After the scandals: A German-speaking perspective on management accounting research and education

Abstract

As a reaction to recent corporate scandals, corporate law and accounting regulations have recently been modified in German-speaking countries. Despite changing corporate contexts and agendas, accounting research in these countries has been comparatively silent on issues of corporate governance. In this paper, we discuss this limited response, focusing particularly on the field of management accounting. In German-speaking countries, management accounting is conceived of in a specific way (usually referred to as Controlling). The traditions of such a practice and the associated academic school of thought have made it difficult for researchers to consider issues of corporate governance and internal control in more empirical depth. Pointing to the importance of investigating the actual use of accounting systems and, thus, the social and institutional context of accounting, we propose a strategy for research and education that would allow for more comprehensive insights into the role that (management) accounting might play in corporate scandals.

Keywords:

• Management accounting
• controlling
• governance
• ethics
• accounting education

Notes

¹Compared to a more pronounced reaction that the scandals have generated in the international literature. See, for example, Benston and Hartgraves (2002), Lev (2002), Ronen (2002) and Verrecchia (2003) for accounting-related discussions. In the German-speaking literature, one notable exception is the special issue on ‘corporate governance and Controlling’ of the Zeitschrift für Planung und Unternehmenssteuerung [Journal of Planning], 14(4), issued in 2003.

²English-speaking discussions of these differences can be found in Sharman (2003) as well as in the work of Thomas Ahrens (1996, 1997; Ahrens and Chapman, 2000). In the following discussion of the German-speaking context, we will use the terms Controlling and management accounting synonymously.

³Gesetz zur Kontrolle und Transparenz im Unternehmensbereich.

⁴Deutscher Corporate Governance Codex.

⁵In Germany, legal compliance is usually not conceived of as ethical behaviour. Questions of ethics are thus separated from legal issues, which in turn means that, from this perspective, ethical behaviour cannot actually be brought about by laws and regulations (Palazzo, 2002, p. 203).

⁶ Controlling education thereby covers both traditional techniques of cost accounting (‘Kostenrechnung’) and the more recently established instruments, such as target costing, activity-based costing or the Balanced Scorecard. These instruments, however, are usually not discussed at the level of practice, that is, their actual use and effects, but mainly with respect to their design and supposed qualities.