HINES_Communicating & Constructing Reality_highlighted

8/9/2019 HINES_Communicating & Constructing Reality_highlighted

1/11

Accounting. Organizations andSocie y, Vol. 13 , No. 3 , pp . 251 -261 , 1988 . 036 1-3 68 2/8 8 $3 .00+ .00Pr in ted in Grea t Br i ta in Pergam on Press p lc

F I N A N C I A L A C C O U N T I N G : I N C O M M U N I C A T I N G R E A L I T Y, W E C O N S T R U C T

R E A L I T Y *

R U T H D H I N E SMacq uari e University, N.S. W., Austral ia

A t f i rs t I sa w D o n J u a n s i m p l y as a r a t h e r p e c u l i a r m a n w h o k n e w a g r e at d e a l . . , b u t t h e p e o p l e . . , b e l i e v e dt h a t h e h a d s o m e s o r t o f s e c r e t k n o w l e d g e , t h a t h e w a s a b r u jo . T h e S p an i sh w o r d b r u j o m e a n s , i nE n g l i s h . . . s o r c e r e r. I t c o n n o t e s e s s e n ti a ll y a p e r s o n w h o h a s e x t r a o r d i n a r y. . , p o w e r s .

I h a d k n o w n D o n J u a n f o r a w h o l e y e a r b e f o r e h e t o o k m e i n t o h i s c o n f i d e n c e. O n e d a y h e e x p l a i n e d t h a th e p o s s e s s e d a c e r t a in k n o w l e d g e t h a t h e h a d l e a r n e d f r o m a t e a c h e r, a b e n e f a c t o r a s h e c a l l e d h i m , w h oh a d d i r e c t e d h i m i n a k i n d o f a p p r e n t i c e s h ip . D o n J u a n h a d , in t u r n , c h o s e n m e t o s e r v e a s h i s a p p r e n t i c e ,b u t h e w a r n e d m e t h a t I w o u l d h a v e t o m a k e a v e r y d e e p c o m m i t m e n t a n d t h a t th e t r a i n i n g w a s l o n g an da r d u o u s . . .

M y f i el d n o t e s d i s c l o se t h e s u b j e c t i v e v e r s io n o f w h a t I p e r c e i v e d w h i l e u n d e rg o i n g t h e e x p e r i e n c e . T h a tv e r s io n i s p r e se n t e d h e r e . . .

M y f i e ld n o t e s a l so r e v e a l t h e c o n t e n t o f D o n J u a n ' s s y st e m o f b e l ie fs . I h a v e c o n d e n s e d l o n g p a g e s o fq u e s t i o n s a n d a n s w e r s b e t w e e n D o n J u a n a n d m y s e l f i n o r d e r t o a v o i d r e p r o d u c i n g t h e r e p e t i t i v e n e s s o fc o n v e r s a t i o n . . .(The Teachings ofDonJuan~. A Yaqui Way of Knowledge, Carlos Castaneda, 1970, pp. 14,24, 25) .

W e s t o o d t o g e t h e r , l o o k i n g d o w n i n t o t h e v a l le yb e l o w . . . t

W h a t d o y o u s e e b e f o re y o u ? s a id t h e M a s t e r .We l l , i n t h e v a l le y , I s e e b u i l d i n g s o f v a r i o u s

k i n d s , s p r e a d o v e r a l a r g e a r ea , a n d s u r r o u n d e db y a f e n c e . T h e r e a r e p e o p l e i n s i d e t h e f e n c e . A

r i v e r r u n s t h r o u g h t h e v al l e y, a n d t h r o u g h t h ea r e a e n c l o s e d b y t h e fe n c e . A n d o u t s i d e t h ef e n c e t h e r e a r e t r e e s , u p t h e s i d e s o f t h e v a l l ey ,a l l a r o u n d , a s f a r a s t h e e y e c a n s e e .

A n d d o y o u k n o w w h a t i t i s, t h a t y o u s e e ?

I t s e e m e d t o m e t h a t I h a d a c c u r a t e l y , t h o u g hb r i ef l y , d e s c r i b e d w h a t I s a w . B u t I w a s u s e d t os u c h q u e s t i o n s f r o m t h e M a s t e r . I t w a s h i s w a y o f

g u i d i n g m e a l o n g t h e p a t h o f t h e s p e c i a l k n o w -l e d g e w h i c h h e p o s s e s se d , a n d w h i c h h e h a d d e -c i d e d t o i m p a r t t o m e , a s h i s a p p r e n t i c e . I r e -

c a l l e d o u r p r e v i o u s c o n v e r s a t i o n :I s t h i s a n ' o r g a n i z a t i o n ' , p e r h a p s ?

H e s m i l e d f a i n t ly , a n d l o o k e d a t t h e f a r h i l ls :T h a t i s g o o d , y o u r e c a l l o u r l a s t l e s s o n . Yo u

a r e p a r t i a l ly r i g h t . P a r t o f w h a t y o u s e e i s a no r g a n i z a t i o n .

We l l , I r e a l l y o n l y m e a n t w h a t l ie s w i t h i n t h e

f e n c e .Ye s I k n o w y o u d i d , b u t a g a i n , o n l y p a r t o f

t h a t i s t h e o r g a n i z a t i o n . . . A n d i n d e e d , p a r t o f

t h e o t h e r i s a l so t h e o r g a n i z a t i o n .

P a r t o f t h e o t h e r ? Yo u m e a n , w h a t l ie s o u t s i d et h e f e n c e - - t h e h i l l s a n d t r e e s - - t h e y a r e a l s op a r t o f t h e o r g a n i z a t i o n ? 2

N o t t h e h i l ls a n d t r e e s , as s u c h , b u t . . . W em u s t n o t g e t o u t o f o u r d e p t h b e f o r e w e c a n

s w i m . T h e h i l l s a n d t r e e s m u s t w a i t .We l l t h e n , w h i c h p a r t s , w i t h i n t h e f e n c e , a r e

p a r t o f th e o r g a n i z a t i o n ? I s u p p o s e t h e b u i l d i n g sa n d l a n d a r e p a r t o f it ?

I n al l l i k e l i h o o d , t h e y a r e. B u t n o t n e c e s -

s a r i l y.W h a t a b o u t t h e r i v e r ? I t m u s t b e b e c a u s e I

c a n s e e t h a t t h e r i v e r w a t e r i s b e i n g u s e d b y t h eo r g a n i z a t i o n . I c a n s e e . . .

Ye s y o u a r e r i g h t . T h e r i v e r s u p p l i e s w a t e rv i t a l f o r t h e m a n u f a c t u r i n g p r o c e s s e s o f t h eo r g a n i z a t i o n , b u t n e v e r t h e l e s s , t h e w a t e r o f t h er i v e r is n o t c o n s i d e r e d t o b e p a r t o f t h e o r g a n i z a -

• T h e a u t h o r t h a n k s t h e a n o n y m o u s r e v i e w e r s a n d M i c h a e l M i k o f o r t h e i r h el p f u l c o m m e n t s .

251


2/11

252 RUTH D. HINES

t i on . . . Unless of course the organiza t ion is so ld .If i t is sold, then who eve r purc hase s the organi-zation will pay for the wa ter of the river, and, itbe ing thus recognized, wi l l become par t of theorganizat ion . It wi l l be nam ed 'Goodwil l '. "

"The r iver - - the water - - wi l l be ca l led

'Goodwil l ' ? Good Heavens. I s there anythin g elseof this nature?"

"What do you m ean 'of th is na ture '? One mustbe c lear in one ' s own mind, as to what i t is pre-c ise ly tha t i s be ing ques t ioned."

"I mean, ugh, in a sense, the river does note x i s t . . . "

I hurr iedly ref lec ted on pas t conversa t ions . Id id not want to appear to be s tupid before theMaster. I t r ied to conve y my ques t ion ac cordingto the language whic h c omm uni cat ed his specialknowledge:

"The r ive r - - t he wa te r i n it - - on ly becomesan 'asse t' of the organiza t ion , whe n the wholeorganization is sold. At that point , the point ofsale, it beco me s part of the organi zation 's reali ty.Like a mirac le . I s there anything e ls e . . , of tha tnature?"

"Excel lent, you see what c lar i ty of mind canachieve? You are a f ine apprent ice. You will be aMaster yourse l f someday. And in answer to yourques t ion , e verythin g i s of th is na ture .

Now, tha t point in t ime, whe n s ometh ing be-

comes rea l , when we r ecogn ize the reali ty ofsomething, what point in t ime might tha t becalled, do y ou imagine?"

"Well , I wo uld call it the po int of rea l - i za t ions ince tha t i s the point a t which th ings becomereal."

"And so we do. That is just what w e do. Do yo usee, a re you begin nin g to see, where our pow erlies?"

' 'Yes, I think I am beg in nin g o see. I think I un-ders tand a bout the water. What o ther th ings arerea l - ized a t cer ta in points in t ime, which youdecide?"

"Oh everything, everything We decide every-th ing. Remember we ta lked about revenue: re-ven ue less expenses equals prof it . Remember?"

''Yes.""When do you th ink some th ing becomes r e-

venue?"

"Wh en it is real-ized?""That' s right . We r ecognize reve nue wh en i t i s

rea lized: tha t ' s what w e say - - 'we recogni ze re-venue and gains when they are rea l ized ' . Wecreate the impress ion that they do not exis t , andthat suddenly, they beco me real , and we recog-

nize them as such. But of course , we make the mreal, by reco gniz ing the m as real . 3 Until we rec-ognize them, they are, for just about all intentsand purposes, not real ."

"But aren' t th ey there? I mean, if they aret h e r e . . . "

"Again, clari ty of mind. What do you meanexactly wh en you say, ' i f they are there '?"

"I mean, i f they exis t , then, even w i tho ut youreco gniz ing them, th ey are real ."

"Oh yes , tha t i s our everyday c once pt of rea l-i ty alright. But everyda y conce pts are a cover-up.Did 'b lack holes ' and ' subatom ic par t ic les ' exis t,before physicists cr eated the idea of them? 4 Ofcourse they d id not "

" B u t . . . ""Oh yes, I know, yo u'r e a l i teral sort of chap;

you will be a f ine master. But even wit h you r l i t-eral mind, do you bel ieve ev erything you readand hear? What about the newspaper? Are allthose stories real?"

"Wel l , I suppose i t depends wha t you mean b y'real' . I mean, I think, some of them are true."

"Unbiased, neutral , do yo u mean?""Well, yes.""Do y ou ser ious ly th ink tha t anythin g in th is

wor ld can be 'neut ra l ' ?""Yes, well , ugh, I 'm n ot sure . . . . ""Do you th ink there ever was a news s tory tha t

took everything in to account ; le f t out nothing;gave the full picture?"

"I t depends what you mean by ' the fu l l p ic-ture'."

"What do y ou me an by i t?""Agh, I do n' t real ly know. Ha. Ha."' 'Yes , good, now we are ge t t ing somewhere .

You 'don ' t know' Who k nows what ' the ful l p ic-ture ' i s? Who knows? How do you k now n whenyou have th e full pictur e?

Having the full pic tur e -- a true, a fair view ofsome th ing - - depends on peop le dec id ing tha tthey have th e full picture. Sometimes, they later


3/11

FINANCIALACCOUN TING AND REALITY 253

d e c i d e t h e y d i d n o t h a v e t h e f u ll p i c t u r e , a n dt h e n t h e r e a r e r e c ri m i n a t i o n s : w h y d i d n ' t w e g e tt h e r e s t o f t h e p i c t u r e ; o r a d i f f e r e n t p i c t u r e ? I tc a n g o o n a n d o n . P e o p l e f e e l e n t i t l e d t o r e a l it y .

D i d y o u s t u d y h i s t o r y a t sc h o o l ? ""Yes , I d id . "

" H i s t o r y c r e a t e s p a s t r e a l i t y fo r u s. T h e p a s t i sa l w a y s b e i n g r e i n t e r p r e t e d . T h e y a r e a lw a y s r e-w r i t i n g t h e h i s t o r y b o o k s . T h e y d o n ' t t e ll y o ut h a t a t s c h o o l t h o u g h , d o t h e y ? W h a t a b o u t h i s-t o r y i n y o u r o w n t i m e : V i e t n a m , fo r e x a m p l e ?Yo u m u s t a d m i t, a c c o u n t s h a v e c h a n g e d o v e rt h e y e a r s. 5 O r w h a t a b o u t t h e B i b l e , i s t h a t ' r e al '? "

" I d o s e e w h a t y o u a r e s a y in g , b u t s c i e n c e i sd i f f e r e n t . I t d e s c r i b e s r e a l t h i n g s , p h y s i c a lt h i n g s . "

" N o , m y b o y , y o u a r e q u i t e w r o n g . A b l a c kh o l e - - m y d e a r f e l lo w, w h a t i s i t e x a c t l y t h a t t h ep h y s i c i s t s s a y is a " b l a c k h o l e " ? C e r t a i n a r e a s i nt h e H e a v e n s p r o d u c e c e r t a in b e w i l d e r i n g e x -p e r i m e n t a l r e s u l t s . . . T h a t i s a ll . A n d t h e s e a r e a sa r e c a l l e d ' b l a c k h o l e s '. B y n a m i n g t h e m , w es u g g e s t t h a t w e h a v e n a m e d , ' d i s c o v e r e d ' , s o m e -t h in g : s o m e t h i n g r e al . B u t m y b o y , ' b l a c k h o le s '?E v e n y o u m u s t s e e .

B l a c k h o l e s a r e a n id e a , a m e t a p h o r , a c o n c e p t .L i k e a t o m s . L i k e e l e c t r o n s . L i k e o r g a n i z a t i o n sT h e s e t h i n g s h e l p s t r u c t u r e o u r l i v e s . I d e a s . 6W h e r e w o u l d w e b e , w i t h o u t i d e as ? B u t I a m

g o i n g m u c h t o o f as t. W h e r e w e r e w e ? "" We w e r e t a l k i n g a b o u t r e v e n u e a n d g a in s ,

a n d t h e i r p o i n t o f r e c o g n i t i o n . . , a n d r ea l iz a -t i o n . "

O h y e s , t h a t 's r i g h t. ' We r e c o g n i z e r e v e n u ew h e n i t i s r e a l i z e d ' . B yn a m i n g i t 'r e v e n u e ' , i tbecomes r e v e n u e . . , j u s t l i ke t h e b l a c k h o l e s ."

" H o w d o y o u k n o w w h e n t o r e c o g n i z e re -v e n u e ? O r s h o u l d I s ay , h o w d o y o u k n o w w h e nt o ' r e a l i z e ' r e v e n u e ? "

" N o w y o u ' r e g e t t i n g i t . . . R e v e n u e i s g e n e r -

a ll y r e c o g n i z e d - - c o n s i d e r e d t o b e r e a l iz e d - -a t t h e p o i n t o f s a le , b u t n o t a l w a y s . "

" W h y a t t h e p o i n t o f s a le ? "" T h is is w h e n g o o d s a r e c o n s i d e r e d t o le a v e

t h e o r g a n iz a t io n , a n d t o b e c o m e t h e p r o p e r t y o fs o m e o n e e l s e . "

" W h e n t h e g o o d s a r e ta k e n a w a y , y o u m e a n ? "" N o. T h e g o o d s d o n o t h a v e t o a c t u a l l y l e a v e

t h e o r g a n i z a t i o n . T h e y m e r e l y h a v e t o b et h o u g h t o f a s h a v i n g d o n e s o. S ee t h o s e b i g c o n -t a i n e rs d o w n t h e r e , b e s i d e t h e s q u a r e b u i l d i n go v e r o n t h e r ig h t? T h o s e g o o d s m a y w e l l b es o l d . "

" So , y o u a r e s a y in g , g o o d s a r e ' s o l d ' , w h e n t h e y

a r e c o n c e i v e d o f, as h a v i n g l e ft , t h e i d e a o f ' th eo r g a n i z a t i o n ' ? "

" Ve r y g o o d . "" H o w d o y o u d e t e r m i n e w h e n t o th i n k o f

t h e m a s h a v i n g l e ft t h e o r g a n i z a t i o n ? "" O h i t v a r i e s. W e h a v e a lo t o f d i s c r e t i o n h e r e .

I t is al l a r b i t r a r y o f c o u r s e , b u t w e t a k e i n t oa c c o u n t v a r i o u s f a c to r s. Yo u c a n n o t j u s t a r b i t ra r -i ly d e fi n e t h e s e t h i n g s : t h e y h a v e t o b e s e e n t o b et h e p r o d u c t o f e x p e r i e n c e , j u d g e m e n t . "

" W h y ? "" We l l, o t h e r w i s e , a n y o n e c o u l d d o t h e j o b ."" O h y e s . . . B u t, a g h , I m e a n , s u r e l y . . . ? "" Ye s I k n o w , i t ' s c o n f u s i n g . L e t m e t r y a n d e x -

p l a i n : t h e r e i s n o s u c h t h i n g a s t h e t r u t h , b u tt h e r e i s s u c h a t h i n g a s s t r e t c h i n g t h e t r u t h t o of ar . T h e r e i s a r e a l it y : t h e r e ' s s o m e t h i n g t h e r ea l r ig h t . D o n o t t h i n k f o r a m i n u t e t h a t I a m s a y i n gw e i m a g i n e th e w o r l d O h n o , n o t at a ll T h eb r i c k s a r e th e r e , a n d t h e p e o p l e , a n d t h o s e c o n -t a i n e r s - - n o d o u b t a b o u t i t. B u t t h e o r g a n i z a -t io n , a n d t h e m o s t m i n u t e p a r t i c l e s in t h e b r i c k s,a n d r e v e n u e , w e l l , w e c r e a t e t h e m

N o w, b a c k t o w h e r e w e w e r e : ' p o i n t o f r e c o g -n i t i o n ' , b e i n g , p o i n t o f r e a l - iz a t i o n , b e i n g , s o m e -t i m e s , b u t n o t n e c e s s a ri l y , p o i n t o f sa le . T h e r ea r e n u m e r o u s p o s s i b il i t i e s . S o m e t i m e s w e r e c-o g n i z e re v e n u e w h e n t h e g o o d s ar e c o m p l e t e d ;s o m e t i m e s w h e n t h e y a re p a rt l y c o m p l e t e d ;s o m e t i m e s w h e n t h e c u s t o m e r i s i n v o i ce d ; o re v e n w h e n h e t e l e p h o n e s a n d p l a c es an o r d e r; o rs o m e t i m e s w h e n h e i s b i l le d ; o r w h e n h e p a y s .A n d e v e n t h e s e a r e n o t c l e a r- c u t . W h e n i s ab u i l d i n g ' fi n i sh e d ' , fo r e x a m p l e ? W h a t p e r c e n t -

a g e o f a b u i l d i n g - o r a s h e e p - - i s ' c o m p l e t e d ' ?W h e n d o e s a c u s t o m e r ' pa y ': w h e n h is c h e q u e i sr e c e i v e d ; w h e n i t i s h o n o u r e d ? "

I f el t o v e r w h e l m e d . T h e r e w a s m o r e h e r e t ol e a r n t h a n I h a d i m a g i n e d . T h e M a s t e r r e a d m yt h o u g h t s :

" I t i s a l l a b i t c o n f u s i n g n o w, b u t d o n o t b e c o n -c e r n e d , y o u w i l l u n d e r s t a n d . "


4/11

254 RUTH D. HINES

"Could we ta lk about what l ies outs ide theorganization , but is part of it?"

"Lad, you are not maki ng sense.""I mean, you sa id there were th ings outs ide

the fence, which were par t of the organiza tion .""Oh yes . Now, do not con fuse the boun dary of

the organiza tion, with the fen ce -- that is just tokeep people out . You must not th ink of theorganiza t ion as ending a t the fence - - tha t i sco mm on sense . That is the way lay peopl e th inkof the organization. Remember, we are profes-sionals.

Now, you see all these trees? The land onwhich they s tand, be longs to the government ,but the or ganiza tion is able to take trees fromthis forest for i ts paper manufa cturin g. That 's acur ly one , i sn ' t it? How w oul d you acco unt forthat?"

"Well , I supp ose the land is not an asset of theorganization , not part of it , so as to speak, but thetrees are, for as long as the organization isa l l owed to t ake them . . .

But it doesn ' t make sense to excl ude the landand inc lude the t rees - - the t rees are par t of thel a n d . . . ? "

" 'In reali ty ', you wer e abou t to say?"I felt stupid."Remember, we are crea t ing rea l i ty. We do

not have to be cons t ra in ed by the everyday way

of th inking - - i t is jus t a way of th inking, can ' tyou see? As ordi nary people, we arbitrari ly com-bine, and define, and add, and subtract thingsfrom our picture of reali ty. As professionalpeople , we arbi t rar ily combi ne , and def ine , andadd, and sub tract things, in a different way to theeveryd ay way: that is what differentiates us.

The fence does not des ignate the organiza-tion. We do that . We designate i t , by decidingwhat things will be part of the organization, andby decid ing how big or smal l these th ings wi l lb e: ' r e c o g n i t io n ' a n d ' m e a s u r e m e n t ' . . . C o m eover he re . . . You see that murky b row n in ther iver, downst ream of the p lant? What wou ld yousay of that?"

"It 's pollution. "' 'Yes, but do you thin k i t is part of the organiza-

tion? Now try to forget about the fence.""Wel l, ordinary people woul d say i t i s . . . So,

ughm, perhaps an accou ntan t woul d say i t i snot."

"It is not quite as simple as that . We do nota lways def ine rea l i ty d i fferent ly to th e co mm onconcept ion . Qui te the contrary. In fact we playsuch a la rge par t in crea t ing the common con-

cept ion , and we have so largely absorbed thecommon concep t ions i n to ou r own th ink ing ,tha t one cannot , by any means , assume that ourdefinit ions are always the c ont rar y of lay defini-t ions. In this case, you are right in saying thatmost people woul d see the po l lu t io n as be ing, insome way or another, par t of the organiza t ion .They used not to. They used to be qui te unawa reof it . But since they ha ve be co me aware of it , andbecause they are beg inni ng to see i t as be ing theresponsib i l i ty of the organiza t ion , we inevi tablymust do so , in t ime. On ce the organiza t ion be-comes accou ntable for something, we mustacc oun t for it , soo ner o r later."

"I 'm sti l l not sure I understand. Before, yousaid you don ' t have to be const r a ined by ordi-nary people ' s not ions ."

"That 's the paradox. That 's where we walk avery th in l ine . We co mmu nic ate rea l ity : tha t i sthe myth; tha t i s what peopl e bel ieve . I t i s evenwhat most of us believe. And, in a sense, we docom mun ica te rea li ty. There i s someth ing there :br icks and peop le and so on. And the organiza-

tion can, say, be 'd oin g well ' , or ' doin g badly' , inwhatev er sense you take tha t to mean. And i t i sour job to con vey i t . But what is ' the full pictur e '?Ther e is no full picture. We make the pi cture. 7That is what gives us our power: people thinkan d act on the basis of thatpicture Do you see?Are you b egin ning to see?"

"Yes . . . I th ink I am be ginn ing to see. Myword, there ' s a lo t more to i t than I rea l ized . . .Rea l-i zed . . . Ha, ha, yes I see, ' realized' : we say ita ll the t ime, don ' t we? We th ink we have grasped

reality, whe n w e 'realize ' ; but really, ha, ha --there I go again, ' really ' -- but we have not somuc h grasped rea l ity, as crea ted i t, by th inking ofit in a cert ain way, and t reatin g i t in that way "

"Good, good, well done Now, most things, weare free to define, and shape, and mould, andmeasure , w i thou t i n t e r fe rence . Bu t when peop lehave a preconceived not ion of what rea l i ty i s ,


5/11

FINANCIALACCOUN TING AND REALITY 255

w e l l , w e c a n ' t a f f o rd t o g o a g a i n s t i t "" W h y n o t ? "" B e ca u se , w e a r e s u p p o s e d t o c o m m u n i c a t e

r e al i ty : i f p e o p l e h a v e a c e r t a i n c o n c e p t i o n o fr e a l it y , t h e n n a t u r a l l y , w e m u s t r e f l e c t t h a t .O t h e r w i s e p e o p l e w i l l l o s e f a it h i n u s."

" W h a t h a p p e n s t h e n ? "" O h , i t ' s t e r r i b l e , t e r r i b l e . H e a r i n g s , l o b b y i n g ,i n v e s t i g a t i o n s , c r i t i c i s m s , p u b l i c i n t e r v e n t i o n .We s e e m t o g et m o r e a n d m o r e o f i t t h e s ed a y s . . . B u t, w e w e r e t a l k in g a b o u t t h e p o l l u -t i o n . "

" Ye s, I w a s w o n d e r i n g , h o w c o u l d i t b e' m e a s u r e d ' ? "

" We w i ll c o m e u p w i t h s o m e t h i n g . We a l w ay sd o . N o d i f f e r e n t t o t h e b r i c k s r e a l l y , o r t h ep e o p l e . "

" H o w a r e t h e b u i l d i n g s m e a s u r e d ? "" A t t h e a m o u n t t h a t t h e y c o s t t h e o r g a n i z a -

t io n , g e n e r a l ly , a l t h o u g h t h e r e a r e o t h e r w a y s ."" A n d t h e p e o p l e ? "" T h e s a m e . "" I s n ' t t h a t a b i t s t r a n g e ? "" W h y s o ? "" We l l, b r i c k s a n d p e o p l e , m e a s u r i n g t h e m t h e

s a m e w a y ? "" O h , I s e e w h a t y o u m e a n . . . We l l , t h e r e a r e

p e o p l e - - r a d ic a l t y p e s - - w h o s a y w e d e v a l u et h in g s , l i k e p e o p l e , b y m e a s u r i n g t h e m t h i s w a y .

T h e y h a t e t h e w h o l e s y s te m , I m e a n t h e w h o l et h in g : r e a li t y , a s w e p e r p e t u a t e i t. T h e y s a y w ea r e c o n s e r v a t i v e s , d e f i n i n g a n d m e a s u r i n g t h i n g st h e w a y t h e y a l w a y s h a v e b e e n , a n d n o t t r y i n g tom a k e i t a n y b e t t e r , n o t t r y i n g t o m a k e a n yc h a n ge s . B u t w h e r e w o u l d w e b e i f w e t r ie d t oo v e r t h r o w t h e s y s t e m ? We a r e p a r t o f t h e s y s-t e m . . .

Yo u s e e, i f w e v a l u e d p e o p l e a n y d i f f e re n t l y tot h e w a y t h a t w e d o , s a y w e t h o u g h t t h i s w a y : ' th em o r e a n o r g a n i z a t i o n p r o d u c e s , t h e m o r e b o r -i n g , in j u r i o u s , a n d s o o n , i t i s f o r t h e w o r k e r s ' .A n d t h e n , i f w e w e r e t o t a k e t h is b o r e d o m , o r i n-j u r i o u s n e s s , i n t oaccount t h e n p e o p l e w o u l de x p e c t t o b e c o m p e n s a t e d f or th e s e t h in g s; a n di f p e o p l e w e r e c o m p e n s a t e d f or th e s e, t h e n t h eo r g a n i z a t i o n w o u l d h a v e t o c h a r g e a h i g h e rp r i c e f o r i ts p r o d u c t s . A n d a t a h i g h e r p r i c e ,p e o p l e w o u l d n o t w a n t t o b u y s o m a n y o f i ts p r o -

d u c t s . T h e y m i g h t b u y o t h e r t h i n g s i n s te a d . A n dt h at , w o u l d c h a n g e e v e r y t h i n g . E v e r y th i n gP e o p l e b u y i n g l e ss o f t h is , m o r e o f th a t; i n v e s t i n gl e ss in t hi s, m o r e i n th a t. N o t h i n g w o u l d b e t h es am e : s o m e p e o p l e w o u l d b e b e t t e r o ff , s o m ew o r s e o f f; w e w o u l d h a v e l e s s o f s o m e g o o d s ,

m o r e o f o t h er s . I t w o u l d c h a n g e w h a t w e c a ll t h e' i n c o m e d i s t r i b u t i o n ' a n d ' r e s o u r c e a l l o c a t i o n ' i no u r s o c i e t y . C h a n g i n g t h a t i s m a j o r ; t h a t i s s o c i a lc h a n g e .

T h a t p o l l u t i o n , f o r e x a m p l e : w h a t i f t h a t i s i n -c l u d e d i n t h e p i c t u re ? I t w o u l d n o t h e l p t h a to r g a n i z a t i o n , w o u l d i t? T h e m o r e g o o d s i t p r o -d u c e d , t h e m o r e p o l l u t i o n . N o t a p r e t t y p i c t u r e .I t w o u l d h a v e c o n s e q u e n c e s . "

" A n d y o u c o u l d d o a l l t h a t I t 's i n c r e d i b l e "" We l l, w e c o u l d n o t d o s o m e t h i n g a s b i g as

t h at o n o u r o w n . S o c ia l c h a n g e . . , w e c o u l d n o tc h a n g e t h e p i c t u r e a s r a d ic a l l y a s t h at , a n d g e ta w a y w i t h i t . B u t t h e d a y w i l l c o m e , w h e n p e o p l es o c l e a r l y ' s e e ' p o l l u t i o n a s p a r t o f t h e o r g a n i z a -t i o n , t h a t w e w i l l h a v e t o i n c l u d e i t i n t h e p i c -t u re . A n d t h e r e w i l l b e c o n s e q u e n c e s . . .

S o y o u s e e , i t 's n o t w e a l o n e t h a t c r e a t e r e a l i ty .E v e r y o n e d o e s i t . B u t as o ff ic i al C o m m u n i c a t o r so f R e a li ty , w e h a v e m o r e p o w e r t h a n m o s t . "

" H m m . . . . I t 's v e r y i n t e r e s t i n g . . . . S o , a h , if t h a th a p p e n s , I m e a n i f p e o p l e c o m e t o ' r e al - iz e ' p o l -l u t i o n a s p a r t o f ' t h e o r g a n i z a t i o n ' , a n d y o u h a v e

t o ' m e a s u r e ' t h e p o l l u t i o n , I d o n ' t s e e h o w y o uc a n d o i t? I t d o e s n ' t c o s t t h e o r g a n i z a t i o n a n y -t h in g . O t h e r p e o p l e p a y . "

" We w i l l w o r k s o m e t h i n g o u t. G e t t i n g c o n s e n -s u s o n i t t h o u g h , t h a t 's t h e p r o b l e m . "

" I s u p p o s e p e o p l e d o n ' t t h i n k i ts r e a l - - t h er e a l m e a s u r e m e n t , t h e t ru e o n e - - u n l e s s t h e yc a n s e e y o u a l l a g r e e a b o u t i t ."

" T h a t ' s r i g h t . T h a t i s r i g h t . I t i s v e r y b a d f o rp e o p l e t o s e e us q u a r r e l l i n g a m o n g s t o u r s e l v e s .I t l o w e r s t h e i r c o n f i d e n c e . I t l o w e r s o u r o w n

c o n f i d e n c e t o o . "" Ye s , I s u p p o s e p e o p l e w o u l d n ' t b e h a p p y t os e e t h a t t h e i r w o r l d i s s o . . . t e n u o u s . I f e e l u n -s e t t l e d b y a l l t h i s m y s e l f ."

' ' Yes , t h e y n e e d u s . E v e r y t h i n g w o u l d b e i n am e s s w i t h o u t u s. J u s t a j u m b l e . N o - o n e w o u l dk n o w w h e r e t h e y w e r e . H o w w o u l d t h a t w o r k ,e h ? "


6/11

256 RUTH D. HINES

" Is t h a t w h y s o m e p e o p l e h a v e c a l l e d y o u t h e' h a n d m a i d e n s o f t h e s t a t u s q u o '? "

" Ha , h a . . . W h e r e d i d y o u h e a r t ha t? "" O h , I d o n ' t k n o w. "" We l l , it is n o t u s , t h a t t h e y c a l l t h e h a n d -

m a i d e n s o f t h e s t a t u s q u o . W e j u s t d o o u r j o b . I t

i s t h e p e o p l e w h o m a k e u p t h e o r i e s a b o u t us .T h e y d o n o t r e a ll y q u e s t i o n w h a t w e d o . T h e yt a k e i t a l l a t f a c e v a l u e . T h e y a d o p t t h e s a m e p e r -s p e c t i v e w e d o . O u r w o r k i s o f fi c ia l ly d e s i g n a t e da s C o m m u n i c a t i n g R e a li ty , a n d t h e y j u s t a c c e p tt h a t i s w h a t w e d o . A c o m m u n i c a t i o n p e r s p e c -t iv e ; m e a s u r e m e n t p e r s p e c t i v e ; i n f o r m a t i o n p e r -s p e c t iv e ; t h a t s o r t o f t h in g . T h e y n e v e r s u s p e c tw e p l a y a r o l e i nconstructing t h e s t a t u s q u o . "

" O h , I s e e . "" T h e y s e e o u r j o b a s a t e c h n i c a l o n e - -

m e a s u r i n g a n d c o m m u n i c a t i n g r e al i t y . L i ke o r d i -n a r y p e o p l e , t h e y t h i n k t h a t t h e r e i s a p r e - e x i s t -i n g r ea l i t y , w h i c h w e r e v e al . T h e y e v e n s a y t h a ts o m e p e o p l e c a n ' lo o k b e h i n d '8 a c c o u n t i n g n u m -b e r s ; t h a t t h e y c a n ' u n r a v e l 9 t h e m . I m a g i n eP e o p l e a r e n o t ' f o o l e d ' , t h e y s a y. We l l , I d o n ' tk n o w a b o u t th a t H h m m , I d o n ' t k n o w a b o u tt h a t

S o m e o f o u r m e t h o d s , a c c o r d i n g t o t h e s ef e l lo w s , a r e ' t r iv i a l ', ' c o s m e t i c ' : t h e s e m e t h o d sd o n o t c o n v e y a n y t h in g n e w a b o u t r e a li ty , a n ds o s o p h i s t i c a t e d p e o p l e d o n o t r e a c t t o t h e m .

P e o p l e w h o r e a c t t o t h e s e ' a rb i t r ar y ' , m e t h o d s ,t h e y s a y, a r e s t u p i d . T h e y c a l l t h e m ' f u n c t i o n a l l yf i x a t e d ' . I m a g i n e , ' f u n c t i o n a l l y f 'L x a te d ' O t h e rm e t h o d s , t h e y s a y, a r e ' s u b s t a n t i v e ' : t h e s em e t h o d s c a r r y ad d i t io n a l in f o r m a t io n c o n t e n ta b o u t r e al i ty , a n d s o p e o p l e r e a c t t o t h e m .

T h is , m y b o y , is w h a t c a n c o m e o f n o t b e i n gc l e a r in y o u r m i n d a b o u t w h a t r e a l i ty is , a n dw h a t ' i n f o r m a t i o n ' is . I t n e v e r o c c u r s t o t h e s ec h a p s , t h a t i n f o r m a t i o n p l a y s a p a r t i n c r e a t i n gr e a l i t y , l o

We l l , t h e t h e o r i s ts , p o o r c h a p s h a v e h a d ad r e a d f u l t i m e l a te l y : s o m e o f t h e t r iv i a l m e t h o d ss e e m t o b e r ea l - - t h e y h a v e c o n s e q u e n c e s ;s o m e o f t h e r e a l o n e s d o n o t s e e m t o h a v e a n yc o n s e q u e n c e s , 11 p e o p l e a c t a s if t h e y d o n o t b e -l i e v e in t h e i r t h e o r i e s . O h , a m e r r y d a n c e S ti ll , i ts u i t s u s . "

" W h y ? "

" I t k e e p s t h e m b u s y. T h e y d o n ' t i n t e r f e r e . 12W h e r e w o u l d w e b e i f t h e w h o l e t h i ng w a s u n -m a s k e d ? . . . S ti ll , w e c o u l d d o w i t h a b i t o f h e l p a tp r e s e n t . . . 3

" D o e s e v e r y o n e t h i n k t h a t w ay ? I m e a n , t h et h e o r is t s , s u r e l y s o m e o f t h e m s u s p e ct ? "

" O h y e s , s o m e o f t h e m d o B u t i t i s u p - h i l lg o i n g f o r th e m . H o w d o y o u g e t i t a c r os s , t h a t w ep l a y a p a r t i n c r e a t i n g r e a li ty , w h e n e v e r y o n eknows, w i t h c o n v i c t i o n , t h a t r e a l i t y e x i s t s u n -p r o b l e m a t i c a l l y , o u t t h e re H o w d o y o u s t a rt t os a y s o m e t h i n g l i k e th a t ? ' Yes , y e s , o f c o u r s e ,t h e r e is a r e a l i t y, b u t . . . P e o p l e d o n o t w a n t t oh e a r t h a t s o r t o f t h in g . Yo u c a n ' t b l a m e t h e m . "

" N o . . . G o s h To b e h o n e s t , I d i d n ' t r e a l iz eh o w f a s c i n a t i n g t h i s c o u l d b e . I t 's r e a l ly v e r y in -t e r e s t i n g "

" O h y e s . It d o e s n ' t h a v e t o b e d u l l y o u k n o w.I t a ll j u s t d e p e n d s o n t h e w a y y o u l o o k a t t h in g s ."

" I ' ve b e e n w o n d e r i n g , d o p e o p l e e v e r d e c i d et h a t t h e a c c o u n t s o f a n o r g a n i z a t i o ndon t r e p r e -s e n t r e a l i t y ? "

" O h y e s, t h a t d o e s h a p p e n . A l w a y s e m b a r r a s -s in g . P e o p l e g e t v e r y u p s e t i n d e e d . "

" C o u l d y o u g i v e m e a n e x a m p l e ? "" C o m p a n y f ai lu r es . T h e y , a r e o u rb~te noire.

T h e a c c o u n t s s o m e t i m e s p r e s e n t a p i c tu r e o f ah e a l t h y o r g a n i z a t i o n , a n d t h e n , i t f ai ls . W e n e v e rh e a r t h e e n d o f it P e o p l e s ay : ' if t h i s o r g a n i z a -

t i o n 's a c c o u n t s w e r e s o u n t r u e , w h a t a b o u to t h e r o r g a n i z a t i o n s ? ' A s I s a id , t h e r e i s n o t r u t h a ss u c h , b u t t h e r e i s s u c h a t h i n g a s s t r e t c h i n g i t t o of a r - - t h a t i s w h e n y o u g e t c a u g h t o u t .

Yo u s e e, n o r m a l l y a h e a l t h y - l o o k i n g s e t o fa c c o u n t s w i l l g e t a n o r g a n i z a t i o n t h r o u g h d if -f ic u l t t i m e s . . . "

" S a v e it ? S a v e i t , d o y o u m e a n ? "" Yes . I f t h e a c c o u n t s l o o k a l r i g h t - - s o b e i t

W h o i s g o i n g t o p a n i c? A n o r g a n i z a t i o n w i l l g e n -e r a l ly g e t t h r o u g h r o u g h w a t e r s a s l o n g a s n o -

o n e r o c k s t h e b o a t .B u t i f t h e a c c o u n t s s u g g e s t a n o r g a n i z a t i o n i sg o i n g t o f a il , s o b e i t S a y, w e l if t w h a t w e c a l l t h e' g o i n g - c o n c e r n ' a s s u m p t i o n , a n d p r e p a r e t h ea c c o u n t s o f a n o r g a n i z a t i o n o n t h e b a s i s o f l iq u i -d a t i o n v a l u e s r a t h e r t h a n c o s ts . W h a t d o y o ut h i n k w i l l h a p p e n ? "

" P e o p l e w o u l d p a n i c , a n d th e o r g a n i z a t i o n


7/11

FINANCIAL ACCOUNTING AND REALITY 257

w o u l d f a i l . "

" S e lf - fu l fi l l in g p r o p h e c y . A n d p e o p l e w o u l d

b l a m e u s M a r k m y w o r d . T h e y w o u l d s a y w e

made i t h a p p e n I r o n i c , i s n ' t i t? "" I t c e r t a i n l y i s. "

" S o, n o - o n e i n o u r b u s i n e s s l i k e s to p r e p a r e

a c c o u n t s w h i c h m a k e a n o r g a n i z a t i o n l o o k ba d . "" D o y o u f e e l r i g h t a b o u t t h a t ? I m e a n , I s e e

n o w t h a t t h e r e i s n o t r u t h , a s s u c h , b u t , u h m , a s

y o u s a i d , s t r e t c h i n g t h e t r u t h . . . "

" L o ok , m a n y t r i b e s h a v e w i t c h d o c t o r s . T h e y

c a n w i l l a m a n t o d e a th . D o y o u w a n t u s d o i n gt h a t ? "

" N o , o f c o u r s e n o t . . . G o s h , y o u h a v e s o m u c h

p o w e r . . . Yo u k n o w , n o w t h a t I a m b e g i n n i n g t o

s e e i t, I d o n ' t u n d e r s t a n d h o w a l l t h i s h a s n o t

c o m e o u t . I m e a n , I ' m t h i n k i n g a b o u t a ll s o r t s o f

t h i n g s: w h a t w e c o n s i d e r t o b e ' o b j e c t i v e ' , w h a t

w e c o n s i d e r t o b e ' r a t io n a l ' , t h e w a y w e t h i n k ,

t h e w a y w e a c t, o u r t h e o r i e s , t h e w a y o u r s o c i e t y

i s s t r u c t u r e d - - i t ' s n o t r e a l i n t h e w a y w e t h i n k

i t is . I t 's a l l j u s t a nidea i s n ' t i t ? "" T h a t ' s r i g h t m y b o y . J u s t a n i d e a. A n d b y a c t -

i n g i n a c c o r d a n c e w i t h i t, w e m a k e i t s o " I f m e n

d e f i n e t h i n g s a s r e al , t h e y a r e r e a l i n t h e i r c o n s e -q u e n c e s . " 1 4

W e c r e a t e a p i c t u r e o f a n o rg a n i z a t i o n , o r t h e

' e c o n o m y ' , 15 w h a t e v e r y o u l ik e , a n d o n t h e b a s i s

o f t h a t p i c t u r e ( n o t s o m e u n d e r l y i n g ' r e a l ' r e a l i t y

o f w h i c h n o - o n e i s a w a r e ) , p e o p l e t h i n k a n d a c t.

A n d b y r e s p o n d i n g t o t h a t p i c t u r e o f r e a l it y , t h e y

m a k e i t s o : i t b e c o m e s ' r e a l i n it s c o n s e -

q u e n c e s ' . 16 A n d , w h a t i s m o r e , w h e n p e o p l e r e s -

p o n d t o t h a t p i c t u r e , a n d t h e c o n s e q u e n c e so c c u r , t h e y s e e i t a s p r o o f o f o u r h a v i n g c o r r e c t l y

c o n v e y e d r e a l it y . C l e v e r , i s n ' t i t? T h a t i s h o w

s o c i e t y w o r k s . "

" So , y o u ' r e s a y i n g t h a t a n y o n e c h a r g e d w i t h

t h e r e s p o n s i b i l i t y o f p r o v i d i n g t h e s e p i c t u r e s ,

h a s a l o t o f p o w e r , b e c a u s e p e o p l e w i l l r e s p o n dt o w h a t t h e y d r a w - u p ? "

" T h a t i s s o ."

" I t s e e m s t o m e , t h a t y o u r p o w e r i s a h i d d e np o w e r , b e c a u s e p e o p l e o n l y t h i n k o f y o u a scom-m u n i c a t i n g r e a l i t y , b u t i n c o m m u n i c a t i n g r e a l-i t y , y o u construct r e a l i t y . "

" T h a t ' s r ig h t . A h i d d e n p o w e r . A n d a l l t h e

m o r e p o t e n t f o r it . T h i s m a y s o u n d s i ll y t o y o u ,

b u t m o s t o f u s a r e o n l y j u s t b e g i n n i n g t o r e a l i z e

o u r s e l v e s t h a t w e h a v e t h i s p o w e r . W e a l w a y s

t h o u g h t o f o u r s e l v e s a s b e i n g t e c h n i c a l p e o p l e .

B u t i t h a s b e e n b e c o m i n g c l e a r la t e ly , t h a t t h e r e

i s m u c h m o r e t o o u r w o r k . M u c h m o r e . . . "

N O T E S

1 T h e p r o c e s s b y w h i c h s o c i e t y i s c r e a t e d i s s u bt l e . I f i n d i v id u a l s w e r e t o b e s e r f - co n s c io u s ly a w a r e o f t h e c o n s t r u c t e d n a t u r eof soc ie ty, and the pa r t they p lay in c rea t ing and sus ta in ing it , soc ie ty wo uld no t fu nc t ion e ffec t ive ly.

E v e r y w o r d , g e s t u r e a n d d e e d o n t h e p a r t o f a n i n d i v id u a l o r g r o u p i s e i t h e r, i n c o n f o r m i t y w i t h s o c ia l m o r e s a n d t h u s c o n -t r ibu tes to the m ain te nan ce o f soc ie ty as i t is , o r i s dev ian t and wi l l be to le ra ted on ly in smal l degree , u n less the ind iv iduao r g r o u p c a n c h a n g e s o c i e t y - - t h e l a t t e r is t h e s t o r y o f m i n o r i t y v o i c e s a n d g ro u p s .

C o n t r a r y t o c o m m o n s e n s e i n t u i t io n s , re a l it y d o e s n o t c o n c r e t e l y e x i s t i n d e p e n d e n t l y o f t h e c o n c e p t s , n o r m s , l a n g u ag e a n db e h a v i o u r o f p e o p l e . P e o p l e c r e a t e s o c i e ty, b u t a t t h e s a m e t i m e , t h e i r c o n c e p ts , n o r m s , l a n g u a g e a n d b e h a v i o u r, b e c o m e i n -s t it u t io n a l iz e d . B y b e c o m i n g t h u s o b j e c t if i e d , so c i e t y a c q u i r e s a s e m b l a n c e o f c o n c r e t e n e s s . I n d e e d i t i s m o r e t h a n as e m b l a n c e , a s a n y o n e w h o b r e a k s t h e r u l e s o f s oc i a l c o n v e n t i o n q u i c k l y l e ar n s.

M a n y r e a d e r s o f t h i s p a p e r w i l l h a v e a l r e a d y l o s t p a t i e n c e w i t h i t , b e c a u s e i t d o e s n o t a c c o r d w i t h t h e n o r m s o f a ca d e m i crea l ity. Every p roper ly soc ia l i zed pe r s on re spon ds to de v ianc e in th i s way. Thus , soc ie ty i s s t ab i l ized , and p r o tec ted f romc h a n g e - - b u t , i n t h i s w a y a l s o , m a n y i n t e r e s t in g t h i n g s s l ip p a s t o u r n o t i c e . . . B y ta k i n g f o r g r a n t e d t h o s e t h i n g s w h i c h o t h e r st a k e f o r g ra n t e d , w e f a il to u n d e r s t a n d h o w t h o s e t h i n g s a r is e , a n d h o w t h e y a r e s u s t a in e d , t h r o u g h b e i n g t a k e n f o r g r a n t e dand th e reb y fo rm ing the bas i s fo r thou gh t an d ac t ion . By t ak ing fo r g ran ted , and r igorous ly s tudy ing , th ings as they a re , onem e r e l y b u i l d s o n l ay c o n c e p t i o n s , b e c o m i n g a n e x p e r t o f d e s c r i p t io n , a n d a c o l l e c t o r o f "f ac ts ". B u t t o o c l o s e a n a t t e n t i o n t othe " fac ts " l eaves unq ues t ione d ho w the fac t s a r i se - - i t l eaves us be re f t o f dee p exp lana t ion .

Academ ic d i scourse f r eq uen t ly func t ion s as a s t ab i l ize r o f soc ie ty. Confe r re d wi th a u thor i ty and l eg i t imacy by a soc ia li d e o l o g y w h i c h h o l d s t h a t a c a d e m i c s e n g a g e i n e x p e r t a n d f r e e t h o u g h t , r e s e a r c h o f s oc i a i "f a ct s" pl a y s t h e i m p o r t a n t r o l e i ns o c i e ty o f o b j e ct i fy i n g , n o rm a l i z in g , a n d s o p e r p e t u a t i n g t h o s e " f ac t s" a n d t h e i n t e r e s ts a n d p o w e r r e l a ti o n s w h i c h g i v e r i seto them.


8/11

258 RUTH D. HINES

The "facis" of society such as "crime", "profit", "madness", "marriage", "organizations", "sexuality" and "assets" are generallytaken for granted, bu t aut hors su ch as Berger & Luckmann ( 1966 ), Berger & Kellner (196 4), Bittner (196 5), Foucault ( 1967,1977, 1981), Garfinkel (196 7), and Giddens (1976, 1984), whilst viewing social reality from different theoretical andmethodological perspectives, all recognize that the facts of society do not pre-exist social practices, but are created and sus-tained by social action.

Crime, profit, madness, and so on, are socially constr ucte d catego ries -- they are definitions of reality or "ways of seeing".Social po wer accrues to t hose wh o can influence conce ptions of reality, since by influencing conceptions of reality -- whatis cons ider ed to be "rational", "moral", "true", "efficient" - - one influences social action.

Hines ( 1986a, 1987) show s how mainstream financial accounting research is based on taken-for-granted commo nsen seconcepti ons and assumptions, which mitigate against the questioni ng of how social reality arises and is maintained and legiti-mized, and whi ch therefore obscur e the roles that financial accounting plays in the creation and maintenance of society.Mainstream financial acc ount ing r esear ch rep res ents a '~¢ay of seeing" similar to the com mon sen se '~zeay of seeing", but inthe wo rds of Poggi (1965), a way of seeing is also "a way of not seeing".

It is necessary to bre ch a way of seeing or worldview, in o rder to create a new way of seeing (see especially Handel [ 1982,pp. 55--77 ] and Mehan & Wood [ 1975, pp. 3-33] ). Castaneda's master, the so rcer er Don Juan, refers to breach ing a worl dvi ewas "stopping the world". "Stopping the world", or dissolving our taken-for-granted concepti on of reality, and thereby seeingthat it is essentially arbitrary and cons tructed rather than "true", is the first step to gaining a new reality or a n ew way of"seeing" (Castaneda, 1971, 1974). It was some years before Castaneda began to be able to stop his world, and to see ho w thatworld wh ich h e had taken for granted and had seen as pre-existing his own and ot hers' action, was socially constructed bythe thou ght and action of himself and others. He was then emp owe red to experienc e a new reality, that of Don Juan.

A touching aspect of Castaneda's early apprenticeship to D on Juan, is his dedication to pursui ng what he sees as rigorous

research pro cedures. Eventually Castaneda comes to recognize that t hese proce dures merely serve to sustain his taken-for-granted world, and to preven t him from discovering an alternative world.

Whilst it is recognized in som e management accounting research and organization behaviour research, that accountingpractices, as well as communicating reality, also play a part in creating, sustaining and changing social reality, this view ofaccounting is not "seen" in mainstream financial accounting research. The present pape r represen ts an attempt to momentar-ily breach or "stop the world" of mainstream financial accou nting research.

2 Reality does not exist i ndepen dentl y o f account s of it. As Meyer ( 1983, p.236 ) states, an organization, "is in fact a sprawling,comple x institution, with multiple purposes and disconnected pro grams (technologies), of unk nown product ion functions,of competing and aut onomo us subordinate units". But accounting i mposes a conceptual bo undary on it: "the accountantssettle the matter by definition, and acquiring boundaries means, for an organization, acquiring reality" (p. 236).

Hines (19 86b ) s hows ho w the financial accounts of an organization do not merely describe, or co mmunica te informationabout, an organization, but ho w they also play a part in the constru ction o f the organization, by defining its boundaries. Anorganization is not a concr ete thing, but a set of interrelationships, and if it is to exist, then it must so meh ow be bound ed o r

defined. Financial accounting controversies are controversies about how to define the organization. For example, whatshould "assets" and "liabilities" include/exclude: at what point does an asset/liability become so intangible/uncertainfunen-forceable/unldent ifiable/non-sev erable, etc., that is ceases to be con side red to be a "part" of an organization? The an swer s toques tion s such as these, define th e "size", "health", "struc ture" and "p erformance", in other wo rds, the reality of an organiza-tion.

3 When the constru cted nature of social reality is recognized, it b ecome s readily understandable why, for example, the Finan-cial Accounting Standards Board (FASB, 1984) was unable, in its Conceptual Framework, to divorce m easur ement fromrecogniti on. It is difficult to "measu re" something, befo re it has been made real, that is, "realized"

4 Gribbin (19 85) elaborates how subatomic particles, and o ther concepti ons of physical reality, are the artefact of observa-tion and measurement procedures:

The only things we know about the quantum world are the result of experime nts. . . The electron is created by our pro-cess of experimental probing. The story stresses the fundamental axioms of quantum theory, that no elementaryphe nom eno n is a phe nom eno n until it is a recorded pheno menon . And the process of recording can play strange tricks

with our everyday concep t of reality (pp. 20 9-210).In the 1930s physicists were intrigued by the prediction o f another n ew particle, the neutrino, required in order to exp-lain the subleties of the spin interactions of some radioactive decays. "I am not much impressed by the n eutrino theory"said Eddington, "l do not believe in neutrinos". But "dare l say that experimental physicists will not have sufficient in-genuity to make neutrinos?"Since then, neut rinos have indeed been "discovered" in three different vari eties ... Can Eddington's doubt s really he takenat face value? Is it possible that the nucleus, the p ositron and the neut rino did no t exist until experi menters discoveredthe right sort of chisel with whi ch to reveal their form? Such speculations strike at the root s of sanity, let alone our c onceptof reality. But they are quite sensible questions to ask in the quan tum world. If we follow the quan tum recipe b ook cor-


9/11


rectly, we can per form an exper iment that produ ces a set of pointe r readings that we interp ret as indicating the existenceof a certain kind of particle. Almost every time w e follow the same recipe, we get the same set of pointer readings. Butthe int erpretation in terms of particles is all in the mind, and may be no m ore than a consistent delusion (p. 162).

s See, for examp le, Tuc ker ( 1981 ). For different accept ed versi ons of the C uban Missile Crisis, see Allison (1969).

6 It is now acknowledged by phil osopher s of science that predictive su ccess of a theory does not necessarily infer the truthof a theory. Many theories in the history of science which w ere ( are) empirically successful, have been established to be non-referential, that is, not descriptively valid, with resp ect to t heir central expl anatory concepts. These include the humoraltheory of medicine, the effiuvial theory of static electricity, the caloric theory o f heat, the vib ratory theory of heat, the theoryof circular inertia, and theories of sponta neous generation (s ee Laudan, 1981 and 1984, for many others).

Conversely, many theories which are presently consi dered to be genuinely referential theories, were previously rejected,because of their appa rent empirical failure. For example, the chemical atomic theory in the eighteenth centu ry was so unsuc-cessful, that most chemists abando ned it. Wegener's theo ry of plate tectonics, publ ished at the b eginning of this century, wasridiculed on t he basis of its empirical support, until the 1960s, when it became geological orthodoxy.

Furthermore, according to the formal rules of logic, the predictive success of a theory d oes no t logically infer the descrip-tive validity of a theory (Hesse, 1975). For example, alternative theories can predict equally well. Laudan (19 77) discussesmany cases of scientific theories wh ich successfully predicted, but w ere eventually determined not to be descriptively valid.

Feyerab end ( 1978 ), Kuh n (196 2) and Laudan ( 1981, 1984 ) illustrate by refer ence to ma ny episod es in science, that scien-tific observations and theories, are a product of a researcher's expectations, sensory impressions, cognitive processes,research metho ds, ideological prejudices, epistemological assumptions, categories and as sumption s embedd ed in their lan-guage, and auxiliary theories such as measureme nt theories. Gribbin (1 985 ) and Pickering ( 1984 ) illustrate this in relation

to ato ms and quarks respectively.A growin g literature describes th e proce sses by which theori es and knowledge are socially const ructed and negotiated, for

example, [Gil bert ( 1976 ), Latour & Woolgar (197 9), Myers (198 5) and Schus ter ( 1984 )].Foucault ( 1967, 1977, 1980) goes even further, to show how socially constr ucted truth and knowledge , are the pro-

duct of interest s and p ow er rel ations [see also Dreyfus & Rabi now ( 1982 ) and Racevskis ( 1983 )].From the perspe ctive of Foucault's writings, it may be suggested that it is not merely chance that has determi ned t he pre-

eminenc e o f positivist financial accoun ting research, s uch as capital market resear ch and agency theory. Since this type of re-search uncritically and unreflectively investigates what is , without qu estioning ho w the status quo arose, and is ongoinglysustained and legitimated, such research legitimizes, rather than threatens, the social, political and eco nomic interests vestedin the status quo. It is thus the type of research that will be encouraged, admired and fun ded by th ose interests.

7 The t hemes in this paper emphasize the c onstructi onist view of society, because it has not generally been acknowledgedin mainst ream financial accoun ting research, t hat social reality, whilst tangibly pre-exi sting the individual, arises interactivelywith social action. It is therefore in an effort to partially redress this imbalance, that t he co nstruc ted n ature o f social reality

has been emph asized in this paper.Various critiques have been made of the construct ionist viewp oint for its neglect of social structure (for ex ample Giddens,

1976 ). However, the pres ent paper, whils t emphasizing that people cons truct social relations and social structure in an on-going fashion, also recognizes that social structu res, such as organizations, pre-exist the individual. As the title of this pa perreflects, social reality exists tangibly, and accoun ting prac tices communic te that reality, but in so doing, such practic es playa part in creating, sha ping and changing , that is, in constructing reality. Th us the overall theoretical position of this pape r cor-respon ds more to the position of Berger & Luckmann (19 66) or Giddens (198 4) [although these are not unproblema tic per-spectives -- see, for example, Smith & Turner ( 1986)].

8 Beaver ( 1973, p. 51 ).

Holthausen & Leftwich ( 1983, p. 81 ).

~o When accounti ng is seen as merely reflecting or communi cating or monito ring the characteristics of organizations, thenmany accounting methods are seen as cosmetic or arbitrary and it is supp osed that investors can see throug h these

method s to the real company. Indeed early efficient markets research tested for those method s and standards which werecosmetic . Moreover, certain accounting changes and standards were held as being cosmetic , and market efficiency was

tested on the basis of this maintained assumption. However, no clear or consist ent picture e merged from this research as towhich methods, issues or standards are indeed cosmetic i.e. do not have information content about reality (Lev & Ohlso n( 1982 ), Hines ( 1984 ) ). This state of affairs ceases to be su rpris ing or to see m anomalo us, whe n it is acknowl edged that realitydoes not pre-exist financial accounting practice, but rather arises reflexively and interactively with inter li financialaccounting practices.

Such a recognition also throws light on why companies have so strongly oppo sed apparently cosmetic accounting stand°ards, and why their manag ements have gone to s uch lengths in ord er to mitigate the effects of them. It is not necessarily that


10/11

2 6 0 R U T H D . H I N E S

m a n a g e m e n t s d o n o t b e l i e v e o r d o n o t u n d e r s t a n d t h e E f f ic i en t M a r k et H y p o t h e s i s , it is r a th e r t h a t t h e y d o n o t t h i n k o f th e ic o m p a n y ' s s i ze , p e r f o r m a n c e , s t ab i l it y , e t c . a s e x i s t i n g c o n c r e t e l y a n d i n d e p e n d e n t l y o f f i n a n c i a l a c c o u n t i n g p r a c t i c e ss o t h a t s o p h i s t i c a t e d in v e s t o r s c a n s e e t h r o u g h a c c o u n t i n g n u m b e r s t o i t. F o r th i s r e a s o n m a n a g e m e n t s o f t e n g o t o e x p e ns i v e l e n g t h s, in o r d e r t o m a n a g e t h e i r c o m p a n y ' s a p p e a r a n c e [ s e e Wy a t t ( 1 9 8 3 ) f o r s o m e o f t h e s e c o s t l y c i r c u m v e n t i o n s oa c c o u n t i n g s t a n d ar d s ].

i i F or e x a m p l e , t h e s t o c k m a r k e t d o e s n o t a p p e a r t o r e a c t t o r e p l a c e m e n t c o s t d i s c l o s u r e s, b u t i t a p p e a r s t h a t i t m a y r e a c t td e p r e c i a t i o n c h a n g e s ( s e e L e v & O h l s o n , 1 9 8 2 ) .

2 A g re q u e n t t o p i c o f d e b a t e i n t h e l i te r a t u re i s t h e i m p a c t o f a c c o u n t i n g r e s e a r c h o n t h e a c c o u n t i n g p r o f e s si o n ; t h e g e n e r ac o n c l u s i o n i s t h a t t h e d i r e c t i m p a c t h a s b e e n m i n i m a l ( B a l l & F o s t e r, 1 9 8 2 , p. 1 6 6 ) .

t3 T h e a c c o u n t i n g p r o f e s s i o n i n E u r o p e , t h e U n i t e d S t a t e s a n d A u s t r a li a , i s i n c r e a s i n g l y a t t r a c t i n g i n v e s t i g a t i o n a n d g o v e r nm e n t a l i n t e r v e n t i o n . T h e f o l l o w i n g s t a t e m e n t w a s m a d e b y A r t h u r M . Wo o d , c h a i r m a n o f th e P u b l i c O v e r s i g h t B o a r d o f t hS e c u r it i es a n d E x c h a n g e C o m m i s s i o n p r a c t i c e s e c t i o n o f t h e A I C PA d i v is i o n f o r C PA fi rm s :

T h i s i s a c r i ti c a l t i m e i n t h e h i s t o r y o f t h e a c c o u n t i n g p r o f e s s i o n . To b e l i e v e t h a t t h e c r i s i s e x i s t s b e c a u s e o f t h e h e a r i n gb e i n g h e l d b y t h e H o u s e S u b c o m m i t t e e o n O v e r s i g h t a n d I n v e s t i g a ti o n s i s i n m y e s t i m a t i o n a se r i o u s e rr o r . C o n g r e s s m aD i n g e l r s h e a r i n g s a r e a s y m p t o m , n o t a c a u s e . T h e c a u s e o f t h i s c ri s i s i s i n f a ct t h a t i n v e s t o r s a n d d e p o s i t o r s a r e l o s i n g f a iti n t h e a b i li ty o f t h e a c c o u n t i n g p r o f e s s i o n t o p e r f o r m t h e j o b t h a t h a s h i s to r i c a ll y b e e n i t s u n i q u e f u n c t io n : a s s u r i n g t hi n t e g ri t y o f t h e f in a n c ia l in f o r m a t i o n o n w h i c h o u r c a p i t a li s ti c s o c i e t y d e p e n d s ( F r o m S t a t e m e n t s inQuotes ,Journal ofAccountancy(August, 1985 , p . 142 ) ) .

14 H a n d e l ( 1 9 8 2, p . 3 6 ) , fi rs t s t a t e d b y W. I. T h o m a s i n t h e 1 9 3 0 s . H a n d e l ( 1 9 8 2 ) a n d M e h a n & W o o d ( 1 9 7 5 ) e l a b o r a t e h o w

a s s u m p t i o n s a b o u t r e a l i ty p r e d i s p o s e o n e t o i n t e r p r e t in g e v e n t s i n h a r m o n y w i t h t h o s e a s s u m p t i o n s . W h e n a c t e d u p o n , t h e sa s s u m p t i o n s p e r p e t u a t e o r c r e a t e t h e c o n d i t i o n s t h a t o n e a l r e a d y a s s u m e d t o h a v e e x i st e d .

~ s S e e M i l l e r ( 1 9 8 6 ) f o r a r e v i e w o f F o u r q u e t ' sLa Comptes de la Puissance ( E n c r e s , E d it i o ns R e c h e r c h e s , 1 9 8 0 ) , w h i c hs h o w s h o w n a t i o n a l a c c o u n t s a r e i n s t r u m e n t a l in s h a p i n g e c o n o m i c b e h a v i o u r .

16 S e e Z e f f ( 1 9 7 8 ) f o r d i s c u s s io n o f t h e p o w e r s t r u g g l e s w h i c h h a v e s u r r o u n d e d a n u m b e r o f U .S . a c c o u n t i n g s t a n d a r d s, av a r i o u s g r o u p s h a v e s o u g h t t o i m p o s e t h e i r d e f in i t io n o f r e al it y, a n d t h e c o n s e q u e n c e s o f i t, u p o n s o c ie t y.

B I B L I O G R A P H Y

A l l is o n , G . T., C o n c e p t u a l M o d e l s a n d t h e C u b a n M i s s il e C ri s is ,The America n P olitic al Science Revi ew

( S e p t e m b e r 1 9 6 9 ) p p. 6 8 9 - 7 1 8 .• B al l, R. & F o s t e r , G ., C o r p o r a t e F i n a n c i a l R e p o r t i n g : A M e t h o d o l o g i c a l R e v i e w o f E m p i r i c a l R e s e a r c h ,

Journ al of Accounting Research, S u p p l e m e n t ( 1 9 8 2 ) p p . 1 6 1 - 2 3 4 .B e a v e r , W. H . , W h a t S h o u l d b e t h e FA SB 'sObjectives?Journal of Accountancy ( A u g u s t 1 9 7 3 ) p p . 4 9 - 5 6 .B e rg e r , P. L & L u c k m a n n , T.,The Social Construction of Reality ( H a r m o n d s w o r t h : P e n g u i n , 1 9 6 6 ) .B e rg e r , P. L . & K e l l n e r , H ., M a r r i a g e a n d t h e C o n s t r u c t i o nof Reality, Diogenes (1 964 ) p p . 1 - 2 4 .B i t m e r , E ., T h e C o n c e p t o f O rg a n i s a t i o n ,SocialResearch (19 65) p p . 2 3 9 - 2 5 5 .B o a t s m a n , J . R., W h y A r e T h e r e Ti g e r s a n d T h i n g s ? ,Abacus ( D e c e m b e r 1 9 7 7 ) pp . 1 5 5 - 1 6 7 .Cas t an eda , C . ,The Teachings o f DonJuan: A Yaqui Way of Knowledge ( H a r m o n d s w o r t h : P e n g u i n , 1 9 7 0 ) .C a s t a n e d a ,C., A Separate Re ali ty ( H a r m o n d s w o r t h : P e n g u i n , 1 9 7 1 ).C a s t a n e d a ,C.,Journey to lxtlan: The Lessons of Don Ju an ( H a r m o n d s w o r t h : P e n g u i n , 1 9 7 4 ) .Drey fus , H . L . & Rab inow, P. ,Michel Foucault. Beyond Structuralism and Hermeneutics ( B r i g h t o n :

H a r v e s t e r P r e ss , 1 9 8 2 ) .Feye rabend , P. ,Against Method ( L o n d o n : Ve r s o , 1 9 7 8 ) .F i n a n c i a l A c c o u n t i n g S t a n d a r d s B o a r d ,State ment o f Finan cial Accounting Concepts No. 5: Recognition

and Mea suremen t in Finan cial Statements of Businesa Enterprises ( FASB, 198 4 ) .F i n d la y, M . C., O n M a r k e t E f f i ci e n c y a n d F i n a n c i a l A c c o u n t i n g ,Abacus ( D e c e m b e r 1 9 7 7 ) pp . 1 0 6 - 1 2 2 .F o u c a u l t ,M., Madness and Civilization: A History o f lnsan ity in the Age of Reasor6 t r a n s l a t e d b y R i c h a r d

H o w a r d ( L o n d o n : Ta v i s to c k , 1 9 6 7 ) .Foucau l t , M. ,Discipline a nd Punish: The Birth o f the Prison, t r a n s l a t e d b y A l a n S h e r i d a n ( L o n d o n : A l l e n

Lane , 1977) .Foucau l t , M. , Power~Knowledge: Selected Interviews and Other Writings 1 9 7 2 - 1 9 7 7 ( N e w Yo r k :

P a n t h e o n , 1 9 8 0 ) .


11/11


Foucault, M., T h e H i s t o r y o f S e x u a l i ty : A n I n t r o d u c t i o n ,translated by Robert Hurley (Harmondsworth:Penguin , 1981 ).

Garfinkel, H., S t u d ie s i n E t h n o m e t h o d o l o g y(Engl ewood Cliffs, NJ: Prentice -Hall, 1967).Giddens, A ., N e w R u l e s o f S o c i o l o g i c a l M e t h o d (London: Hutchinson, 1976 ).Giddens, A., T h e C o n s t i t u t i o n o f S o ci e ty : O u t l i n e o f t h e T h e o r y o f S t r u c t u r a t i o n(Cambridge: Polity Press,

1984).Gilbert, G. N., The Tran sformation of Research Findings nto Scientific Knowledge, S o c i a l S t u d i e s o f S c i e n c e

(1976) pp. 281-306.Goodman, N., Wa y s o f Wo r l d m a k i n g(Brig hton : Harvester Press, 1978).Gribbin, J., I n S e a r ch o f S c h rO d i n ge r s Ca t: Q u a n t u m P h y s i c s a n d R e a l i t y ( L o n d o n :Corgi, 1985 ).Handel, W. , E t h n o m e t h o d o l o g y : H o w P e o p l e M a k e S e n s e ( E n g l ew o o dCliffs, NJ: Pren tice- Hall , 1982).Hines, R. D., The Implications of Stock Market Reaction (Non- react ion) for Financial Account ing Standard

Setting, A c c o u n t i n g a n d B u s i n e s s R e s ea r ch ( W i n t e r1984), pp. 3-14.Hines, R. D., Towards a Sociopolitical Research Program me in Financial Accounting, working paper ,

Macquarie University, Australia (198 6a).Hines, R. D., Why Wo n't the FASB Conceptual Fr amework Work? Working Paper, Macquarie University,

fi~ustralia (1 986 b).Hines, R. D., The Social Roles and Consequences of Financial Accounting, working paper, Macquarie

University, Australia ( 1987 ).Holthausen, R. W. Leftwich, R. W., The Econ omic Conseq uence s of Accoun ting Choice: Implications of

Costly Contracting and Monitoring, Journal o fA c c o u n t i n g a n d E c o n o m i c s ( A u g u s t1983) pp. 77-118.

Jon es, R. S., P h y s ic s a s M e t a p h o r(London: Wildw ood House, 1983).Knorr-Cetina, K. D., Social and Scientific Method or What Do We Make of the Distinction Betwee n

the Natural and th e Social Sciences? P h i l o s o p h y o f t h e S o c i a l S c i en c e s( 1981 ) pp. 335--359.Kuhn , T. S., T h e S t r u c tu r e o f S c i e n ti f i c R e v o l u t i o n s(Chicago: University of Chicago Press, 1962).Latour, B. Woolgar, S., Lab ora to ry L i fe : The Soc ia l Cons t r uc t ion o f Sc ien t i f i c Fac t s (London: Sage, 1979 ).Laudan, L., A Confuta tion o f Conv ergent Realism, P h i l o s o p h y o f S c i e n ce( 1981 ) pp. 19--49.Laudan, L., Discussion: Realism wi tho ut the Real P h i l o s o p h y o f S c ie n c e ( 1 9 8 4 )pp. 156-162.Lev, B. Ohlson, J. A., Market-Based Empirical Research in Accounting: A Review, Interpre tatio n, and

E x t e n t i o n , J o u r n a l o f A c c o u n t i n g R e s e ar c h,supp lemen t ( 1982 ) pp. 24 9-311.Mehan, H. Wood, H., T h e R e a l i t y o f E t h n o m e t h o d o l o g y(New York: John Wiley, 1975 ).Meyer, J. W., On the Celebration of Rationality: Some Comments on Boland and Pondy, A c c o u n t i n g

O r g a n i z a t i o n s a n d S o c ie t y(1983) pp. 235-241.Miller, P., Accounting for Progress - - National Accounting and Planning in France: A Review Essay,

A c c o u n t i n g O r g a n i z a t i o n s a n d S o ci e ty ( 1 9 8 6 )pp. 83-104.Myers, G., Texts as Knowledge Claims: The Social Const ruc tion of Two Biology Articles, S o c i a l S tu d i e s o f

Sc ience (1985 ) pp. 593--630.Pickering, A., C o n s t r u c t i n g Q u a r k s : A S o c i o l o g i c a l H i s t o r y o f P a r t i c l e P h y s i c s ( C h i ca g o :University of

Chicago Press, 1984).Poincar6, H., T h e F o u n d a t i o n s o f S c i e n c e (Prin ceton , NJ: Scien ce Press, 1913 ).Racevskis, K~, M i c h e l F o u c a u l t a n d t h e S u b v er s i on o f l n t e l le c t ( L o n do n :Corneli University Press, 1983).Schuster, J. A., Methodologies as Mythic Structures: A Preface to the Future Historiography of Method,

M e t a s c ie n c e ( 1 9 8 4 )pp. 15-36.Scott, M. B. Lyman, S. M., ACcounts, A m e r i c a n S o c i ol o g ic a l R e v i e w(February 1968) pp. 46-62.Silverman, D., Acco unts o f Organ izations , in McKinlay, J. B., P r o c e s s in g P e o pl e : C a se s i n O rg a n i z a t i o n a l

B e h a v i o u r(Ne w York: Holt, Rinehart and Winston, 1975 )pp. 269-3 02.Smith, J. W. Turner, B. S., Review article: Construct ing Social Theory and Cons titut ing Society,

T h e o ~ , C u l t u r e a n d S o c ie t y (1 9 8 6 )pp. 125-133.

Tucker, R. W., Spoils of Defeat: Rationalizing Vietnam, H a r p e rs ( N o v e m b e r1981 ) pp. 8 5-88.Wyatt, A. R., Efficient Market Theory: Its Impact on Accounting, J o u r n a l o f A c c o u n ta n c y(February

1983) pp. 56--62.Zeff, S. A., The Rise of 'Economic Consequences', T h e J o u r n a l o f A c c o u n t a n c y,(December 1978)

pp. 56-63.

Date post:	01-Jun-2018
Category:	Documents
Upload:	jean-s-theresia
View:	219 times
Download:	0 times

HINES_Communicating & Constructing Reality_highlighted

Documents