Story Garry Carnegie CA, Lee Parker FCA and Eva Tsahuridu

Cast your mind back to how accounting was defined when you first started studying. It was probably something along the lines of: measuring, recording, classifying and summarising information for use in decision-making.

Now, consider what you actually do and deliver as a professional accountant in business or in practice. Does the way we commonly define accounting adequately reflect its purpose, influence and contribution to society?

We have examined the extensive interdisciplinary literature on accounting, auditing and accountability, and considered the accounting profession’s responsibilities and impacts, intended and unintended. Today they extend to organisations, organisational and societal culture, communities – and our natural environment that is so often beset by disasters.

We arrived at the conclusion that accounting needs to be redefined if it is to fulfil and reflect its expanding role in today’s world.

Implications for members and future members

This carries important implications for the focus and work of professional accountants, the education of entrants to our profession and the ongoing professional development of our profession.

Further, we contend that accounting must be broadly conceived and practised according to the following new multidimensional definition, premised on the social and organisational contexts in which it operates.

Accounting is much more than an ensemble of techniques, concepts and procedures – it is not a technical practice alone; it is beyond a purely instrumental or technical pursuit. Accounting is social practice with enabling, disenabling and pervasive characteristics that reveal how accounting impacts human behaviour, shapes organisational and societal culture, and influences and modifies organisational and social functioning and development.

As social practice, accounting orders our lives such as by means of key performance indicators (KPIs) or other metrics which are often aggressively set and narrowly based, as well as being culture bending or reshaping. Accounting indeed impacts organisations, people and nature.

The morality of accounting

Accounting is a moral practice – indeed, morality is at accounting’s core – whose actions and inactions affect others, now and in the future. It contributes to shaping the moral order and accountability infrastructures of organisations and society, as reflected in the overarching responsibility to act in the public interest and the centrality of professional judgement in the Code of Ethics for Professional Accountants (APES 110 in Australia) and the New Zealand Institute of Chartered Accountants (NZICA) Code of Ethics Act.

This proposal for redefining accounting presents accounting in substance as a combined and continuous technical, social and moral practice rather than a mere neutral, benign, solely technical practice. Accounting is not just the ‘doing of accounting’, which itself is not simply a matter of following and complying with the applicable professional standards, accounting standards and other rules.

What does this extension – and broader, more complete – understanding mean for the global accounting profession, for the purpose of shaping a better world for tomorrow?

This proposed definition of accounting may be applied using a framework of key questions:

• Technical practice: How do we do accounting and what conventions drive what accounting fails to do?
• Social practice: What does accounting do and what are accounting’s impacts on organisations, people and nature?
• Moral practice: What should accounting do and what should accounting not do?

Addressing society’s challenges

This definition and framework of questions presents an impetus to accounting’s future leadership in addressing the challenges facing all of us: humans and non-humans alike. The accounting profession is to act in the public interest, which includes the interests of the natural environment, as well as those of the planet.

Accounting in substance must be studied, practised, regulated and evaluated in the contexts in which it operates. Whether changing or change resistant, accounting has consequences for human behaviour, for shaping the culture in all kinds of organisations and has implications for organisational and social functioning and development. Accounting conditions the way we think and what we do.

Accounting is more influential in the world and in our lives than many people may imagine or think. The way we define accounting is fundamental in defining its purpose, obligations and outcomes. A broader, clearer, more realistic and ‘gamechanging’ definition of accounting, which portrays the discipline as a social and moral practice, as well as a technical practice, is an essential step to take. 

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