Opening Accounting to Critical Scrutiny: Towards Dialogic Accounting for Policy Analysis and Democracy

Abstract

Engaging policy studies audiences in the critical scrutiny of accounting potentially enhances the possibilities for democratizing accounting. To facilitate realizing this potential, this article highlights traditional accounting’s narrow focus on financial markets and shareholder wealth maximization, its failure to adequately account for the social and environmental impacts of organizational activity, and the role it has played in the spread of neoliberal logics. It outlines proposals for dialogic accounting theory and practice aimed at developing civil society-oriented accounts that foster critical reflection and debate on organizational practices. The discussion also highlights the significant challenges involved in developing dialogic accounting – in terms of both the taken-for-grantedness of business-oriented framings, and wider political economy context. The article underlines the importance of cross-disciplinary initiatives and civil society engagement in efforts to challenge the monologism of traditional accounting and develop democratically responsive accounting.

Keywords:

• comparative analysis
• monologic accounting
• dialogic accounting
• conceptual analysis

Acknowledgements

Many thanks to participants at the 7th International Conference in Interpretive Policy Analysis, 5–7 July 2012, Tilburg University, the Netherlands and two anonymous referees for their very helpful feedback on earlier versions of this paper.

Notes

1. The Global Reporting Initiative is widely regarded as the leading international framework for voluntary non-financial reporting by corporates (Dingwerth and Eichinger 2010: 76).

2. The International Integrated Reporting Council was established by the Prince of Wales Accounting for Sustainability (A4S) project in 2010 in collaboration with the Global Reporting Initiative and the International Federation of Accountants, together with other international financial and accounting bodies.

3. Brown (2009) uses the term dialogic accounting to highlight critically reflexive learning processes and debate among multiple actors. However, she and others have also used the term polylogic to denote the possibility of many – and potentially incommensurable – positions and/or logics. The potential for deep differences – such as incompatible epistemic or value positions – underlines the political nature of accounting. Rather than use the cumbersome phrase “dialogic/polylogic accounting”, we use the term “dialogic” here to denote both dimensions. We elaborate on the underpinnings of dialogic accounting in agonistic political theory in the third section, on contemporary developments.

4. See Söderbaum and Brown (2010: 182–183) for discussion of “ideological orientation” as a key concept in pluralistic appraisal. It is used in the sense of a “worldview” to denote “a web of ideas that is fundamental to thinking and action”.

5. Some professional accounting bodies admit a bias in favour of investors but assert that in meeting their information needs, other users will be catered for. For example, the International Accounting Standards Board (IASB 2010: 11) in its conceptual framework advises that: “Other parties, such as regulators and members of the public other than investors, lenders and other creditors, may also find general purpose financial reports useful. However, those reports are not primarily directed to these other groups”. The IASB (2010: 5) favours “focusing on financial statements that are prepared for the purpose of providing information that is useful in making economic decisions” and “believes that financial statements prepared for this purpose meet the common needs of most users”.

6. For example, Watts and Zimmerman (1979: 280), in considering the demand for accounting theories in a regulated economy, advise that: “We assume that private citizens, bureaucrats, and politicians have incentives to employ the powers of the state to make themselves better off and to coalesce for that purpose. One way by which coalitions of individuals are made better off is by legislation that redistributes (i.e., confiscates) wealth”.

7. Although, as Brown and Dillard (2013b: 177) emphasize, there are more difference-sensitive versions of deliberative democracy that could be used to address at least some of these criticisms.

8. For a summary of some of these projects, see: http://csearweb.blogspot.co.uk/2012/07/closer-look-at-research-dialogic.html.

9. We would argue that direct financial costs and benefits also involve high levels of subjectivity and contestability – for example in terms of which and whose financial costs and benefits count and the discount rates applied to take account of the time-value of money, which assume “that flows of value occurring in the future are less important than those occurring at the time of appraisal” (Leach et al. 2010: 103).

10 See, for example, Anderson (1988: 60) contrasting workers’ self-understandings of their risk decisions with the view presupposed by cost–benefit analysis.

11. For example, we are encouraged by the 2014 International Student Initiative for Pluralism in Economics. In an open letter, students from 19 countries are calling for the teaching of a range of theoretical perspectives, including classical, post-Keynesian, institutional, ecological, feminist, Marxist and Austrian economics, arguing that: “The teaching of economics is in crisis … and this crisis has consequences far beyond the university walls. What is taught shapes the minds of the next generation of policymakers, and therefore shapes the societies we live in … We are dissatisfied with the dramatic narrowing of the curriculum that has taken place over the last couple of decades. This lack of intellectual diversity does not only restrain education and research. It limits our ability to contend with the multidimensional challenges of the 21st century – from financial stability, to food security and climate change”. See http://www.isipe.net/open-letter/.

Additional information

Funding

We wish to thank the Royal Society of New Zealand Marsden Fund for supporting this research as part of a funded project on “Dialogic Accounting: the Challenge of Taking Multiple Perspectives Seriously” [contract number VUW1011].

Notes on contributors

Judy Brown

Judy Brown is a Professor of Accounting at Victoria University of Wellington. She is an associate editor for Critical Perspectives on Accounting and is on the editorial boards of the Accounting, Auditing and Accountability Journal, Journal of Accounting and Organizational Change, Issues in Social and Environmental Accounting and International Journal of Pluralism and Economics Education. Her research interests focus on the study of accounting in its social and political contexts, including the development of new pluralistic approaches to accounting theory and practice.

Jesse Dillard

Jesse Dillard is a Professor of Accounting at Victoria University of Wellington and at the University of Central Florida. He was the founding editor of Accounting and the Public Interest, and serves as associate editor of Critical Perspectives on Accounting, Accounting Forum and the Sustainability Accounting, Management and Policy Journal. His research interests include the ethical and public interest implications of administrative and information technologies particularly as they affect social and environmental sustainability and accountability.