Is Accounting a Socially Constructed Discipline - Literature review Example

Critically Consider Whether Accounting Is a Socially Constructed Discipline It is widely accepted that accounting profession is a crucial facet of the society. Accounting has materialized from the society and it can be said to be socially constructing and socially constructed. In other words, accounting is influenced by the society and it influences the society (Kaidonis 2008, p1). Accounting is an important subject in the social construction of knowledge. This is based on the conventions that stem from the historical experience; flowing from the accounting boards, they were institutionalized as rules and they have been passed as tactic knowledge between accountants. Knowledge is socially constructed but not all socially constructed knowledge is valuable for each purpose (Chai, Swedlow and Wildavsky 1998, p85). Thus, the paper will critically analyze whether accounting is a socially constructed discipline. Accounting and Social Construction An explanation of these two terms is important in the understanding of whether accounting is a socially constructed discipline. Accounting can be described as an information system that offers reports to its use about the condition of the business and economic activities. In other words, accounting is the way in which the financial information of a business is communicated (Duchac, Reeve and Warren 2011, p3). Social construct can be defined as anything that exists because of the social interactions. Thus, social construction occurs when individuals think about and utilize categories to structure their experiences and evaluation of the world. Things such as citizenship, newspapers and money are social constructions because their existence is based on the societies (Boghossian n.d., p3). The Role of Accounting in the Society The history of accounting is long and it has been socially constructed; it is practiced by people for the people and thus, it is an art rather than being a science. Accounting is different from other professions in that it lacks a body of theoretical knowledge on which to base its decisions. Instead, it has evolved as a craft possessing a number (few) rules and little theoretical knowledge on which to underpin its function and practice (nrupalia n.d., par. 4). Traditionally, accounting has played the stewardship role; this is because accounting itself is an extension of the accountant’s personal memory. However, there have been changes in the business and society world. The growth of the international business and the occurrence of new sectors like ecommerce have resulted in exchange of complex transactions (nrupalia n.d., par. 5). This has revealed the problems of inconsistency and subjectivity in the application of the traditional accounting methods. For example, the nature of the business assets has changed; the inclusion of the intellectual property or the utilization of leasing has raised questions on how to take into account these forms of transactions (nrupalia n.d., par. 5). This change has led to the creation of loopholes in accounting and thus scandals and manipulation have emerged. In order to decrease these loopholes, the accounting profession has put huge amount of investments (in terms of money and time) in introducing theory into accounting. This is in a bid to offer a framework in which the application of the accounting techniques is possible and also offer meaning to the traditional accounting practices. However, as mentioned before, accounting is not a science, it is an art and thus, the development of a theory is problematic in real sense though it is very beneficial (nrupalia n.d., par. 7). In accounting like in other disciplines, researchers look for free value free theories; a misinformed search expressing the failure to recognize the accounting social constitution. Construction of theory in accounting is a technical and logical process; accounting theories are not absolute because they ought to be compatible with the frequently changing political and institutional characteristics of the society. It is very impossible for the accountants to be objective, value free, and uninvolved. Accounting theories are an active portion of the interaction between organizational legitimation and organizational internal efficiency, performance, ethical, political and societal interest, and adaptation interactions (Lehman 1995, p50). The social and mutability conditioning of accounting is encompassed in cultural characteristics; thus, accounting theory and culture cannot be separated. For example, the Native American culture and its present emphasis on the welfare of the tribe are not compatible with the Western ideology of present value of future income and the related accounting practices. Thus, accounting theories are different to an extent that variables such as cultures and values controlling the societies are also different. Accounting theories and practice have become methods of communicating and knowing reality for the conventional researchers. They mutually agree on the constitutive relationship between social realities and accounting; social reality is constructed and it is not basically a representational or a reflective act (Lehman 1995, p50). Economic reality and our apprehension of it depend on each other; reality is not expressed faithfully and unambiguously is a system of symbols or signs. Signs in this case are arbitrary and social constructions. Economic realm cannot be detached from the political and social regimes; communication of reality leads to the construction of reality. Knowledge cannot be grounded externally because it is approved by its own advantaged discourse. Most of the scholars view accounting systems as reflections of the organizations or societies in which they are implicated. At the society level, it has entailed seeing accounting as basically reflective of the social relationships of the organization (Lehman 1995, p51). Out-dated societies are viewed as requiring out-dated accounting systems, capitalist ways of accounting and capitalist societies. Accounting is an outgrowth of the institutional processes and a social practice that is shaped by the pressures which lead to the rise of accounting innovations rather the essence of accounting mission. Social practice encompasses a variety of acts in disciplining, constructing, dominating, and governing social members; accounting involvement participates in and mirrors these practices. For example, the emergence of cost accounting is seen as a significant calculative practice and a part of the collection of modern tools of power evolving in the 1990s to develop controllable, governable, and manageable individuals (Lehman 1995, p51). The Social Construction Perspective of Accounting Collier (2003, p59) states that the behavior social constructionist model is not a rational process but rather a product of a creative person. An individual’s actions towards a certain thing are based on the meaning these things have for him or her. During the encounter and interpretation of a situation or an event, the person constructs the meaning of the event or the situation and acts according to what it means. Meaning is not intrinsic; it is brought into the situation by the person. The meanings result from the social interaction; that is the way people talk, play, meet, and work together. Through this means, the individuals construct and share meanings. The meanings are socially constructed, shared, and internalized between the individuals (Collier 2003, p59). The social constructionist perspective does not exclude the existence of organizational processes and structures; they are symbolic expressions of a particular view of the organizational reality. The meanings are also represented symbolically through language. In this particular situation, accounting information is a symbolic expression of reality. The individual behavior is controlled by the values, beliefs, and meanings that are constructed and distributed or shared by the members of the organization. These symbols are then subjected to interpretation by the individuals; the action towards the symbols by the individuals is based on what these symbols mean to them. However, these processes and structures can have a significant influence on the development of the organizational culture; that is the shared beliefs, meanings, and values that are held collectively by the organizational members (Collier 2003, p59). There are three major aspects of social construction of knowledge. The first aspect is based on how accounting is constructed, utilized, and understood in the society and organization. In this perspective, accounting takes the particular shape it does in the society (it reflects an immutable or natural truth and it serves certain purposes or functions). In the modern society, accounting reveals itself as a powerful technology that takes a crucial place in social construction process. It is only in accounting that economic concepts have become axiomatic, comparable, demonstrable, accountable, controllable, reportable, codified , comprehensive, and coherent to an extent that is known to each one of us. The social construction of accounting has an effect on the wider process of reality construction in the society. In other words, accounting makes a contribution to the construction of the broader social realities and the way people perceive the world. Particular expressions of this are widely based on the economistic view of the society, “and the elevation and celebration of profit as a worthy end in and of itself” (Blair et al. 2008, p50). Concluding the first aspect, it is worth noting that purposes and forms in which accounting takes place are as a result of the processes of social construction (Blair et al. 2008, p50). The second aspect deals with the nature or character of the main assumptions that underlie the socio-political opinion of accounting and accounting research that emanate from the questioning of the mentioned assumptions. The assumptions entail the general privilege of profit and capital over the environment and labor. Exploring and exposing these conventions, including their mutability, permits the students to view the way in which accounting is constructed, defined and practiced to form and build certain social realities (Blair et al. 2008, p50). The third aspect of social construction of accounting is based on the exclusive focus on the numbers in the conventional accounting practice and thought. Accounting view as a monolingual language in the multilingual world permits the students “to see how the dominance of the empirical/calculative tradition in accounting results in an unnecessarily narrow view of what accounting is and what it could be” (Blair et al. 2008, p50). Financial accountability is very important and the wider view of accountability adopted entails that the de-facto dominance of economic and financial factors be challenged. Based on this perspective, the students can begin to gain an understanding of the consequences of the power of numbers and explore other forms of numbers and different forms of accounts such as narratives; they should have potential privilege over the other factors. The discourses and narratives in which the traditional accounting practice is built on have an effect of emphasizing the social status quo (Blair et al. 2008, p50). The Truth in Accounting Riahi-Belkaoui (2004, p235) states truth in accounting is impossible or it does not exist. Truth in accounting indicates the requirement to avoid secrecy. Secrecy in this case is “the act of concealing a fact or blocking information about it or evidence of it from reaching interested publics that can benefit from knowing it” (Riahi-Belkaoui 2004, p235). Secrecy is not a moral consideration. Because the accountants are not free to reveal secrets that may be of benefit to the users; this raises concerns over the limitations of narrative truth in accounting in comparison to the historical truth. It is clear that the truth in accounting cannot be attained; it is an intangible goal (Riahi-Belkaoui 2004, p235). The human mind tends to view the truth as an ideal; the view attempts to make exact justifications of scientific phenomena. However, there are areas that this ideal is not applicable; the actual world of business and accounting is not an exception (Riahi-Belkaoui 2004, p235). Accounting is left in scenarios where the probability of truth exists if approximated by criteria such as objectivity, hardness, reliability, and/or neutrality. These criteria are adapted to a variety of roles of scenarios and accounting where truth impossibilities are dominant in cases involving income smoothing, asset valuation, utilization of narrative truth, cost allocation, measurement, choice of accounting techniques, and the reliance on standard evidence (Riahi-Belkaoui 2004, p236). The inability to capture the truth justifies the nature of accounting that is, accounting is not scientific. It is evident that accounting theory does not constitute scientific explanations. “There are no immutable laws of accountancy comparable to the immutable laws of nature; there are no laboratory tests and controlled experiments to yield data which may be set up as mathematical formulas to express existing relationships” (Riahi-Belkaoui 2004, p236). Thus the accounting discipline is socially constructed and it does not have immutable truths or laws. The individual rules made in accounting rely on the judgment process for the both utilization and preparation of accounting information (Riahi-Belkaoui 2004, p236). The socially constructed nature of accounts has become an influential center of attention. There has been significant opportunity for the expansion of creative accounting and this has been fuelled by the absence of effective accounting regulation in association with the complexity and development of the international business. Linked with such developments, there has been a significant growth in the studies that scrutinize how the methods and principles of external reporting are enforced and determined (Alvesson and Willmott 1996, p141). Accounting As both an Institutional and a Social Practice Research that indicates that accounting is both an institutional and a social practice basically seeks to explore the concept of accounting from a wider perspective, investigating the application(s) of accounting practices in the organizational and social contexts in which they happen. Such studies indicate that accounting is best understood as a dynamic and a socially constructed practice; it has even reached a point in which researchers have argued that accounting practice lacks a natural or a fixed domain (Potter 2005, p267). These researchers basically attribute the application of the accounting practices within certain organizational contexts. This is with implication for the functioning of the societies and organizations, and the behavior of the individuals. Majority of the individuals adopt the institutional and social paradigm with the aim of exploring accounting as a tool for intervening in the function of societies and organizations. This perspective brings out the notion that it is no longer proper to think of accounting as a technical practice that is used to reveal the pre-existing concepts of reality or certain truths about the organization (Potter 2005, p267). Rather, accounting can be associated with shaping the form of world we live in, the form of social reality we live in, the manner in which we understand choices that are open to individuals and business undertakings, the manner in which we organize and manage processes and activities of diverse types, and the manner in which we control our lives and the lives of others. Reinforcing this accounting perspective is the focus on the interaction between the methods of measuring processes and activities, in financial terms, and the methods of managing societies and organizations (Potter 2005, p267). The application of these accounting practices assists in the adoption of a particular financial view for understanding the organizational outcomes and the individual’s activities. These practices in turn provide a basis for controlling processes, societies, people, and organizations. As a consequence of its capability to develop possibilities for action in societies and organizations, accounting has become a prominent way of managing the social and organizational arrangements in a wide range of settings (Potter 2005, p267). In conclusion, it is clear that accounting is a socially constructed discipline. Bibliography Alvesson, M. & Willmott, H. (1996) Making sense of management: A critical introduction. Thousand Oaks, CA: SAGE. 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