Role of Accounting in Society - Essay Example

THE ROLE OF ACCOUNTING IN SOCIETY Student’s Name Institutional Affiliation Introduction The recently witnessed global financial and economic crises have resulted to the presentation of numerous numbers of critical views on matters related to accounting while attracting extensive appeals for conducting thorough alterations to most of its concepts. It should be understood that these views and perspectives do not only emanate from the representatives of the world’s strongest economies and globally-recognised economists but also from the accountancy professions. In essence, intensive level of pressures related to changes of accounting solutions and questions related to responsibility of the profession for painting a true and fair picture of events have continued to emerge, especially in relation to its roles in fair value accounting, auditing, off-balance sheet financing as well as accounting regulation. In this regards, the confidence level in relation to accounting competency and relevance across the globe has significantly dwindled. Role of Accounting in Society: Different Views A significant perspective of accounting as an imperative for accounting originates from academics that merely perceive accounting systems as being mirrors of the societies for which they belong and implicated (Biondi & Suzuki, 2007). It is important to note that at the societal level, this has resulted to perceiving accounting as a notable and essential reflective model of an organisation’s immediate social relationships. In this regards, it can be ascertained that feudal societies are perceived to be collectively striving for a feudal accounting systems just like the capitalist societies that are in dire need of capitalist modes of accounting (Biondi & Suzuki, 2007). Considering this philosophy, it can now be seen that accounting plays a key role and is an immediate result of such attributes as complexity and uncertainty of the underlying organisational level environments; the technological feature of an organisation as well as its overall corporate management strategies (Boyer, 2007). Some of the current organisational-based accounting theories depend on the validity of the presumption that contingency models consign with the overall objectives of a firm and relies on the accounting systems for which they are expected to analyse. The current views on provides for a normative structure for accounting thought. While conforming to activities of the overall accounting vision and mission, standard setters have always formulated a statement that focuses on expounding on accounting and what it really ought to be about in real-world life and, as a result of this, there has been significant appraisal of accounting practice altogether (Boyer, 2007). To make sure that there is consistency in accounting and confirm its critical role in the societies and organisations, people have opted to extend accounting for purposes of promoting corporate accountability and even propel aspects related to making rational decisions while others have continued to point out possible issues that social change causes for real-life accounting practice (Boyer, 2007). In essence, while still portraying the ability to indicate the relationship that exists between roles and practices of accounting; people have ensured to commit to efforts of correcting that which they have perceived to be erroneous in real-life scenario. Most notably, most of the existing functional stipulations that have been made in relation to accounting have all emerged at a distinct distance as a result of accounting practice (Hines, 1989). Such bodies as professional institutions; agencies of state as well as the agencies focused on accounting regulation have all shown interest on the need for public legitimacy and a fundamental rationale for immediate action. For a long period, accounting’s role in the society has been perceived as serving an ideological function. It is perceived to be permuting a rather false consciousness given that it avails a means for mystifying as opposed to revealing the very true nature of social relationships that result to productive endeavours (Burchell, Clubb, & Hopwood, 1985). Specific societies have however; adopted a lesser assertive perception and pointed out on the mythical, symbolic and metaphorical roles of accounting as a whole. In this regard, accounting is seen to be under the operationalisation of dominant economic and social distinctions; the formulation of symbolic restrictions especially between rival social parties and the underlying basis for rationales and missions developed and enhanced even further (Burchell, Clubb, & Hopwood, 1985). Indeed, given that accounting portrays a trend of both economic and social stipulations, it has been noted to be partially meeting expectation for the creation of a symbolic order for which social agents are allowed to interact freely. On the contrary, there have been people that have continued to adopt a rather wider view on the social significance and roles of accounting as a whole. These people have always held an enabling functionality of accounting craft. Although there has been so much emphasis on the role it plays in allowing aspects related to devolution and decentralisation of economic decision models; it has also attracted internal pressures especially in the event that the decision process is centralised either by organisations or state (Burchell, Clubb, & Hopwood, 1985). In consequence, in the case of a social orientation as it regards to the functionalist perception, accounting’s role is that of sustaining a status quo thereby assuming that the exact momentum of the society is always shifting forward towards a specific set equilibrium while any issues related to conflict is deemed to be a partial disruption (Hines, 1989). This means that in times of crisis, accounting reacts by simple touch-ups within underlying proposed solution for the purpose of making its overall functionality aspect even better (Burchell, Clubb, & Hopwood, 1985). A good example of this concept can be perceived in relation to fair value measurement. It can be noted that even though the underlying credibility of efficient market theory as a platform of imminent accounting theory and especially that which relates to fair value measurement seems to be distorted in the recently witnessed financial crisis; it is still perceived as being one of the most revered for which proposals for changes are based upon. In relation to the institutional accounting solutions, the aspect of fair value measurement has been sustained and improved upon even with a detailed level of specific measurements (Dillard, 1991). As a result of this, a high degree of transparency and even formulation of more rules would certainly assist in developing desired social balance at all times. Accounting profession as well as widespread definition of the activity indicate that it is an unbiased observer and goal-oriented generator of independent economic realities that is deemed to be very useful to end users (Dillard, 1991). In this regard, the perception lies in defining accounting as a simple technological solution for possible technological issues of measurement as well as in control of business operations (Horvat & Korošec, 2015). Markedly, it is thereby postulated as being a primary facet that generates rational and independent market participants with sufficient economic data that is required for decision-making process and therefore, plays a significant role in matters related to enhancing efficient functioning of markets by helping them achieve optimum balance (Dillard, 1991). Indeed the mistakes or even irregularities witnessed in the course of implementation like in the case of accounting fraud and negligence are deemed to be the sole areas that can allow any level of criticism. This leaves little or no room for a given deeper social regard since the platforms that can ensure enormous social potential of accounting are never established at all (Dillard, 1991). It only means that revelation of this capability can set to widen the perception on accounting as both a social and institutional-based practice. One of the fundamental perceptions of accounting that has emerged over the years ascertains in regards to it being a social and institutional practice rest with the fact that extends political practices and ideologies. In the modern accounting environment, the practice is revealed to be a form of political and economic substance in itself. Markedly, in the event that the role of accounting is depicted in terms of its political and economic undertakings means that it relates to socio-political and economic platform as it pertains to such aspects as optimal social order; fairness of relations; distribution of resources in any give society; social development; issues related to ethics as well as the immediate level of attitude towards matters related to the surrounding environment and social responsibility in its entirety (Horvat & Korošec, 2015). As a political economy, accounting ascertains the prevailing of a distinct set of value system of the discipline that also involves primary cultural and ideological foundation and aspects related to identity and motivations. It is an implication in distributive transfers of wealth between social classes while still ensuring to shape any form of power degree within the underlying political economy for which it conducts its business (Horvat & Korošec, 2015). Following this line of reasoning, the process of linking accounting to its overall social context means that it is indeed ideological in nature given that output of accounting phenomenon are decided not by aspect of efficiency but in regards to both political and social aspects. Furthermore, the underlying rhetoric of accounting profession in relation to its role to public interest indicates that it operates under a philosophy of self-interested ideology, which solely focuses on upholding the economic interests of the public accounting profession as a whole (Gomes, 2008). It thus goes without saying that the existing political-economic perception of accounting indeed is focused on comprehending and evaluating the overall functionality of accounting within the context of such important aspects as economic; social and political environment for which it is engaged and it is swayed either directly or even indirectly (Hines, 1988). Thus, to extensively comprehend the role and, also the effects of accounting within any given society and determine the rationale behind it being the way it is; it is crucial to understand the nature and origin of fundamental methodological solutions; theory and policy framework (Cooper, & Sherer, 1984). In regards to this perspective, it is asserted that the accounting profession does not hold any form of value outside the aspects of social; legal and economic facets under which it unfolds; meaning that the relevance of accounting to any given organisation or society is solely focused on the goals established there within (Burchell, Clubb, & Hopwood, Hughes, 1980). For instance, in the event that a society revolves around the frameworks of competition; sanctity of private property and self-interests then it thus goes without saying that accounting will only focus on serving this purpose and goal at all times. Issues related to profit maximisation; shareholder wealth maximisation and capital being a fundamental factor of production are primarily economic attributes that are imposed within the society and no further analysis or questioning is needed to determine their true nature. Concerning this perspective, it can be agreed that accounting profession is indeed an incorporative section of a symbolic framework for neo-liberalism that only perceives accounting as technological animates that focus on serving to enrich a few individuals at the expense of the majority within the society as a whole (Hines, 1989). Notwithstanding, most of accounting entities have certainly been a subject of critique especially through the immediate sale of tax avoidance mechanism thereby facilitating a skewed allocation of both income and wealth amongst the different societies. In sum, the paper has been successful in discussing the role of accounting on both organisations and society at large and has also formulated immediate areas for which there has been an unexplored complexity. The paper has noted that accounting is merely perceived as being mirrors of the societies for which they belong and implicated, which has resulted to perceiving accounting as a notable and essential reflective model of an organisation’s immediate social relationships. It is also perceived as serving an ideological function given that it focuses on permuting a rather false consciousness give as that it avails a means for mystifying as opposed to revealing the very true nature of social relationships that result to productive endeavours. Moreover, it has also been related to political ideology and serves that society goals and purposes meaning that it can be manipulated to reflect on self-interests of a few individuals. References List Biondi, Y., & Suzuki T. 2007. Socio-economic impacts of international accounting standards: An introduction. Socio-Economic Review, vol.5, no.4:pp. 585–602 Boyer, R. 2007. Assessing the impact of fair value upon financial crises. Socio-Economic Review, vol.5, no.4:pp. 779–807 Burchell, S., Clubb, C., & Hopwood, A. G. 1985. Accounting in its social context: Towards a history of value added in the United Kingdom. Accounting, Organizations and Society, vol.10, no.4:pp. 381–413 Burchell, S., Clubb, C., & Hopwood, A. G., Hughes, J. 1980.The Roles of Accounting in Organizations and Society, Accounting Organizations and Society, vol.5, no.1:pp.5-27 Cooper, D.J., & Sherer, M.J. 1984, The Value of Corporate Accounting Reports – Arguments for a Political Economy of Accounting, Accounting, Organizations and Society, vol.9: pp.207-234 Dillard, F. J. 1991. Accounting as a critical social science. Accounting, Auditing & Accountability Journal, vol.4, no.1:pp. 8–28 Gomes, D. 2008. The interplay of conceptions of accounting and schools of thought in accounting history, Accounting History, vol.13, no.4:pp. 479-509 Horvat, R & Korošec, B. 2015, The Role of Accounting in a Society: Only a technological solution for the problem of economic measurement or also a tool of social ideology? NAŠE GOSPODARSTVO / OUR ECONOMY, vol.61, no.4: pp.32-40 Hines, R. D. 1988. Financial accounting: In communicating reality, we construct reality. Accounting, Organizations and Society, vol.13, no.3: pp. 251–261 Hines, R. 1989, Financial Accounting Knowledge, Conceptual Framework Projects and the Social Construction of the Accounting Profession, Accounting, Auditing & Accountability Journal, vol.2, pp. 72-92. Read More