Traditional accountants and business professionals: Portraying the accounting profession after Enron

Society’s perception of the legitimacy of the accounting profession and its members is grounded in the verbal and visual images of accountants that are projected not only by accountants themselves but also by the media. The paper uses the critical literature on stereotypes to examine how books written for a general readership on Enron and other recent corporate failures portray accountants and accounting, and the implications their authors draw for corporate governance and the survival of the financial system. The paper explores how commentators have analyzed the changing activities of accountants (including the rise of consulting) and have contrasted the personalities of “founding fathers” of the US accounting profession with their early 21st-century successors. The paper concludes that changing stereotypes of accountants are evidence of “negative signals of movement” for accounting as a profession.     

Ontology-based e-assessment for accounting: Outcomes of a pilot study and future prospects

This article reports on a pilot of a novel ontology-based e-assessment system in accounting that draws on the potential of emerging semantic technologies to produce an online assessment environment capable of marking students’ free-text answers to questions of a conceptual nature. It does this by matching their response with a “concept map” or “ontology” of domain knowledge expressed by subject specialists. The system used, OeLe, allows not only for marking, but also for feedback to individual students and teachers about student strengths and weaknesses, as well as to whole cohorts, thus providing both a formative and a summative assessment function. This article reports on the results of a “proof of concept” trial of OeLe, in which the system was implemented and evaluated outside its original development environment (an online course in education being used instead in an undergraduate course in financial accounting. It describes the potential affordances and demands of implementing ontology-based assessment in accounting, together with suggestions of what needs to be done if such approaches are to be more widely implemented.     

Social scanning: Improving futures through Web 2.0; or, finally a use for twitter

This article outlines the potential for “social scanning,” the practice of aggregating and analyzing publicly available content created by futurists and shared on blogs and other social software platforms, and explains how it could create value for professional futurists and their clients. The system would take content that is personal but not proprietary, and create new value from it by detecting larger, long-term patterns that individual users might not be aware of. It would create the means to better distribute credit for finding weak signals or emerging trends, and create new forms of professional credit for work that currently remains invisible. It would create goods that are useful to individual practitioners and the profession as a whole. Finally, it would serve as a foundation for collaborative research in a community of practice that is highly distributed.     

CAPITAL AND FINANCIAL ACCOUNTING: A COMMENTARY ON BRYER'S “A MARXIST CRITIQUE OF THE FASB'S CONCEPTUAL FRAMEWORK”1

Bryer (1999) reiterates criticisms of the “balance-sheet” approach underlying the FASB's conceptual framework as failing either to explain or guide the development of financial accounting practice, and aims to demonstrate how operational and objective principles of financial accounting can be derived from Marx's labour theory of “surplus-value”. However, the potentially conflicting objectives of “Marxist” accountings remain unresolved, and Bryer's attempted derivation of accounting rules for individual business enterprises appears to misunderstand the rationale of Marx's detailed examination of the circuits of capital in Parts One and Two of Volume II of @9pCapital@2p and to offer no critical foundation for Praxis. It is argued here that the focus of a critical Marxist accounting would more appropriately shift to recognising the extraction of surplus-value from labour and its addition to the value of inventory during the process of production (rather than reporting profit as the result of sale). However, the practical application of such a principle would still require the use of convention-based allocations at least as arbitrary as those of conventional financial accounting and, more fundamentally, such a change of accounting principle could not in itself be sufficient to “force the secret of profit making” under the capitalist mode of production. The accounting would still be consistent with both Marxist and neoclassical economic theories of the nature of capitalism. Bryer's approach to deriving Marxist accounting rules cannot help us to understand the problematic nature of the power of modern financial accounting.     

Accounting for organizational performance: The construction of the customer in the privatized water industry

The concept of the customer exercising market power to obtain the desired combination of attributes in terms of price and quality of the product to be purchased has been integral to the Conservative Government's justification of privatization. However the practical import of giving effect to customer sovereignty was problematic if it was not accompanied by an increase in competition and choice for customers. This is particularly true of the recently privatized Water industry, where the monopoly character of the industry has remained unaltered. To give effect to its claims that customers would benefit, and to prevent overcharging and to protect standards of service, the Government had to introduce a new regulatory system operated by the Office of Water Services (Ofwat). In pursuing these objectives the Director General of Ofwat has stated that his aim is to secure for the customer a place that he/she would have were the companies operating in a competitive market. This paper, drawing on Miller and Rose's analysis of Governing economic life, examines the attempts that have been made to give effect to this “place for customers”. In doing so much of the analysis focuses on exploring how notions of “the customer”, and “customer service”, have been constructed through new forms of accounting and accountability, and how this new accounting for customer service has enabled the concept of “the customer” to be made operational within the newly privatized Water plcs, even though their monopoly status has remained unaltered. Central to this has been Ofwat's determination of performance indicators on levels of service to customers, its measurement of company performance against these indicators, and assessments based on these measures of companies' success in “serving customers”. The paper seeks to demonstrate how these new accounts of organizational performance required of the Water plcs by Ofwat have only been made possible by rendering “customer service” a calculable and comparable entity. The paper also looks at some of the ways in which this accounting for customer service has been incorporated into other accounts of managerial and organizational performance.     

Discourses surrounding the evolution of the IASB/FASB Conceptual Framework: What they reveal about the “living law” of accounting

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) recently published the final version of Chapter 1 of their joint Conceptual Framework for Financial Reporting (IASB/FASB, 2010). In this article, we focus on two of the key issues addressed in Chapter 1: stewardship and the definition of the primary user groups of financial statements. To address the discourses surrounding the evolution of Chapter 1, we introduce the concept of “living law” from sociological jurisprudence into accounting scholarship. We first trace the role of stewardship/accountability in the evolution—from antiquity to the present day—of the living law of accounting. We then explore the origin, nature, and implications—from a living law perspective—of the moral traditions associated with stewardship/accountability. Our analysis suggests that stewardship has been, and continues to be, embedded in the living law of accounting—notwithstanding the formal pronouncements of standard setters. We also examine the social accounting project from a living law perspective and we suggest that such an analysis provides new possibilities for addressing core social accounting concerns. We conclude by arguing that, particularly in light of the far reaching impact of the neoliberal agenda, there is an urgent need for scholars in both contemporary “social” and “mainstream” accounting to recognize and build upon their shared living law heritage rooted in the age-old traditions of stewardship/accountability.     

Dirty work and the construction of identity. An ethnographic study of management accounting practices

This paper examines the processes by which identity work influences accounting and organisational practices. Analysing ethnographic material, we study how accountants engage in a struggle for recognition in a context where tensions emerge from the confrontation between idealised occupational aspirations and situated possibilities. To theorise this struggle we draw on Everett Hughes’s conceptualisation of a moral division of labour. Building on his concept of “dirty work”, we differentiate between the “unclean” and the “polluted”. Accountants have to perform tasks that are incompatible with the aspirational identities they claim; more than “boring”, these tasks become symbols of misrecognition. We call these unclean tasks. Yet even tasks that, in a more favourable context, would be associated with prestigious aspects of the job, can become degrading in specific situations. We call them polluted work. We highlight how trying to comply with a positively-anticipated role transition can help avoid unclean work yet generate more polluted work. Our analysis suggests that paying greater attention to symbolic differentiations between prestigious and shameful aspects of work can improve our understanding of accounting, identity work and organisational practices.     

Negative behaviors that impede learning: Survey findings from award-winning accounting educators

A review of the education literature, both within and beyond accounting, indicates previous consideration of attributes of teaching “effectiveness.” This literature provides educators with an ability to model approaches and techniques to enhance their teaching. Largely absent from the literature, however, is any attempt to identify teaching attributes that impede the learning process. While it may be assumed that “the opposite of best practices” would constitute methods or behaviors to be avoided, very little evidence is available to support this view. Little is known, except anecdotally, about why and how behaviors other than those subsumed in “best practices” frameworks can produce unintended negative results. Generally absent from the literature as well are perspectives from exemplars; that is, award-winning educators. This paper responds to both of these voids and presents evidence of classroom behaviors to be avoided because of their perceived negative effect on student learning. Specifically, we report survey responses from a sample of 105 accounting educators who have been formally recognized for their teaching excellence. These teaching exemplars were asked to list, in their own words and in ranked order of importance, up to five responses to the following question: “what behaviors would you counsel other accounting educators to avoid?” We received 374 responses to this question. A content analysis of these responses suggests the following major factors (in decreasing order of importance): negative or uncaring attitudes about students and the class; improper preparation and organization; faulty or deficient course-delivery skills; assessment mistakes; and, inflexible/inaccessible demeanor. Our results should be relevant to accounting faculty interested in assessing and improving their own teaching as well as to senior faculty who are interested in mentoring junior faculty.     

HISTORICAL ALLEGORIES: LET US HAVE DIVERSITY

This paper points out that differences between “old” and “new” accounting history are not resolvable at the level of evidence because history is a form of allegory–a “true” allegory. In addition, it cautions against an overly zealous evangelization of particular “new”/critical faiths and argues instead for a “celebration of difference” in the telling of historical stories.     

EXPLORING AN ACCOUNTING PARADIGM: THE CASH ACCOUNT

This paper explores the possibility that practitioners' standards of accounting rationality are partly determined by a “cash account” paradigm, of which the method for preparing accounts from incomplete records is a major exemplar (an important part of the Kuhnian concept). Preparation of accounts from incomplete records forms part of many accountants' early practical experience, and often provides the setting in which elementary bookkeeping and accounting concepts start to become “second nature”. In addition to this, and partly as a result of it, accountants may tend to refer (perhaps not always explicitly) to the so-called “single entry method” when addressing much more complex and intractable problems. Practitioner paradigms get less attention in the literature than research paradigms, and one purpose of this paper is to redress this balance, and to show how articulation of a practitioner paradigm might suggest ways out of some conceptual difficulties     

The future of human benefit knowledge: Notes on a World Brain for the 21st century

In the late 1930s, H.G. Wells proposed an “adequate knowledge organization” or World Brain, where ideas would be received, sorted, summarized, clarified, and compared. At the same time, sociologist Robert Lynd questioned ever more “bricks of data” on the growing pile of social science, and called for more synthesis and long-range thinking. Despite proclamations about emerging “knowledge societies,” little has been done to organize the broad and messy realm of human benefit knowledge that encompasses the overlapping policy, planning, futures, and leadership “communities.” The problem of the narrow brickmaker mentality still persists, along with more infoglut, more rapid obsolescence, more fragmentation, more label profusion, and even more nationalistic division. A World Brain for the 21st century should have at least seven features: timely abstracts of key books/reports/articles in several languages, comprehensive coverage, identification of not-yet-published books in the publisher's pipeline, regional and national nodes for collection and dissemination, overviews of sectoral and cross-sectoral issues, user-friendly features, and ample publicity. An appreciative environment must also be built, encompassing more and better technology assessment, ongoing “Top Ten” booklists for each sector and issue, annual prioritizing of issues, integrative research units at universities, more effort to promote civic education, more debates, more attention to good information design, and a higher status for high-quality human benefit thinking.     

“Holier-than-thou” perception bias among professional accountants: A cross-cultural study

Theoretical conceptions of culture in accounting research are controversial, ranging from highly deterministic, quantified and componential perspectives (such as Hosfstede's five dimensional model) to those that suggest continual changes in cultural values brought about by forces of acculturation. This paper makes a contribution to cross-cultural accounting research by examining the influence of competing theoretical perspectives of culture and acculturation on “holier-than-thou” perception bias. “Holier-than-thou” perception bias leads to individuals perceiving themselves as acting more ethically than comparable others when confronted with ethically uncertain work-related behaviours. This study contributes to cross-cultural accounting research by surveying Australian and Indian professional accountants from big four accounting firms. We firstly seek to establish the prevalence of “holier-than-thou” perception bias in both cultural settings. Secondly, we examine the differential and competing influences of culture and acculturation on perceptions of accountants from the two countries on measures of this bias. Data was collected through a survey questionnaire administered to samples of senior accountants from the big accounting firms in Australia and India. The questionnaire comprised an auditor-client conflict and two whistle-blowing scenarios and used two questions to measure the magnitude of the bias. The results show that “holier-than-thou” perception bias exists among accountants within each of the two countries. However, the magnitude of the bias was not significant between the countries. The results support the theory of acculturation in big accounting firms. Our findings have implications for accounting research where the presence of “holier-than-thou” perception bias needs to be considered in cases where respondents are questioned on socially sensitive issues. The findings may be useful to accounting researchers, managers of multinational enterprises in general, and big-four accounting firms in particular. Our conceptual framework applied in this study is innovative and provides a template for assessing current controversies in cross-cultural accounting research.     

Relate management accounting research to managerial work!

This article argues that management accounting research should be more aligned with managerial work. Managers work with words. This means that managerial conversation and the use of accounting information in such conversation should be studied. Methodology is developing rapidly in other areas of social science where a “linguistic turn” has made an impact. Managerial work, characterised by “brevity, variety, and fragmentation,” provides the context in which accounting information is used. Management is thus described as a co-operative game where communication is central to attention direction as well as problem solving. An illustration is given of the kind of studies deemed necessary for management accounting research to progress towards managerial relevance.     

SOCIAL ANALYSES OF ACCOUNTING INSTITUTIONS: ECONOMIC VALUE,ACCOUNTING REPRESENTATION AND THE CONCEPTUAL FRAMEWORK

The paper is a commentary on Bryer's article “A Marxist Critique of the FASB's Conceptual Framework”; the commentary is divided into three main sections. The first section begins by addressing the changing relationships between accounting and economics and, more specifically, the ideas of economic value and accounting representation (often called “representational faithfulness”, see Bryer, p. 582) that underlie Bryer's concerns with the FASB project. The second section considers the role of the FASB conceptual framework project in order to address the different ways that the “impact” of the FASB's Conceptual Framework project upon accounting practices can be considered. Several of the existing studies of this project that consider its purpose in social and political terms are reviewed. This is not to suggest that the FASB's work has had @9pno@2p effects, but rather that its consequences might be thought of in institutional and political terms. In the final section some of the specifics of Bryer's Marxist analysis are addressed. In particular the relationship between Marxian analysis and accounting change is considered.     

Regulatory networks for accounting and auditing standards: A social network analysis of Canadian and international standard-setting

Rose and Miller [Rose, N., & Miller, P. (1992). Political power beyond the state: Problematics of government. British Journal of Sociology, 43(2), 173–205] note that governmentality is exercised through “centers of calculation” embedded in “networks of rule;” we focus on the “networks of rule” and use social network analysis to document the linked organizations, both domestic and international, that affect the creation of accounting and auditing standards in Canada. The network is defined as the set of regulatory bodies and other organizations that have the right to appoint (or approve the appointment of) members of another organization’s standard-setting body. The network consists of 61 organizations, sharing 131 interlocks. These organizations are clustered into four groups centered on, respectively, the Canadian Institute of Chartered Accountants, the Canadian Securities Administrators, International Federation of Accountants and the IOSCO/World Bank. The analysis identifies the boundaries of these clusters and the key organizations that maintain the cohesion of the network. The conclusion identifies research opportunities opened by this perspective on accounting and auditing regulation.     

Reversing an impairment loss and earnings management: The role of corporate governance

This paper examines whether the reversal of a previously recognized impairment loss provides an opportunity for earnings management, and whether such behavior is associated with managers' incentives. It also examines whether a corporate-governance mechanism can mitigate this behavior. Since 2005, listed companies in Taiwan have been required to comply with accounting standards, equivalent to International Accounting Standards (IAS) No. 36 “Impairment of Assets,” which allow reversals of asset-impairment losses. Data on a sample of 55 firms that reversed impairment losses between 2005 and the first quarter of 2007 were matched by industry and size with 55 control firms. Empirical results show that firms recognizing more impairment losses are more likely to reverse impairment losses when doing so would avoid an earnings decline in a subsequent period, which is consistent with the “cookie jar” reserve hypothesis. We also show that such behavior is more pronounced for firms with higher debt ratios, consistent with earnings management being associated with the incentive to avoid violation of debt covenants. However, an effective corporate governance mechanism could mitigate such behavior. Our study may contribute to the debate on global convergence with IFRS, especially convergence between IFRS and U.S. GAAP with respect to the “Impairment of Assets,” by providing a rationale for the latter's prohibition of reversals. It may also contribute to the corporate-governance literature by showing the effect of governance mechanisms on deterring earnings management.     

A critical realist image of the future Wendell Bell's contribution to the foundations of futures studies

Wendell Bell's contribution to the foundations of futures studies grows out of his concern that fashionable philosophies of the day could undermine the very idea of a respectable, viable futures studies discipline. As his concept of “image of the future” is an effort to counter the positivist intellectual constraints on futurology, so his support of “critical realism” is part of an effort to counter the equally questionable move towards “the nihilism and relativism of postmodernist post-positivism”. Both theoretically and philosophically, Bell aims to create and keep a balance, a middle ground between extremes, trying to stabilize the still volatile foundations of futures studies. His effort is one of a founder in the most robust sense of the term. In his endeavor, Bell went beyond the rhetoric of asserting the promise of a new discipline and advertising its merits. He invested into the less glamorous but crucial effort of building the epistemological and conceptual bases able to sustain an entire intellectual edifice.     

Accountants as “new guard dogs” of capitalism: Stereotype or research agenda?

Drawing inspiration from the theses of the regulation school, Gerard Hanlon analyses the socialisation process in the “big six”. For accountants are, according to him, the new “controllers” of “a process of flexible accumulation”, one that goes hand in hand with a heightened international division of labour. Unfortunately, his research site remains too limited to confirm—or disconfirm—his ambitious hypotheses. Moreover, the transposition of neo-marxist theories leads him to underestimate the whole work of construction of social credibility of accounting knowledge, as well as the complex play of interaction—and not only of opposition—between these “multinational service conglomerates” and the local or national dignitaries who continue to represent the core of the field of practice.     

Institutional thinking: The case of financial instruments

Although financial accounting practices and disclosures are frequently altered, such changes appear to be constrained by “institutional thinking”. In this paper, I explore an instance of institutional thinking — the emergence and development of an FASB project on financial instruments. This study illustrates the programmed ways in which accounting problems are constructed and resolved, a process that shadows certain questions while emphasizing the traditional accounting concerns with disclosure, recognition and measurement.     

Using student response systems in the accounting classroom: Strengths,strategies and limitations

A Student Response System (SRS), often referred to as a “clicker,” enables students to individually answer instructor questions on a real-time basis using individual mobile devices, and have the aggregate responses displayed as feedback to the class at the instructor’s discretion. A mobile device can be a proprietary, vendor-specific remote, or a multi-purpose item such as a smartphone or computer. While SRSs have been used in education for some time, we perceive the adoption rate in accounting classes as still being quite low. This paper is a “how to” and “why” guide for accounting faculty who are considering using SRSs, and for experienced users who seek to refine or expand their SRS use.