c t i c e is f r a m e d b y an o v e r - a r c h i n g m e t a p h o r e n c o u r a g i n g a n u m e r i c a l v i e w o f reality. J u s t as e a r l y o r g a n i z a t i o n t h e o r i s t s at- t e m p t e d t o r e p r e s e n t o r g a n i z a t i o n s t h r o u g h
b u r e a u c r a t i c p r i n c i p l e s d e r i v i n g f r o m t h e i m a g e t h a t o r g a n i z a t i o n s a r e m a c h i n e s , a c c o u n t a n t s t r y to r e p r e s e n t o r g a n i z a t i o n s a n d t h e i r a c t i v i t i e s in t e r m s o f n u m b e r s . T h i s is m e t a p h o r i c a l . A n d like all u s e o f m e t a p h o r , it gives b u t a p a r t i a l a n d in- c o m p l e t e r e p r e s e n t a t i o n o f t h e r e a l i t y t o w h i c h t h e n u m b e r s relate. T h e n u m e r i c a l v i e w high- l i g h t s t h o s e a s p e c t s o f o r g a n i z a t i o n a l r e a l i t y t h a t a r e q u a n t i f i a b l e a n d b u i l t i n t o t h e a c c o u n t i n g f r a m e w o r k (e.g. f l o w s o f costs, r e v e n u e s a n d o t h e r v a l u e s ) , b u t i g n o r e s t h o s e a s p e c t s o f or- g a n i z a t i o n a l r e a l i t y t h a t a r e n o t q u a n t i f i a b l e in this way. J u s t as w e m i g h t a t t e m p t t o r a t e t h e q u a l i t y o f last n i g h t ' s d i n n e r o n a s c a l e o f 1 - 1 0 , a n d in g i v i n g it "a 9" c a p t u r e t h a t it w a s i n d e e d a v e r y g o o d meal, t h e a c c o u n t a n t ' s n u m e r i c a l f o r m o f r e p r e s e n t a t i o n p r o v i d e s a v e r y "thin" a n d l i m i t e d c h a r a c t e r i z a t i o n . It l e a v e s m u c h o f t h e q u a l i t y a n d o v e r - a l l e x p e r i e n c e o f t h e m e a l o u t o f a c c o u n t . T h e m e t a p h o r "it w a s a 9" re- m a i n s s i l e n t o n so m a n y things.
W e a r e a d d r e s s i n g h e r e o n e o f t h e m a j o r p r o b - l e m s in a c c o u n t i n g p r a c t i c e . A c c o u n t a n t s h a v e l o n g r e c o g n i z e d t h e l i m i t a t i o n s o f n u m e r i c a l m o d e s o f r e p r e s e n t a t i o n , b u t h a v e b e e n h a m s t r u n g in t h e i r a t t e m p t s to o v e r c o m e t h e m b e c a u s e t h e n u m e r i c a l v i e w has b e e n e q u a t e d w i t h an objective view. T h e i d e a t h a t a c c o u n - t a n t s r e p r e s e n t r e a l i t y "as is" t h r o u g h t h e m e a n s o f n u m b e r s t h a t are o b j e c t i v e a n d v a l u e free, has c l o u d e d t h e m u c h m o r e i m p o r t a n t i n s i g h t t h a t a c c o u n t a n t s a r e a l w a y s e n g a g e d in interpreting a c o m p l e x reality, partially, a n d in a w a y t h a t is h e a v i l y w e i g h t e d in f a v o u r o f w h a t t h e a c c o u n - t a n t is able t o m e a s u r e a n d chooses t o m e a s u r e , t h r o u g h t h e p a r t i c u l a r s c h e m e s o f a c c o u n t i n g t o b e a d o p t e d . 2
But t h a t is b y n o m e a n s t h e e n d o f t h e m a t t e r , b e c a u s e w i t h i n t h e f r a m e w o r k o f a n u m e r i c a l v i e w o f reality, a c c o u n t i n g t h e o r y a n d a c c o u n t - ing p r a c t i c e h a v e b e e n s h a p e d b y o t h e r m e t a p h o r s w h i c h offer c o m p e t i n g v i e w s as to
h o w n u m e r i c a l r e a l i t y s h o u l d b e r e p r e s e n t e d a n d u n d e r s t o o d ( D a v i s e t a L , 1 9 8 2 ) . A c c o u n t i n g as a d i s c i p l i n e h a s c o n s t r u c t e d a n d c h a n g e d i t s i d e n t i t y o v e r t h e y e a r s , i n a m a n n e r t h a t p r o v i d e s a c l o s e p a r a l l e l w i t h t h a t f o u n d i n o r g a n i z a t i o n t h e o r y . J u s t as o r g a n i z a t i o n t h e o r y h a s b e e n d e - v e l o p e d a n d e n r i c h e d b y v i e w i n g o r g a n i z a t i o n s as m a c h i n e s , o r g a n i s m s , c y b e r n e t i c b r a i n s , c u l - t u r e s , p o l i t i c a l s y s t e m s , i n s t r u m e n t s o f d o m i n a - t i o n , a n d s o o n , a c c o u n t i n g t h e o r y h a s b e e n s h a p e d a n d f o r m e d b y m e t a p h o r i c a l i n t e r p r e t a - t i o n s t h a t e n c o u r a g e a c c o u n t a n t s t o c o n s t r u c t a n d i n t e r p r e t t h e s i g n i f i c a n c e a n d m e r i t o f d i f f e r e n t a c c o u n t i n g s c h e m e s f r o m all k i n d s o f v a n t a g e p o i n t s .
F o r e x a m p l e , h e r e is a l i s t o f s o m e o f t h e m a j o r m e t a p h o r s t h a t h a v e e x e r t e d a n i m p a c t o n r e - c e n t a c c o u n t i n g t h e o r y :
A c c o u n t i n g as history: the view that accounting is con- cerned with providing a faithful record of the transac- tions of an enterprise, and with reporting such transac- tions in a manner suited to the needs of users (e.g. Paton & Littleton, 1940; Littleton, 1953).
A c c o u n t i n g a s economicg, the view that accounting should try to mirror current economic realities and re- flect basic economic principles (see, for example, Davis e t a L , 1982).
A c c o u n t i n g as information~ the view that accounting should form part of a wider MIS framework (e.g. Prakash & Rappaport, 1977; Snowball, 1980).
A c c o u n t i n g as a language: the view that accounting pro- vides concepts and fi'ameworks which structure thought, conversation, perceptions and decision-making (e.g. Bel- kaoui, 1978), especially to support capitalism.
A c c o u n t i n g a s rhetoric: the v i e w that accounting, and the debate about different accounting systems, is largely a question of argument and discourse where various proponents attempt to convince others of the superiority of one principle over another (e.g. Arrington, 1987). A c c o u n t i n g aspoliticg, the view that accounting and ac- counting systems reflect and support the values and needs of specillc interest groups, and that accounting in- formation is constructed and used as a resource in shap- ing corporate politics, especially in decision-making and impression management (e.g. BurcheU et aL , 1980 ). A c c o u n t i n g as mythology: the view that accounting sys- tems provide a societal resource to be used in sustaining myths of rationality, and as a means of justifying. rationalizing and legitimizing decisions that ultimately serve other individual and social ends (e.g. Boland, 1982).
A c c o u n t i n g as magic: the view that underneath the ven- eer of rationality, accounting and the use of accounting
information forms part of a societal "rite" serving the same functions for modern decision-makers as the en- trails of chickens served for old witch doctors (e.g. Gambling. 1977).
A c c o u n t i n g as d i s c i p l i n e d control: the view that one of the primary functions of accounting is to exercise sur- veillance by creating "visibility": just as prisons are often designed to maximize the visibility and scrutiny of in- mates, accounting systems are often designed to increase the visibility and scrutiny exercised over employees, even those working in remote locations without direct forms of supervision (e.g. Burchell e t a L , 1980). A c c o u n t i n g as ideology: the view that accounting sys- tems form part of the ideological apparatus that sustains the ability of a society to produce and reproduce itself in accordance with clearly defined principles. (e.g. Merino & Neimark, 1982; Tinker e t a L , 1982).
A c c o u n t i n g as d o m i n a t i o n a n d e x p l o i t a t i o m the view that accounting provides techniques for the extraction of wealth in support of elite interest groups, both at the ex- pense of Mother Nature (in terms of natural resources and the ecological balance of the planet), and of the people employed in the service of others (e.g. Tinker, 1985).
All t h e s e m e t a p h o r s h a v e b e e n d e v e l o p e d t o f o r m c o m p e t i n g i n t e r p r e t a t i o n s r e g a r d i n g t h e n a t u r e a n d s i g n i f i c a n c e o f a c c o u n t i n g , a n d h o w a c c o u n t i n g p r i n c i p l e s c a n o r s h o u l d b e d e - v e l o p e d . I n t e r e s t i n g l y , t h e y all g r a s p s i g n i f i c a n t e l e m e n t s o f w h a t a c c o u n t i n g is all a b o u t , a n d o f t e n s u g g e s t i n t e r e s t i n g p r i n c i p l e s f o r a c c o u n t - i n g d e s i g n . H o w e v e r , n o o n e m e t a p h o r g r a s p s t h e t o t a l n a t u r e o f a c c o u n t i n g a s a s o c i a l p h e n o m e n o n , f o r a c c o u n t i n g , l i k e o t h e r a s p e c t s o f s o c i a l life, is i n h e r e n t l y c o m p l e x , m u l t i - d i - m e n s i o n a l a n d p a r a d o x i c a l . T h e a c c o u n t a n t a n d a c c o u n t i n g t h e o r i s t s t a n d s i n e x a c t l y t h e s a m e r e l a t i o n s h i p t o t h e r e a l i t y h e o r s h e w i s h e s t o r e p r e s e n t a s d o e s t h e a r t i s t , o r g a n i z a t i o n t h e o r i s t o r a n y o t h e r p e r s o n w i s h i n g t o u n d e r s t a n d s o m e c o m p l e x a s p e c t o f t h e w o r l d a r o u n d us. I n r e c - o g n i z i n g t h i s , a c c o u n t a n t s c a n m o v e t o w a r d s a n e w e p i s t e m o l o g y f o r u n d e r s t a n d i n g a n d c o n - d u c t i n g t h e i r c r a f t .
A C C O U N T I N G A N D T H E M Y T H O F O B J E C T M T Y
482 GARETH MORGAN
and, b y i m p l i c a t i o n , t h a t it is p o s s i b l e for a c c o u n - tants t o b e o b j e c t i v e a n d t o p r e s e n t t h e r e a l i t y o f a s i t u a t i o n in a " t r u e " m a n n e r . Clearly, this is an i m p o s s i b l e ideal, for, as s h o w n a b o v e , a c c o u n - tants a r e a b l e to d o n o m o r e t h a n g r a s p l i m i t e d a s p e c t s o f t h e r e a l i t y t o w h i c h t h e i r a c c o u n t i n g s c h e m e s relate. A c c o u n t i n g c a n n e v e r b e t r u l y o b j e c t i v e , for, as G e o r g e B e r k e l e y o b s e r v e d in t h e s e v e n t e e n t h c e n t u r y , o b j e c t i v i t y is a l w a y s as m u c h a p a r t o f t h e o b s e r v e r as o f t h e o b j e c t ob- s e r v e d . A c c o u n t a n t s a r e l i n k e d to t h e i r o b s e r v a - t i o n s t h r o u g h a c c o u n t i n g p r i n c i p l e s a n d p r a c - t i c e s t h a t a r e u l t i m a t e l y b a s e d o n m e t a p h o r s c r e a t i n g p a r t i a l a n d o n e - s i d e d w a y s o f v i e w i n g t h e w o r l d .
T h e m y t h o f o b j e c t i v i t y d i s g u i s e s t h e t r u e n a t u r e o f a c c o u n t i n g a n d c r e a t e s m a n y o p e r a - t i o n a l p r o b l e m s b e c a u s e , as every practising ac- c o u n t a n t k n o w s , it is p r e t t y w e l l i m p o s s i b l e t o d e f e n d o n e ' s o b j e c t i v i t y u n d e r c l o s e a t t a c k f r o m p e o p l e w h o h a v e a d e t a i l e d k n o w l e d g e o f t h e s i t u a t i o n s t o w h i c h t h e a c c o u n t a n t ' s s t a t e m e n t s relate. In a c t u a l p r a c t i c e , m a n y p e o p l e k n o w t h a t t h e a c c o u n t a n t ' s w o r k is b a s e d o n s o m e w h a t ar- b i t r a r y a s s u m p t i o n s a n d c o n v e n t i o n s . T h e y k n o w t h a t t h e a c c o u n t a n t is r e a l l y in t h e busi- n e s s o f t r y i n g t o p e r s u a d e o t h e r s t h a t his o r h e r c o n c e p t s , o r l a t e s t set o f figures, "give a t r u e a n d fair v i e w " o r h a v e s u p e r i o r insight, w h e n in real- ity this view, w h a t e v e r t h e figures m i g h t say, is as p a r t i a l as a n y o t h e r . T h e a c c o u n t a n t ' s v i e w o f re- ality o f t e n c a r r i e s m o r e w e i g h t t h a n o t h e r views, b e c a u s e o f t h e p o w e r r e l a t i o n s a s s o c i a t e d w i t h t h e a l l o c a t i o n a n d c o n t r o l o f s c a r c e r e s o u r c e s . But this s h o u l d in n o w a y b e s e e n as d u e to t h e a c c o u n t a n t ' s " o b j e c t i v i t y " .
A C C O U N T I N G AS AN INTERPRETIVE ART
T h e o n l y v i a b l e l o n g - t e r m s o l u t i o n t o this p r o b l e m r e s t s in r e c o g n i z i n g a n d a c c e p t i n g t h e b a s i c s u b j e c t i v i t y o f a c c o u n t i n g , a n d in d e v e l o p - i n g a c o d e o f p r a c t i c e t h a t w i l l a l l o w t h e a c c o u n - t a n t t o r e c o g n i z e t h a t h e o r s h e is n o t an " o b j e c - tive c o m m e n t a t o r " , b u t a p e r s o n e n g a g e d in a c o m p l e x w e b o f r e a l i t y c o n s t r u c t i o n . T h e ac- c o u n t a n t r e p r e s e n t s c o m p l e x s i t u a t i o n s , s u c h as
t h e e c o n o m i c v i t a l i t y o f an e n t e r p r i s e , t h e b e n e - fits o f a p a r t i c u l a r i n v e s t m e n t d e c i s i o n o r t h e o p - e r a t i o n a l e f f e c t i v e n e s s o f a p r o d u c t i o n s y s t e m , in l i m i t e d a n d r a t h e r o n e - s i d e d ways. But t h e s e r e p - r e s e n t a t i o n s b e c o m e p a r t o f t h e f a b r i c t h r o u g h w h i c h t h e s i t u a t i o n " a c c o u n t e d for" is t h e n sus- t a i n e d o r c h a n g e d . A c c o u n t a n t s i n t e r p r e t reality. But t h e i r i n t e r p r e t a t i o n s - - in t h e f o r m o f state- m e n t s a b o u t g e n e r a l e c o n o m i c vitality, a c a p i t a l b u d g e t d e c i s i o n , o r c o s t o v e r - r u n r e p o r t - - b e c a m e r e s o u r c e s in t h e o n g o i n g c o n s t r u c t i o n a n d r e c o n s t r u c t i o n o f reality, as t h e s e a c c o u n t - ing r e p o r t s a r e u s e d t o s h a p e o r r a t i o n a l i z e fu- t u r e d e c i s i o n s .
F o u r s h o r t e x a m p l e s w i l l s e r v e t o i l l u s t r a t e h o w a c c o u n t a n t s p l a y an a c t i v e r o l e in this w e b o f r e a l i t y c o n s t r u c t i o n , s h a p i n g a n d s u s t a i n i n g o r g a n i z a t i o n a l r e a l i t i e s t h r o u g h p a r t i a l w a y s o f seeing.
Accounting and corporate culture
A c c o u n t i n g s y s t e m s d o m o r e t h a n just m o n i t o r o r m i r r o r reality; t h e y also s h a p e reality. C o n s i d e r , for e x a m p l e , h o w t h e i n t r o d u c t i o n o f r i g o r o u s financial c o n t r o l s c a n r e s h a p e t h e cul- t u r e a n d g e n e r a l o r i e n t a t i o n o f an o r g a n i z a t i o n . F o r e x a m p l e , in h o s p i t a l s i n t r o d u c i n g s y s t e m s t h a t m a k e p a t i e n t s o r d e p a r t m e n t s p r o f i t o r c o s t c e n t r e s , n u r s e s a n d o t h e r staff o f t e n e n d u p as ex- t e n s i o n s o f t h e n e w financial s y s t e m s , r e c o r d i n g a n d a l l o c a t i n g t h e i r t i m e a n d u s e o f m a t e r i a l s m u c h m o r e r i g o r o u s l y t h a n u n d e r m o r e tradi- t i o n a l Systems o f m a n a g e m e n t (Davis, 1986). I n t h e p r o c e s s , t h e n u r s e s ' r e l a t i o n s w i t h p a t i e n t s o n t h e o n e h a n d a n d d o c t o r s o n t h e o t h e r , c h a n g e , as an o r i e n t a t i o n to c o n t r o l costs, o r "stay w i t h i n b u d g e t " , i n t r u d e s o n d e c i s i o n s t h a t u s e d t o b e d o m i n a t e d b y c o n s i d e r a t i o n s o f h e a l t h care. T h e p r o c e s s s e e m s t o b e p a r t i c u l a r l y e v i d e n t in r e l a t i o n t o t h e m o r e q u a l i t a t i v e as- p e c t s o f nursing, e s p e c i a l l y in n o n l i f e - t h r e a t e n - i n g situations. U n d e r t h e r e q u i r e m e n t o f " m e e t - i n g b u d g e t " t h e w h o l e w o r k o r i e n t a t i o n o f nurs- i n g staff c a n c h a n g e t o w a r d s an a d m i n i s t r a t i v e r a t h e r t h a n p a t i e n t - o r i e n t e d focus.
important aspects of the reality o f running a hos- pital, especially the e c o n o m i c and financial as- pects, but in the process, they also change the nature and quality of o t h e r aspects.
Accounting and technological change
Most organizations n o w require that capital expenditures in n e w t e c h n o l o g y be subjected to some kind o f rigorous financial appraisal. These appraisals might often do an excellent job in de- termining the financial and e c o n o m i c viability of a proposal, but leave other aspects, such as the general social and human consequences, and even the wider strategic impact, unaddressed. As a result, decision-making is often c o n d u c t e d in a way that p r o m o t e s "cost consciousness", at the expense of a broader understanding of the impli- cations o f a p r o p o s e d technological change. The existence of techniques and data for evaluating projects in a uni-dimensional w a y tends to encourage uni-dimensional decision-making. Again, w e have an example of h o w accounting practices that grasp an aspect of "the reality" of organizational decision-making, can have a dis- turbing influence on others.
Accounting and economic and social policy In the 1 9 8 4 - 8 5 coal miners strike in the U.K. accounting practices and related cost and other financial data w e r e used to arrive at National Coal Board (NCB) calculations as to what consti- tutes an e c o n o m i c coal-mine, with a view to rationalizing w h i c h mines should remain open, and w h i c h should be closed. The calculations w e r e based on many detailed accounting con- ventions, on assumptions with regard to the price of coal, and on assumptions that it was legitimate to conceptualize and restrict the e c o n o m i c s of pit closure to costs and revenues directly associated with NCB operations (see Berry et al., 1985). There w e r e alternatives to the accounting principles selected to calculate profitability. The price of coal used to estimate future revenues assumed social and political de- cisions that w o u l d result in nuclear energy pro- viding the primary source of future power. Also, the costs o f u n e m p l o y m e n t benefits arising from closure of selected mines, w h i c h w o u l d have
fallen o n the British G o v e r n m e n t rather than directly on the NCB, w e r e excluded from the calculations, even though the British Govern- ment, the ultimate paymaster for the NCB, ulti- mately had to foot the bill - - w h e t h e r in the form of wages or u n e m p l o y m e n t benefits.
The point is that the decision regarding what constitutes an e c o n o m i c pit is underpinned by many social and political choices, and that the accounting and e c o n o m i c principles used in actual decision-making captured but a small as- pect of the wider socio-political decisions being faced.
Accounting and the "shareholder view" o f organization
Much accounting practice is geared to provid- ing and sustaining a shareholder view of organi- zation, but in recent years, the idea of viewing organizations from a "stakeholder perspective" has g r o w n in importance. Increasingly, organiza- tions are b e c o m i n g viewed as being as m u c h the p r o p e r t y and c o n c e r n of employees, customers, managers and the general public, as they are of "owners", in the sense that each of these groups has a deep stake, w h e t h e r for better or worse, in the existence of an organization. Those w h o pro- vide capital may legally o w n an organization, but employees and managers invest their working lives, careers, creativity, energy and initiative. Customers may be vitally d e p e n d e n t on the quality o f the organization's p r o d u c t s for their continued well-being. The public at large also has a stake in ensuring that the organization is a g o o d citizen, and does not pollute the environ- ment or engage in other socially irresponsible practices.
Accountants typically w o r k with the interests o f just o n e or two of these stake-holder groups in mind, even though the health and well-being of the organization may ultimately demand a broader view.
IMPLICATIONS AND CONCLUSION
484 GARETH MORGAN
the p e r s p e c t i v e - b a s e d n a t u r e o f accounting; and ( b ) h o w a c c o u n t i n g is central to the p r o c e s s o f reality c o n s t r u c t i o n within an organization, shaping decision-making in a c c o r d a n c e w i t h the values and p e r s p e c t i v e s u n d e r p i n n i n g the ac- c o u n t i n g p r i n c i p l e s used.
A c c o u n t a n t s are e n m e s h e d in a p r o c e s s o f reality c o n s t r u c t i o n . T h e y grasp and articulate c o m p l e x realities in partial ways, and t h e s e graspings and articulations h e l p to sustain the
realities as perceived.
O n e o f the m a j o r challenges facing the ac- c o u n t i n g profession is to c o m e to grips w i t h these essential limitations. Rather than cling to an o u t d a t e d c o n c e p t o f objectivity, they should c o n f r o n t the basic subjectivity o f their craft and d e v e l o p means o f c o p i n g w i t h t h e s e limitations. In m y view, this will lead t h e m to a d o p t a m u c h m o r e i n t e r p r e t i v e style of accounting, b u i l d i n g on the p r i n c i p l e s that: ( a ) a c c o u n t i n g is an in- t e r p r e t i v e art and always p e r s p e c t i v e - b a s e d ; and ( b ) "that the challenge facing a c c o u n t a n t s is to d e v e l o p forms o f p r a c t i c e that e m p h a s i z e h o w a c c o u n t i n g s t a t e m e n t s and insights s h o u l d b e re- g a r d e d and u s e d as e l e m e n t s o f a conversation. o r dialogue, r a t h e r than as foundational claims asserting a p a r t i c u l a r kind o f o b j e c t i v i t y o r "truth".
A m o d e l for d e v e l o p i n g this i n t e r p r e t i v e v i e w o f a c c o u n t i n g is found in Morgan ( 1 9 8 6 ) , w h e r e the view that effective managers and organiza- tional analysts have to b e c o m e skilled in the art of "reading" the situations that t h e y are attempt- ing to organize o r manage is d e v e l o p e d . 3 They have to learn to see and u n d e r s t a n d the m a n y and p a r a d o x i c a l d i m e n s i o n s of organizations, and find ways o f b l e n d i n g t h e m to p r o v i d e a crit- ical u n d e r s t a n d i n g o f the m u l t i p l e meanings and range o f p o s s i b l e actions w i t h w h i c h t h e y are faced. Skilled managers d e v e l o p the knack of r e a d i n g c o m p l e x situations w i t h various scenarios in mind, and o f forging actions appro- priate to the u n d e r s t a n d i n g s obtained.
In a similar way, a c c o u n t a n t s n e e d to b e sensi- tive to the m a n y d i m e n s i o n s of the realities
w h i c h t h e y are a t t e m p t i n g to " a c c o u n t for". They n e e d to learn h o w to p r o b e t h e s e dimen- sions so that m u l t i p l e insights can emerge, to p r o v i d e b r o a d - b a s e d u n d e r s t a n d i n g s and plat- forms for r e l e v a n t actions. Rather than a t t e m p t to r e p r e s e n t situations narrowly, t h r o u g h one- s i d e d a c c o u n t i n g schemes, t h e y should aim to d e v e l o p b r o a d - b a s e d schemes. But, p e r h a p s m o s t importantly, w h a t e v e r s c h e m e t h e y use they should always b e as sensitive to the ele- m e n t s o f reality e x c l u d e d b y the scheme, as to t h o s e e l e m e n t s that are included. They should realize that in using s c h e m e s that highlight cer- tain aspects o f organizational reality, t h e y always t e n d to o b l i t e r a t e o t h e r aspects from view.
In essence, this a p p r o a c h r e q u i r e s a reflective and critical u n d e r s t a n d i n g o f the relationship be- t w e e n the a c c o u n t a n t and w h a t is " a c c o u n t e d for", and an ability to d i s c e r n the h i d d e n o r re- p r e s s e d d i m e n s i o n s o f a p a r t i c u l a r set o f ac- counts o r a p p r o a c h to the i n t e r p r e t a t i o n of t h o s e accounts. A c c o u n t a n t s have long ap- p r e c i a t e d the significance o f "double-entry" ac- c o u n t i n g in the p r o d u c t i o n o f accounts. W h a t I am advocating h e r e amounts to a kind o f "dou- ble-view accounting" in the i n t e r p r e t a t i o n o f ac- counts. The a c c o u n t a n t must r e c o g n i z e the ten- sion that exists b e t w e e n "the w o r l d as v i e w e d b y the accountant", and "the w o r l d in a w i d e r sense".
In r e c o g n i z i n g this tension, the a c c o u n t a n t will b e g i n to i n t e r a c t and "dialogue" w i t h situa- tions in a m u c h m o r e o p e n - e n d e d i n t e r p r e t i v e m o d e , than is the case w h e n t h e y see t h e m s e l v e s as p r o d u c i n g o b j e c t i v e o r "true" statements. They will see that t h e i r ultimate aim should b e to d e v e l o p the art o f "reading" and p r o b i n g situa- tions to c r e a t e intelligent, a c t i o n a b l e insights, r a t h e r than to p r o d u c e rigid technical state- m e n t s as ends in themselves. In the process, t h e y will b e able to d e v e l o p an a p p r o a c h to account- ing that is able to address m a n y o f the p r o b l e m s and tensions that c h a r a c t e r i z e relations b e t w e e n accounting, organizations and society.
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