Accounting Representations Help


The faithful representation
'The idea that accounting representations are, or could be, unambiguous, that is, unequivocal re-presentations of an uninterpreted reality is regularly asserted in both professional and academic literatures.' (McSweeney, 1997:691) Examining a wide range of literature views this paper attempts to explain the relationship between accounting representations and organizational control. The conflicting picture of the existing partiality of representations in the field of accounting, in addition to an examination of the construction and transformation of them is analysed. Accounting's essentiality as a mechanism to organizational control is emphasized with its partiality supporting the achievement of this main objective-control- of accounting. The concept of 'faithful representation' of accounting in respect to its capability of it and is maintenance or rejection as an ideal, is also critically discussed with references of supporters and critics of the idea.


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An illustrious sociologist and founder of the systematic study of bureaucracy (as might be characterized) named Max Weber, in his suggested model of bureaucracy -based on formal-legal authority- reflecting to the structure of an organization, portrayed the authority held by accountants in the preparation of financial statements and on the appraisal of the suitable procedures. Technical expertise possessed by accountants provides them with power over their hierarchical superiors but in spite of that power they act under the regulatory system guaranteeing that their expertise is applied for achieving the best possible. However as Burns and Scapens (2000:3) note, management accounting's practises have changed over the years, a consequence emerging from the change of market structure and the growth of technology.

Alteration of the environment that management accounting is appearing in, affected the representation of accounting-financial statements- with a transformation from their simple use to a variety of tasks. Changes also resulted to the replacement of the prime objective of financial statements in organizations, from 'stewardship' to decision making-two basis for purposes of organizational accounting-, with the capability of providing complete information to help the decisions of non-organization members and to control the organization being the main tasks of accounting, as Britton and Waterston (2006:2) describes. Thus accounting main function is to portray information for the organization to people through the collection and neatness of them (Britton and Waterston, 2006:3). But, 'Accounting can be what accountants do, what they aspire to do, or at least what they should aspire to do.'(Nelson, 1993: 207)

Representation has been a topic in accounting with an enormous discussion of literature studies revolving around it. There have been an important number of studies examining the type of values influencing representation. In McSweeney's (1997: 692) opinion the two significant types of these studies are the studies concerning genealogical factors and the studies examining accounting in a worldwide range. Genealogy as Miller and O'Leary (1987:237) explain, is an idea declaring the historical routes of the modern world's concepts and furthermore a notion for assisting the knowledge of the routes of some of our unambiguous logic principles. Miller and O'Leary (1987:238) searching the origins of accounting, through historical and social values, national conditions and the progress of control, explain the influence of those values on representation. Their paper, and Hopwood and Miller's (1994) paper as McSweeney (1997: 692), is prevailing the notion of accounting as a calculative practise rather than a simple explanation of financial statements. McSweeney (1997: 692) refers on the result of these genealogical studies that accounting cannot be taken as an instrument indicating the complete reality since even there development of new methods of accounting calculation reveal parts of the reality. Through the examination of two papers, Lee (1984) and FASB (1980), McSweeney (1997:692) concludes to their inadequacy to support representation's reflection of reality and in addition boosting the idea of its impossibility of accomplishment.

The changes of accounting's environment in the modern world, as mentioned above, in relation to the representation of accounting have been the main subject of Kallinikos' (1995, in Lightfoot, 2009:1-2) paper. According to Kallinikos (1995:118-119, in Lightfoot 2009:1-2) representation is a method based on the 'selective objectification' of methods and things, selecting only what is necessary for control through technology, reflecting the parts of society and nature that utilizes for its reformation and not an imaginary world. Accounting differs from other practises in the sense that 'usually explicitly seeks to construct itself as representational' (McSweeney, 1997:707) and not something imaginary (McSweeney, 1997:707).


The discussion concerning accounting's importance as a mechanism for the achievement of organizational control has been a subject of many managerial textbooks and scholars. An essential step for the conception of accounting as a control system in an organization, is the examination of the notion 'control' and its mechanisms that will produce organizational effectiveness. Through Ouchi's (1979:833) paper we observe the many meanings that past literatures have given to 'control' with Tannenbaum (1968) and Etzioni (1965) sharing similar views of control as a form of power-influence in organizations , 'domination' as Emmanuel ,Otley and Merchant(1990:7)note, and on the other hand Weber (1947),Ouchi and Maguire (1975) and Thompson (1969,1970)with the definition of control corresponding to a problem; in constructing and supervising the rules, streaming information and as 'cybernetic' methods(Emmanuel ,Otley and Merchant(1990:7) describe the second theme as the idea of control in the form of regulation). Sharing the approach of Tannenbaum's and Etzioni's (1968, 1965: in Ouchi 1979:833), Flamholtz and Das (1985:47) consider organizational control as '[A] process of influencing the behavior of people as members of a formal organization.' (Flamholtz and Das, 1985:38); highlighting the significance of this notion from managerial and theoretical perspective.

Organizational control emerges through its mechanisms; market mechanism which mainly describes the work of the purchasing manager, the bureaucratic mechanism with high degree of monitoring and supervising from the hierarchical superiors but always under the discipline of the regulatory system and the clan mechanism with an informal-social structure which in specific organizations can operate as a foundation of control (Ouchi, 1979:834-837). The three mechanisms in organizations are intertwined as Ouchi (1979:840) highlights. In every department of an organization and with respect to the assigned task, each time is indicated which of the mechanisms must be given more emphasis to (ibid).

Accounting's importance in relation to organizational control has been examined by several studies with Bryer (2006) stating the conflicting views on the subject through a paper inspired by Marx's theoretical literature. Bryer (2006:552) opposes to modern scholar's approach, with example of the approach of Emmanuel, Otley and Merchant's (1990:97) whose state is that accounting is not the most significant control system neither 'the totality of [the control] process'(Emmanuel ,Otley and Merchant,1990:98) but rather viewed as a regular technique totality. Through the 'objectivity' of accounting's methods, 'references to measurable phenomena'... '[T]hat exists independently of the accountant's rule' (Bryer, 2006:552), Bryer (2006:552) highlights that accounting can serve managers and investors for the comprehension and production of 'rate of return', something that promotes it to something more important than a regular technique. Accounting with its 'objective' structure creates the ability of controlling the workforce in an organization with both control defined as dominance or regulation, hence this elevates it as the most important control system; but acknowledging the fact that is not revealing a complete reality of an organization nor permit to the comprehension of it (Bryer, 2006:552,553).

This paper centralizes on the partial representation of accounting, as the title of the paper indicates, and thus is essential to present a clear image of the notion 'partial'. 'Partial' as indicated by OED has the meaning of the section of an entire picture- i.e. a piece of 'totality'- or is presented as that piece of 'totality' which additionally is used with a cause of deliberate preference to a party of people or individual. The meaning of 'partial' that utilizes this paper is related to the incompleteness rising from a conscious choice of parts of the 'whole' to support particular benefits of a group of people.

Remembering the words of Nelson (1993:207) we acknowledge the difference between the aims of accounting as theory proposes and what accountants actually do. Young's (2006) paper is constructed on an examination of the utility of financial statements and seeking for the reason that changed the prime objective of financial statements to 'serve user information needs' (Young, 2006:580). The importance of this paper lies in the connection of the 'users' of financial statements with the changed purpose through the standard setting process (Young, 2006:580). Young (2006: 596) explains how users were viewed, in the whole procedure, starting from when committees decided to set a new purpose for financial statements to FASB's construction of 'rational user'. Through a 'rational' behaviour, users can determine their expectations from financial statements and therefore these expectations must contain a specific category of information (Young, 2006: 596).Consequently users with critical thinking that might have a contradictory view with the stated purpose of financial statements are transformed to doubtless and passive human beings -'rational 'users- , given that any other behaviour will result to the expectance of types of information that will be considered as insignificant and meaningless and thus rejected (Young, 2006: 596). Young (2006:596) in her paper highlights how the construction of the 'rational' user affects accounting to serve the one and only goal being set in an organization, profitability, and therefore everything is controlled and performed in respect to that objective. Chwastiak and Young (2003:548) sharing a similar view also emphasize the role of annual reports in the construction of control in the form of dominance assisting to the accomplishment of economic growth. Moreover the notion of dehumanization appears with relationships between hierarchical superiors and workforce being downgraded and humans perceived as machines (Young, 2006:597). Likewise Chwastiak and Young (2003: 548) underline this major issue of dehumanization in addition to the negligence of working conditions. The two papers Young (2006) and Chwastiak and Young (2003) highlight respectively, the different perspective of financial statements that might occur in today's world if the construction of the 'users' of those statements was developed differently and how the 'silences' in accounting and in our whole lives construct the injustice appearing in the entire world that we take for granted. Through the distinct structures of the papers we however observe the emphasis of the same idea as far as concerns the partiality of accounting's representations operating as a servant of profitability; organizations single goal.

However the partiality of financial statements discussed through Young's (2006) paper, through the specification of 'user's behaviour' results to an indirect and efficient mastery of the 'user' that assists to the economic growth of organizations. Moreover Young's (2006) argument in relation to the partial information given to users contradicts with the typical prospect of accounting's representation lying in an organization (Lightfoot, 2009:13). From Weber's (1947:333) bureaucracy, a foundation of the formation of organizational structure and control, an organization is divided to departments consisting of a group of people and in each of those departments it is assigned a different manageable task; as the hierarchical superiors divide the complex problem to manageable tasks and thus a smaller amount of information. In this way through sub-division of the labour and rational calculations emerges organizational control with its essentiality for the achievement of organizational goals.


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Partiality of information as a form of favouritism concerning investors and creditors is also represented in Solomon's (1991) paper. Solomon's (1991:290) approach in concern of the limited view of the 'users' of financial statements which results to the representation of biased information is similar to the one of Young's discussed in this paper. Information of financial statements must be provided as a total image of economic and social subjects resulting to the construction of their ability to serve except for investors' and creditors' financial requirements the requests of labour, purchaser of goods and provided services by businesses (Solomons, 1991:290).Furthermore the writer declares his strong belief on accounting's free from bias presentation with the phrase 'I believe that accountants are like journalists. They should report the news, not make it.'(Solomons, 1991:287) Solomons (1991:291,294) through an examination of the proponents of a different theory named 'radical', and especially Dr Tinker's approach, with their purpose to either hinder or result to social and economical fields' transformation from the utilization of accounting, declares the absence of expertise of accountants in addition with the divergence of their role; facts that result to an erroneous and impossible purpose. The writer explains that, '[Accountant's] job is to portray certain aspects of society, not to change it.' (Solomons, 1991: 294) Thus Solomons (1991: 289) notes that is society that 'radical' accountants disapprove and not accounting. His beliefs lie on financial reports directed by neutrality- "absence in reported information of bias intended to attain a predetermined result or to induce a particular mode of behavior'', as defined by FASB (in Solonoms, 1991: 294)- which can result to the improvement of financial statements representing a more trustworthy image for the users and thus enhancing accounting's credibility.(Solomons,1991: 294-295) Even though acknowledges that biased free financial information might be inaccessible, Solomons (1991: 295) underlines that removing it from our ideals would be similar as '[T]o stop trying to reduce air and water pollution because completely pure air and pure water can never be attained.' (Solomons, 1991: 295)

A different view of accounting representations with a critique on Solomons (1991) approach to 'faithful' representation arises from Tinker (1991). Tinker (1991:305) reviewing the representational failures in respect to economic reality as Solomons (1991: 290-292) indicated, underlines the negligence of the representation of the social setting that construct these failures by Solomons (1991). Philosophical Realism one of the assumptions of Solomons based on the completeness of accounting symbols which 'faithfully' represent economic reality reveals an inadequacy in respect to how social and political structure influence the creation of those signs as Tinker (1991: 298,303) designates. These socio-political 'lacunae' on the construction of a 'faithful representation', Tinker (1991:301,305) highlights that occur from Solomons' rejection of capitalism vulnerability in partiality of accounting's representation and his denial on the development of asocial accountants through accounting education which however emerges from Solomons'(1991) own statement '[Accountants] have no special expertise in [social] direction.' (Solomons, 1991:294) Tinker (1991: 305) in an estimation of Solomons' approach, with outcome the socio-political 'lacunae', results to the attempt of Solomons' to elevate '[S]pecific economic interests and beneficiaries' (Tinker, 1991:305) through its partial view that completely contradicts free from bias representation. Examining the conflict of the two writers we observe their contradictory views on whether accounting shall be driven by the ideal of 'faithful representation', with Tinker (1991:303) stating that there is no such thing as 'faithful' representation and Solomons' (1991) reply to his statement 'If there is indeed "nothing to seek", we are really in bad shape, unless we are all willing to become solipsists, and dismiss the external world as fantasy.' (Solomons, 1991:312)

A paper supporting the approach of Solomons' (1991) in regard to the maintenance of 'faithful representation' as an ideal is the one of McSweeney's (1997). The paper contains an examination of two texts -FASB (1980) and Lee (1984) - which attempt to defend accounting's capability of 'faithful' representation in addition with the presentence of an argument, concerning accounting's practices, in the thesis that representational 'faithfulness' must be rejected as an ideal (McSweeney, 1997:692). Hines (1991) in his paper refers to 'objectivity' as an unavoidable assumption that 'remains at the core of most adults 'reasoning' (Hines 1991:317) and 'faithful' representation of accounting being a major influence on the social structure of the world, through the words of Molotch and Boden (1985, in Hines, 1991:327). 'Objectivity' of financial statements that provide relevant and reliable information to users (FASB,1980: in Hines,1991:315) result to the partiality of this social construction's of accounting in respect to a world with materialism as its objective (Hines, 1991:328). McSweeney (1997:693) evaluates Hine's (1991) paper revealing the necessity to examine the special characteristics of accounting's representations that lack from Hine's(1991)paper, in addition with the prejudice of its approach resulting from the referencing of only the writers that reject the ideal of 'representational faithfulness'. Thus in a reply to Hines' (1991) prejudice, McSweeney (1997:694) examines the ability of representation to construct free from bias information through two supporters of that capability revealing this way the impartiality of his examination when he concludes to the 'self-cancelling rhetorical moves' of the two papers in their effort to present the occurrence of 'representational faithfulness' in accounting. 'Self-cancelling rhetorical moves' can be observed in Lee's (1984) words, when from the statement of the current existence of accounting's 'correspondence'-representational faithfulness- substitutes his sayings with a reference to an achievable and essential 'correspondence' (McSweeney, 1997: 699). But also can be seen clearly in FASB's (1980 para.70, 79, 64, in McSweeney, 1997: 696) statements, in a attempt for the justification of the existence its 'correspondence', where there is a mixture of the notion of 'users' of financial statements with the concept of the 'rational' user being essential for the correct examination of financial statements -in relationship to their intended cause- and afterwards the involvement of the 'active' user -user with critical thinking as previously described in Young (2006:596)- for the justification of the existence of partial representations. Although the indication of 'active' users constructing incomplete representations by discarding information through personal judgment has been rebuked from FASB (1980,in McSweeney, 1997:696) and characterised as biased, however FASB (1980, in McSweeney, 1997:696) acknowledges discernment of information that is not contained in the 'specific category of information' (Young, 2006: 596) indicated and information that their creation is calculated to be over-priced; accomplished through the neutrality and expertise of the accountant (Solomons, 1991:295-295).An obvious contradiction rises here with the capability of accounting to 'faithfully' represent crossing from fact to myth, nevertheless nothing prevents the maintenance of it as an ideal (McSweeney, 1997:697). A further suggestion of McSweeney's (1997: 706,708) supporting the maintenance of 'representational faithfulness' ideal, refers to its 'regulative' functionality with a major influence on accounting control and furthermore in the construction and effective choice of accountings mechanisms. Revealing the character of accounting representations McSweeney (1997:703) highlighted the 'intertwined' and 'indistinguishable' construction of accounting. 'Accounting is always constructing the foundation upon which it is claimed to rest.' (McSweeney, 1997:708) Accounting performs as a mechanism representing everything according to the objectives ought to serve, and nothing else, thus 'representational faithfulness' of accounting as McSweeney (1997:708) emphasizes is something unreachable. The unavoidable, and essential in a way, partiality of the accounting mechanism with in addition the criterion of the creation of representations according to the objectives of organizations (McSweeney, 1997:708), one of the main objectives placed is control as we mentioned, assist to the apprehension of the importance of accounting's role in the structure of an organization and specifically organizational control.


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Accounting representations through 'objectivity' have the ability to provide relevant- as related to a specific subject- and reliable information to users as FASB (1980: in Hines,1991:315) indicates. However this ability of representations, to represent 'faithful', through the examination and discussion of many papers concluded to be myth rather than reality. In spite of this conclusion the aspiration for 'representational faithfulness' must be preserved as every human being never abandons its ambition for the achievement of something better in his life and this becomes his guidance for his choices. Representations have accused for their function on the creation of dominated form of control by Chwastiak and Young (2003:548). Nevertheless McSweeney (1997:708) indicates that accounting works as a mechanism constructing in regard to those placed as its objectives, supporting through its partiality of representations a typical structure of an organization, with sub-division of labour- subsequently specific amount of information given- and rationality -'rational' user of FASB (in Young,2006: 596) -, introduced by Weber (1947:333) which efficiently accomplishes organizational control.