Apr ’15: What is Accounting?

slider1Accounting? To some extent yes, but this is not the whole truth…

What is Accounting?
by Hannele Mäkelä

The question concerning the core nature of the “dull and unimaginative” field of accounting never stops to fascinate (at least some of) us. Accounting scholars go so far as to find the workings of accounting embedded in several passionate aspects of life, such as punk rock music, football and God. Be it as it may, I often hear people wondering what accounting precisely is and what an accountant does.

It seems that many people perceive accounting as double-entry bookkeeping and as a purely technical, calculative matter in line with rationality. For a long time, this was also the perception of the academic field itself: “accounting is what accountant does” was a pragmatic way of saying that we should hardly be interested in further analyses of the craft of accounting. The sociological analysis drawing on Weber and others on the broader significance of accounting, moreover, was missing from the academic accounting arena.

However, the calculative practices and reports of financial accounting are only a part of the workings of accounting, as well as are the management accounting approaches of budgeting and control persistent in present-day workplaces. Since 1980s, accounting scholars have dealt with the broader roles of accounting in organisations and society and searched for the nature and rationale of accounting. It has been suggested that there is no single all-encompassing logic of accounting, but rather “the very idea of accounting is fluid, historically contingent, and constantly shifting” (Miller & Power 2013). Accounting is “a complex” that includes not only the functions of financial management and reporting, budgeting, auditing etc. but also the elements of standards, information systems, ideas and human agents.

The overarching rationales of efficiency, accountability and sustainability stimulate the production of accounting calculations and are often operationalized through the technique of accounting. But accounting also has more profound roles to play in the institutional fields in which it operates, in part because of its ability to produce calculations to be used in the decision-making processes, and in part because it also constitutes and shapes the domain of economic operation. To put it briefly (following an admirable article by Miller & Power 2014 that you can find here for reading!), accounting renders entities and individuals calculable and comparable, and audited for “a proper performance”. Often presented in the form of figures and numbers that are proven to have universal appeal, accounting presents plural organizational realities as stabilized facts.

These complex workings of accounting(s) are indeed embedded in our everyday lives and have multidisciplinary potential. Thinking of the world of Monty Python, it is perhaps the lion tamer -accountants that are needed nowadays to tackle the implications of accounting intertwined in the societal and organisational processes of politics and power.

For further reading, here’s the background inspiration once more: Miller, P & Power, M. (2013), “Accounting, Organizing, and Economizing: Connecting Accounting Research and Organization Theory”, The Academy of Management Annals, 7:1, 557-605.

CSR-banner_1Accounting? Things such as corporate responsibility belong to the field as well…