Throughout society, the influence of accounting permeates

fundamental issues concerning wealth distribution, social

justice, political ideology and environmental degradation.
Contrary to public opinion, accounting is not a static
reflection of economic reality, but rather is a highly partisan
activity
Baker and Betner 1997 as quoted in Deegan 2010

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Critical
Perspectives in
Accounting

 Discuss the co-existing and competing

paradigms in the accounting world;
Explain why some scholars and practitioners
challenge widespread beliefs held about
accounting and its function in society
Discuss the arguments which suggest that
accounting values are contradictory to the
traditional values of indigenous peoples.
Discuss the arguments that accounting
supports and privileges individuals in society
who control resources and exercise power.

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Objectives

 Refers to accounting research that goes

beyond questioning whether particular
methods of accounting should be employed
Focuses on the role of accounting in sustaining
the privileged positions of those in control of
resources (capital) while undermining or
restraining the voice of those without capital
Critical accounting theorists seek to highlight,
through critical analysis, the key role of
accounting in society
Challenges the view that accounting can be
construed as objective or neutral
Accounting seen as a means of constructing or
legitimising particular social structures

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Critical perspectives
defined

 Grounded in Political Economy Theory (see chapter 8)

political economy is the social, political and economic
framework within which human life takes place (Gray et al
1996)
Critical research is based on Classical branchit considers
structural conflict, inequity and the role of the state. Central
to much critical accounting research is an underlying belief
that the distribution of power in society is not even and that
the way society is structured benefits a particular elite, and
undermines the rest.
Social and Environmental accounting is based on the
bourgeois branch. Accounting researchers who adopt other,
non classical, theoretical perspectives typically do not
consider issues associated with an uneven distribution of
power in society.
They accept the way society is currently structured as a
given and tend to make an implicit assumption that power is
evenly spread throughout society.

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Origins of critical
perspectives

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Marxist critique of
accounting

 Owners of capital are regarded as having

(unfairly) accumulated their wealth by the
historical exploitation and expropriation (over
several centuries) of the value created by
workers.

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Marxist critique of
accounting

Accounting is a powerful tool in both enhancing

the power and wealth of capital and helping to
protect this power and wealth from threats arising
from the structural instability of capitalism .
6

 Related to the works of philosophers such as

Marx,
Also based on others eg: Hegel, Weber and Foucault.

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Classical Political economy

perspective

Explicitly considers structural conflict, inequity,

and the role of the State at the heart of the
analysis
Highlights issues which may not otherwise be
addressed such as social welfare
7

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So Critical theorists
would like social and
environmental
accounting then?

 That disclosure of social responsibility information

is wasted unless accompanied by fundamental
changes in how society structured

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Critical view of disclosure of

social responsibility information

The disclosure acts to legitimise, not challenge,

those providing the information

 As accounting deemed to sustain particular social

structures, introduction of new forms of accounting will
only help to sustain that social system
Consider that the disclosure of corporate social
responsibility information acts to legitimise and not
challenge those providing the information.

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Critical views on social and

environmental accounting

Considered that it is a wasted effort to use accounting to

solve problems in society because one is using the very
process that caused the problem to try to solve the
problem
Accountants are complicit in supporting a powerful elite
10

Deegan Page 575

 The State is seen as a vehicle of support for

holders of capital and for the capitalist system as
a whole
Government will take action to enhance the
legitimacy of the social system
Social disclosures seen as a means of pacifying
challenges against the capitalist system where
corporations given many rights and powers
Restricting the flow of information, or availability
of specific types of information seen as a means
of maintaining particular organisations and social
structures
government does not operate in the public
interest, but in the interests of well off groups

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Role of the State

11

 Accounting researchers are seen as providing

research results and perspectives that help to
legitimise and maintain certain political ideologies
eg. anti regulation stance and EMH during the late 1970s
and 1980s matched the views of government at the time

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Role of accounting
research

rise of PAT consistent with political views at the time

rise of economic consequences research seems to have
been motivated by desire of large corporations to counter
attempts to change reporting systems and levels of
disclosure
research efforts into inflation accounting were seen as being
motivated by a desire to alleviate shifts in real wealth from
owners to higher wages, not by rate of inflation

12

 Moore (1991) suggests that the low level of

consideration of critical accounting theory by US
accounting academics could be due to the
universities reliance on business funding.

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Role of accounting
research

13

Critical theorists see conceptual frameworks as

legitimising the accounting profession and of financial
reports produced by reporting entities
Accountants seen as imposing their own views about
what performance characteristics are important or not
important
Attention is directed to particular measures (eg.
profits) through accounting
in communicating reality, accountants simultaneously
construct reality
Political economy perspective emphasises the role of
accounting reports in maintaining social arrangements
Critical theorists see the adoption by the profession of
corporate social reporting as harmful as it gives the
impression of concern and change without any real
change occurring

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Role of accounting
profession

14

15

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Kinship, Co-operation,
Co-existence and
Egalitarianism
Mainstream Western
accounting and
accountability values (yang)
instead focus on:
Individualism
Achievement
Independence

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Accounting and the

values
of
Indigenous
Indigenous values (yin)
include:
peoples
Sharing, Relationships,

16

 Argued by Greer and Patel (2000) that attempts to

dissipate social and economic disadvantage via
imposition of financial accountability measures on
Indigenous groups is unlikely to deliver fair social and
economic outcomes.

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Accounting and the values of

Indigenous peoples

Greer and Patel (2000) also criticise the Hofstede-Gray

model (covered in topic 6) for not acknowledging cultural
differences within countries, and for not acknowledging
the effects of accounting on cultures.
17

 Accountants appear neutral and objective theirs

is a hidden power.
Accounting legitimises the current social and
political structure of the organisation

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The power of
accountants

Accounting legitimises the capitalist system,

annual reports are also used to protect and
legitimise the system General Motors pg 551

18

 Are financial statements objective and neutral

from a critical perspective?

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Discussion Question

19

 Critical theorists often marginalised to a greater

extent than others
Often do not provide solutions to perceived
problems

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Criticism of critical
perspective

inconsistent with normal training of accountants to

provide solutions if problems are evident

That it is critical of accountants

20

21

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 Discuss the co-existing and competing

paradigms in the accounting world;
Explain why some scholars and practitioners
challenge widespread beliefs held about
accounting and its function in society
Discuss the arguments which suggest that
accounting values are contradictory to the
traditional values of indigenous peoples.
Discuss the arguments that accounting
supports and privileges individuals in society
who control resources and exercise power.

12/29/16

Objectives - recap

22