Accounting as Power and Control: Achieving Accountability

Introduction: Accountability and Accounting

The term "accountability" is usefully defined by Roberts and Scapens (1985), as cited in Roberts (1991, p. 4): "Accountability in its broadest sense simply refers to the giving and demanding of reasons for conduct." When connecting accountability to accounting, they further observe that "accounting institutionalizes the notion of accountability; it institutionalizes the rights of some people to hold others to account for their actions" (ibid.), and that accounting therefore reflects social values, norms, conventions, and expectations. In this sense, accounting is a value system that binds its own ideologies onto society.

The role of accounting as a subjective and control-implementing discipline has long been recognized. What this essay seeks to determine is whether accounting is the discipline best suited to exerting control over organizations and people, or whether it should be replaced by a model that is more objective and more responsible in achieving accountability. This essay explores the subjectivity and bounds of the power claimed by accounting, and then proceeds to question whether an alternate form of expression could be found that would be more impartial and effective in its dominion.

Accounting is a discipline in flux — it is in constant momentum of evolution and development, shaped by the variables of surrounding culture and environment. It is therefore not only changeable but also capable of being changed.

Accounting as a Constructivist Enterprise

Miller and O'Leary (1987) argue that accounting can be understood within Foucault's equation of human knowledge as power. The human sciences, accounting included, exert certain power over individuals, robbing them of aspects of their autonomy.

In this manner, accounting can be seen as a constructivist enterprise in that it serves to construct a particular field of visibility — shaping its domain so that we see it from one specific angle rather than from multiple perspectives. Certain aspects of its territory are emphasized whilst others are ignored (Lehman, 2005). For instance, corporate accounts publicize industrial actions such as "acquisitions, downsizing, spin-offs, globalization, increased market share, new and innovative technologies, outsourcing and the reduction of labor costs through relocating manufacturing facilities" (Miller and O'Leary, 1987, p. 239) whilst ignoring other issues, such as persistent wastage of goods and reckless pollution. These issues would detract from what the organization wishes to promote, and they are therefore ignored.

As Chwastiak and Young (2005) point out, monthly or annual records play only on optimistic factors and elements of success. They ignore the phenomenon of unbalanced distribution of wealth that results in global hunger, violence, and death — consequences for which corporate actions are largely responsible, along with environmental pollution and the contamination of food with pesticides. Nonetheless, the accounting records of these corporations ignore such phenomena; they are either rationalized away or attributed to society as a whole rather than to the corporations themselves.

The organization, through its language of "accountability," imposes certain perspectives whilst eliminating or attenuating others (Armstrong, 2002). From the nineteenth century onwards, members of the profession hedged themselves with a whole structure of calculative norms and standards that stood between them and the worker — and certainly between the discipline and the lay person — thereby obstructing and obfuscating the enterprise. This process attributed accounting with a certain domination. Eventually, the power of the discipline transitioned from the employer to the machine, that is, to the conventions and hieroglyphics of accounting, which placed an inhibiting influence on the very individuals who operated within the discipline.

Miller and O'Leary (1987) concluded:

"Accounting can no longer be regarded as a neutral and objective process. It comes rather to be viewed as an important part of a network of power relations, which are built into the very fabric of organizational and social life." (p. 240)

Accounting theory and practice were well established by the 1930s. The norms and conventions, including the vocabulary, began to crystallize around that time. Phrases such as "the standard cost," "variance analysis," "the budget," and "budgetary control" entered common usage. Standard costing and budgeting pinpointed a set of responsibilities within the discipline, and the individual actor gained his professional reputation according to how well he operated in relation to these standards. Standard costing and budgeting thus became innovations that defined individual expertise vis-à-vis the field. This form of making all individuals accountable soon manifested itself as a form of social power — "domination," in Foucault's vocabulary.

The Language of Accounting and Scientific Management

Individuals were described according to the norms of standard costing and budgeting, which delineated and asserted parameters around their contribution to society. Statistical deviations from the norm placed individuals within certain categories and also introduced social controls — such as eugenics, mental hygiene, and mental testing — to induce conformity to "contributive" and "efficient" norms. It was in this way that accounting indirectly served as an instrument of socio-political maneuvering and control. The great craze of efficiency was also expressed in one of the foremost philosophies of the period, William James' pragmatism. Efficiency soon became imbued with ideological context as well. Poverty and destitution were framed as losses for society as a whole, and by defining and promoting efficiency, social welfare could be improved. Enter scientific management, which defined individuals and resources as worthy of retention or elimination depending upon their efficiency.

Accounting historians unanimously agree that the discipline of scientific management introduced the concept of standard costing into the accounting literature. In Principles of Scientific Management, F.W. Taylor proposed that scientific management would replace vagueness and the unpredictability of human imagination with exact scientific knowledge of the extent of waste caused by human inaptitude, and would set itself the task of the systematic elimination of such waste. Other scientific managers reached similar conclusions. Harrison, a modifier of cost accounting practices, argued that cost accounting had failed to achieve its purpose. The mission of accounting, as he saw it, was to direct management's attention to preventable inefficiencies so that steps could be taken to eliminate them (Bryer, 2006).

Through the strenuous endeavors of scientific managers such as Harrison, standard costing became the means by which both workers and employers could be controlled and oriented toward better performance. Money shaped workers into a homogenous, undistinguished organism, and budgeting and standard costing served as the lens through which individuals were perceived — in terms of rationality and efficiency. It was the discipline of accounting, shaped by scientific management, that constricted humans into this perspective and, by doing so, claimed dominion over them.

As Argyris (1952, as cited in Young, 2006, p. 582) later asserted, accounting as a discipline depersonalized humans, comparing accountants to those who had:

"reached the ultimate state of dwelling within an electronic tube and emerging only to shake a mechanical finger at erring human beings."

Argyris (1952) drew attention to the fact that different groups of people — "budget people," "factory supervisors," and "factory employees" — held diverse perspectives on budgeting, and that accounting had imposed a negative construction on human beings that was not necessarily accurate. In other words, accounting could be seen as a constructivist discipline and as a mechanism for inserting pressure on a largely powerless population.

Conclusion

Whilst textbooks and business managers consider accounting to be the most important management control system, modern scholars consider its role to be subjective and, consequently, problematic. Most argue that accounting, by placing a specific controlling lens on reality, serves as one among many control systems. Marx, in fact, argued that modern accounting lies at the core of capitalist control of modern business enterprises (Bryer, 2006), and Weber would have seen it as conducive to history's troubling rationalization of man. Marx was not far wrong, for, as we have seen, the discipline of accounting served as an instrument for scientific management to convert people into machines and to judge them — and eliminate them — according to standards of efficiency. Western society, particularly that of the United States, is not regarded by many as being substantially different today.