Accounting and the Big Issues: Developing Interconnectedness
Today’s world is replete with challenging economic, institutional, social, environmental, ethical, and sustainability issues. Answers to the “big questions” and solutions to the “wicked problems” are urgently needed. To this end, the accounting profession needs, in the first instance, to rediscover the connections and communications between the practitioner and academic communities. This is a “two-way street,” requiring accounting academics and practitioners to mutually engage, not merely limited to funneling new members into professional associations but to jointly addressing challenging national and global issues facing business, government, and the “Third Sector” [constituting organizations not belonging to the public sector (the state) nor the private sector (profit-seeking corporations), such as not-for-profit organizations].
To address the contemporary world’s complex challenges, there is a strong case for the accounting profession to intentionally engage more directly with other disciplines beyond finance and economics. Its fundamental conceptions and definitions require reappraisal and revision to reposition accountancy as a multi-disciplinary, enhanced, globally relevant, and proactively thought-leading profession. While there has been a growing, and welcomed, focus by the profession on Corporate Social Responsibility (CSR) by means of sustainability reporting, the Triple Bottom Line (TBL), and Environmental, Social, and Governance (ESG) reporting, these approaches to date have been typically interpreted through the narrow lens of accounting understood as technical practice alone, under traditional, narrow definitions of accounting. Such an interpretation focuses on the corporate and professional self-interested financial business case rationale rather than the broader societal, ecological, and global impacts that are increasingly what concern governments and communities.
The next section elaborates on this point, identifying accounting’s technical emphasis with respect to “How do we do the accounting?” The author’s prime concern in this article is to elucidate a new definition of accounting that has, to date, been embraced by a large cohort of accounting researchers and educators internationally. This definition offers the profession a new, and more inclusive, trajectory for shaping a better world in the future.
Developments in Academia: Redefining Accounting
Accounting conditions the way we think and what we do. It is a highly influential discipline, albeit not always well-understood or appreciated. What is accounting today? Students repeatedly ask this question when pondering whether an accounting career is the right choice for them. For recruiters, a failure to move beyond a traditional technicist accounting definition may presage a growing risk of deterring interest from graduates with broader interests and agendas.
In the past, accounting was typically defined as measuring, recording, classifying, summarizing, and communicating information for decision-making. In recent decades, however, accounting research and education have taken a broader view—laying the foundation for accounting’s expanding scope and global outreach.
A broader, universal definition of accounting, focusing on its three key dimensions—technical, social, and moral—offers a paradigm shift. It is central to broadening accounting’s role in society and enhancing its attractiveness to the best and brightest future professionals. This is neither a new nor unachievable aspiration. Accounting has a long history of developing and enlarging its scope of activities and services over time—particularly over the past 200 years, coinciding with the advent of the limited liability company. These began with the reporting of funds statements, and then cash flow statements, consolidated financial reports combined with segment reports, and quarterly reporting.
Far from the typical textbook definition, scholars increasingly recognize accounting as a multidimensional technical, social, and moral practice. A new definition is offered by these authors as follows:
Accounting is a technical, social, and moral practice concerned with the sustainable utilisation of resources and proper accountability to stakeholders to enable the flourishing of organisations, people and nature (Carnegie et al., 2021a, p.69; 2021b).
Moving from the traditional understanding provided in earlier definitions, accounting is posited as “not being a mere neutral, benign, technical practice” (Carnegie et al., 2021a, p.72). Instead, the above-proposed definition confirms that accounting is a discipline with critical social and moral imperatives that impact people’s lives and the global environment. This may offer a new perspective for those who may otherwise decide against a career in accounting, given the prominent role of accountants and accounting firms in recent corporate collapses, scandals, and high-profile or massive conflicts of interest. Instead, this definition reacquaints the profession with its core mission: to serve in the public interest (AICPA Article II).
In effect, this implies a broader understanding of accounting needs to be operationalized, especially among the discipline’s practitioners. This begins at the first levels of accounting education, which impart a broad scope understanding of “the nature, roles, uses, and impacts of accounting in its operational contexts, both in organizations and societies” (G. Carnegie, L. Parker, and E. Tsahuridu, “Accounting Research for Shaping a Better World,” Knowledge Gateway, IFAC, October 22, 2022b, https://tinyurl.com/5xh6uee6). Under this aspiration of accounting for a better, more sustainable world, acting in the public interest extends to when the 1) technical, 2) social, and 3) moral elements are all accepted as the basis of accounting; accordingly, these elements collectively constitute and portray the prime “public interest” obligations to be consciously met in professional practice (G.D. Carnegie, D. Gomes, K. McBride, L.D. Parker, and E. Tsahuridu, “How Accounting Can Shape a Better World: Framework, Analysis and Research Agenda,” Meditari Accountancy Research, vol. 32, no. 5, pp. 1529–1555, 2024).
This proposed redefinition of accounting is essential given the array of grand challenges such as global pandemics, significant environmental concerns, failing social justice systems, and growing wealth disparities. These immense challenges require innovative government, business, profession, and community responses and strategies built on collaboration and goodwill—including the expertise of accountants, respected due to their integrity, who are alert to developing and reframing professional practice to embrace and engage with the new possibilities of accounting under this definition.
What’s more, today’s obsession with detailed micro-performance metrics is reinforced by accounting processes that impact organizational, social, and moral functioning. This can risk dysfunctional impacts such as shaping organizations to take on originally unintended distorted identities and roles. It is a classic case of goal displacement, wherein the organizational KPIs become the primary objectives in themselves, and the organization’s primary aims, scope, roles, and impacts are distorted and lost. For example, it can transform organizations such as public universities into self-interested revenue-pursuing corporations fixated upon climbing global ranking tables in direct competition with each other. In so doing, they subvert their official missions and visions for advancing the public interest and generating public benefit (G.D. Carnegie, “Global University Rankings: The Macro-Micro Contradiction in Public University Management,” Accounting and Management Review, vol. 26, no 1, pp. 77–109, 2022). As Twyford and Abbas (“Broadening the Boundaries of Accounting: A Call for Inter-disciplinarity in the Calculative Era,” Meditari Accountancy Research, vol. 31, no. 1, pp. 187–211, 2023) argued: “this necessitates moving beyond a technical field to one that can perhaps facilitate and illuminate social and moral understandings while contributing to solving societal challenges and wicked problems.”
Social and Moral Practice: The Case of Artifacts in Public Museums
Accounting is a social practice. It impacts organizations, people, and nature depending on what information is collected and reported—as well as what information is not collected or reported. It significantly affects how we operate, are evaluated, and behave. Accounting is also a moral practice, one whose actions and inactions influence others, now and in the future, and help shape the moral order of organizations and society (see, e.g., J.R. Francis, “After Virtue? Accounting as a Moral and Discursive Practice,” Accounting, Auditing & Accountability Journal, vol. 3, no. 3, pp. 5–17, 1990).
For accounting to retain its social and community legitimacy and maintain the trust of stakeholders, it needs to reflect and account for organizations not only in their economic contexts but also in their social contexts. Accounting is not solely the technical calculative execution of accounting processes. For example, the growing trend towards placing monetary values on public cultural, heritage, and scientific collections for financial reporting purposes is incongruous. Why? Public collections of art and artefacts are universally known as “priceless” because public museums’ and galleries’ precious cultural, heritage, and scientific collections cannot be simplistically represented as assets in financial statements. They possess non-financial cultural, heritage, and scientific values in their organizational and social contexts; they are, at law and in substance, deliberately and legitimately held as long-term public collections for preservation, conservation, protection, and community appreciation.
Collection objects are purposely removed from “the economics of the marketplace.” They can only be legitimately returned to the market by being put through a formal “deaccessioning process” (G.D. Carnegie, and E. Kudo, “Whither Monetary Values of Public Cultural, Heritage and Scientific Collections for Financial Reporting Purposes,” Journal of Public Budgeting, Accounting & Financial Management, vol. 35, no. 2, pp. 192-197, 2023). As a moral practice, only formally deaccessioned collection objects can be legitimately accounted for as assets on the balance sheet.
Accounting is being deployed to reconfigure priceless resources to become what they are not, however, and saleable goods are increasingly at risk of being subject to punitive annual capital/finance charges levied by national or state governments. This socially and morally inappropriate accounting ignores these public institutions’ unique missions and contexts. Moreover, accounting for organizations as social and moral practice cannot disconnect organizations from their formal, public statements of overarching and time-honored commitments and subvert their missions to stakeholders and society more broadly (Carnegie, 2022).
Under the elaboration of what is in the “public interest” in the previous section under Carnegie et al.’s (2021a, 2021b) definition, the monetary valuation of the collections of public, not-for-profit cultural, heritage, and scientific collections for financial reporting purposes is indeed not in the public interest; it fails under the social and moral dimensions of accounting as articulated by Carnegie, Parker, et al. (G.D. Carnegie, P. Ferri, L.D. Parker, S.I.L. Sidaway, and E.E. Tsahuridu, “Accounting as Technical, Social and Moral Practice: The Monetary Valuation of Public Cultural, Heritage and Scientific Collections in Financial Reports,” Australian Accounting Review, vol. 32, no. 4, pp. 460–472, 2022). The authors argue that nothing is more important in the domain of accounting today than acting in the public interest.
Interdisciplinarity and Multidisciplinary: Bridging the Gap Between “Us” and “Them”
In an era of growing recognition of the importance of social and environmental responsibility, Milton Friedman’s platitude, “The business of business is business,” is no longer acceptable to the public (i.e., to local, national, regional, and international societies). Moreover, to shape a better world, accounting must move beyond its current focus on the technical, the numerical, and the one-dimensional. Our “bottom line” is fixated on economic transactions that obscure much of our social and natural worlds and their grand challenges. Addressing the latter requires new multidimensional evaluation, analysis, and account-giving practices, without which technically and economically defined accounting will find itself increasingly irrelevant and marginalized—potentially increasing wealth disparity in society. If the accounting profession simply applies band-aid solutions in the form of primarily corporate profit-interested social/environmental adjustments to its still dominant technical, financial measurement focus, this will be seen as self-serving and inadequate by governments, media, communities, and societies.
A return to a tradition of stimulating academic and practitioner engagement and dialogue in accounting practitioner journals can “offer the prospect of a future profession that engages far more proactively with the human issues and their moral, social, institutional, economic and environmental aspects” (G. Carnegie, L. Parker, and E. Tsahuridu, “SOS Accounting Educators: Developing Accounting and Accountants for a Better World,” Knowledge Gateway, IFAC, April 19, 2022a, https://tinyurl.com/2pta8xp4). Our profession’s engagement with other disciplines in order to effectively deal with today’s major challenges is long overdue. Only through effective interdisciplinary partnering and understanding can a multidimensional technical, social, and moral accounting reach its full potential and help shape a better world.
Expanding the accounting definitional scope to purposely include its social and moral imperatives offers the best prospect of enabling the profession to acknowledge the humanistic elements of accounting practices. This imperative encompasses “the envisioned future education and work trajectories of the profession” (E. Twyford, “Crisis Accountability and Aged ‘Care’ During COVID-19,” Meditari Accountancy Research, vol. 31, no. 1, pp. 1–27, 2023). The authors encourage all professional accounting associations, practitioners, and academics as well as politicians, policymakers, legislators, and regulators, along with accounting standard setters to view this new definition as an opportunity—not as a threat to the status quo or accountants’ traditional role. Indeed, maintaining the current economics-oriented technical definition poses a far greater threat to the accounting profession’s role and viability. This broader definition instead opens endless possibilities for what accounting can offer and deliver to society and nature. Not only is accounting sufficiently adaptable and powerful to purposely shape a better world, but professional accountants and their associations are also obligated to aspire to realize accounting’s full potential.
Thinking Multidimensionally
Our profession has a golden opportunity to re-position accounting as “concerned with the sustainable utilization of resources and proper accountability to stakeholders to enable the flourishing of organizations, people, and nature” (Carnegie et al., 2021a, p.69; 2021b). This more holistic reconceptualization of accounting as a multidimensional technical, social, and moral practice recasts our discipline as more human-centered and aspirational.
Accounting’s future lies in bettering the world, its people, and the natural environment. The latter vitally sustains all humans and non-humans alike and contributes to safeguarding the planet. We are now challenged to serve “the public and the planet’s interests.” There is no “Planet B!” We inspire accounting to aspire to reach its full potential in shaping a better world.
The next generation of potential entrants to the profession is already inculcated with social and environmental responsibility concerns. They will arguably expect an accounting profession that has embraced a more meaningful definition and related orientation and ambition. They expect innovation that will achieve the accounting profession’s full potential. They will expect accountants to act in the public interest—something that can be attained when the technical, social, and moral elements of accounting are vital to its satisfaction. This envisaged future of accounting can also transform the accountant’s image and stereotype with positive implications for recruiting talent into the profession (G. Carnegie, and J. Rose, “How Should We Redefine Accounting?” ICAEW Insights, April 14, 2023, https://tinyurl.com/3c4bf3y4; G. Carnegie, L. Parker, and J. Rose, “Redefining Accounting for Shaping a Better World and a More Attractive Profession,” ICAS News, Nov. 16, 2023, https://tinyurl.com/ytdfhaju; F. Leão, and D. Gomes, “The (Lack of) Progress in Accountancy Professionalisation: Insights from Non-Accountants in Portugal,” Australian Accounting Review, May 2024, https://onlinelibrary.wiley.com/doi/10.1111/auar.12420).
To paraphrase former President John F. Kennedy: “Don’t ask what accounting can do for you; ask yourself what you can do for accounting—to shape a better world.”
