1. “Rip it up and start again”
Critical Perspectives

2. Could it be different?
Are we measuring the right things?

3. Accounting is neutral
Reality
Accounting

4. Solomon’s View
Accounting should follow journalistic standards and report not make the news
Accounting should emulate a well calibrated speedometer clocking the economic road speed
With social change in the broadest sense accounting has little to do
BUT…

5. Faithful representation
Accounting is neutral
Reality
Faithful representation
&
Neutrality
Accounting

6. ..but never mind individual accountants
What about the standard setter?

7. Accounting has economic consequences
Preparers and users lobby to:
promote,
obstruct or
influence the standard setting process

8. Capture theory
Regulation introduced to protect public but is often subsequently controlled (captured) by the regulated
Results in the protection of the regulated (for example, accountants, preparers i.e. big companies)
Very difficult for the regulatory body to remain neutral (even if they wanted to!)

9. Theories of the politics of standard setting
Standard setting is a political process – interested parties choose whether to lobby on a cost/benefit basis (draws on positive accounting theory).
Sutton (1984) used a cost/benefit model to explain when parties take part in the lobbying process
Watts & Zimmerman (1986) developed an economic model where benefits to managers depend upon expected future cash flow
Lobbying is a non-pluralistic process dominated by a few powerful groups to the detriment of others who are excluded from the process.

10. Faithful representation
Accounting is neutral
Reality
Faithful representation
&
Neutrality
Accounting

11. In communicating reality we construct reality
“…accounting practice and accounting research [is seen by some authors] as a constituor, influencer, reifier and legitimiser of social reality”
Hines 1991
Accountants need to acknowledge responsibility for actions that rebeverate beyond economic welfare.
Tinker 1991

12. Real examples Of accounting generally Design of regulation
British Imperialism – making territories governable
Neu 1999
Mobilisation of financial data against the workforce - cost consciousness
Puxty 1993
Accounting for defined benefit pension schemes

13. Tinker’s View Accounting is PARTISAN
Be explicit about the subjective perspective from which you view society
3 Critical Perspectives:
Marxist View
Feminist View
Deep Ecological View

14. Marxist View
Accounting is a powerful tool in enhancing the power and wealth of capital and protecting that wealth and power from the structural instability of capitalism

15. Example of structural instability of capitalism
Increased mechanisation
Decreased demand for labour
EFFICIENCY and PROFITABILITY
Less spending
No market for goods and LOWER profits

16. Owners of capital will protect their privilege & wealth
Financial Crisis: Structural Instability of capitalism
IAS 39 required banks to fair value account for financial assets
HUGE write downs – threat to banks’ survival
Government, investors, EU lobby for IASB to allow banks to retrospectively reclassify assets – amortised cost

17. Feminist Standpoint
Looking at the world through the lens of feminism!

18. The Feminist standpoint
THE FACTS
THE CONSEQUENCES
2 female Managing Partners in top 50 firms
16% female partners but 50% female entrants
Women under represented in accountancy
Accounting not neutral it’s masculine
Challenges the masculinity of powerful social institutions
Advocates social change through political action
Need a feminist perspective.

19. The CONSEQUENCES Examples of change:
Accounting profession acknowledge wider responsibilities: employees, citizens.
Different disclosure: distribution of corporate wealth, gap between lowest and highest paid employees

20. Deep Ecology

21. No trade offs
Challenges ways of human existence.

22. What’s the problem
Accounting should measure the broader issues – evaluate cost to the environment
INSTEAD
It ignores these issues.
BUT what about SER???

23. .. But even more traditional scholars argue that ….
Social & environmental accounting has been captured
Gray 2010
Need new ways of accounting that consider sustainability

24. In summary
You might have started this course thinking accounting was about certainties and facts
You should have discovered this year that its political, contested and that it doesn’t always faithfully represent economic reality
…and what is “economic reality” anyway?
Accounting doesn’t just have economic consequences – it has a real impact on people’s lives.