Redefining accounting for shaping a better world and a more attractive profession
A broader, universal definition of accounting focusing on its three key dimensions offers a paradigm shift for shaping a better world and is central to enhancing accounting’s attractiveness to the best and brightest to join the profession.
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? This question is posed repeatedly by students considering if chartered accounting is the right choice of career for them.
In the past, accounting was typically defined along the lines of the measuring, recording, classifying, summarising and communication of information for use in decision making. In recent decades, however, accounting research and education has moved on as it tried to lay foundations for accounting’s expanding scope and global outreach.
Accounting’s purpose is now much broader. Its influence and contribution to society has progressed to embrace a much more significant and meaningful purpose. To reflect this changed and dynamic role, Carnegie, Parker and Tsahuridu (2021a, 2021b) redefined accounting as:
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.1
Prospective students considering chartered accounting as a profession are often unaware of this changed role. By emphasising and applying this new definition in accounting education, future generations can be inspired to put into action their desire to truly make a difference in the world by becoming professional accountants. Their accounting education can help them think more broadly and holistically, so that, informed by the latest research, they can consider the interdisciplinary implications when solving business and other problems. In this way they will be prepared for the expanded accounting role and be positioned to enable the flourishing of organisations people and nature.
Some readers may be asking themselves. What has changed in the world? It should be recognised that young people, among others, are more concerned than ever about the climate crisis and its impacts. This is not their only concern; they want to address various other major challenging issues facing the world in meaningful and effective ways. This public interest mindset is to be applauded.
To think otherwise, would suggest our lack of thoughtfulness towards others, both humans and non-humans alike, or at worst, a mindless “switching-off” from our profession’s duty to society. ICAS is commended for recently reiterating the importance of upholding professional ethics and cultivating trust in chartered accounting.
While more recent entrants to our profession may be concerned about the sustainability of the planet and shaping a better world than previous generations, they still may not appreciate the extent to which accounting impacts how we think and what we do. They may be unaware of how to make a difference and ensure resources are used sustainably and adequately protected.
It's now 2023! It is essential that accounting is now studied and evaluated with respect to the organisational and social contexts in which it operates. Whether changing or change resistant, accounting has consequences for human behaviour, organisational and societal culture, social functioning and development, and our natural environment. Furthermore, the importance of ethical behaviour and trustworthiness in professional relationships must be inculcated.
The new definition of accounting carries important implications for the education of future chartered accountants, the work of qualified accountants and ultimately for the profession’s attractiveness. It recognises that while the technical practice of accounting is important, including how events are recorded and categorised, modern broader scope reports produced by accountants go far beyond the use of double entry bookkeeping, balancing the books and following accounting standards.
As a social practice, accounting orders our lives by means such as key performance indicators (KPIs) or metrics. There are many examples where KPIs are aggressively set and narrowly based to the detriment of organisational cultures and their impacts on community. By emphasising its role in shaping a better world, a new generation of chartered accountants can be inspired to make a difference in the world, not just within the domain of accounting, but across all sectors as well as the natural environment on which we all depend for our sustenance.
The moral practice imperative of accounting cannot be denied. We see time and again when accountants’ actions and inactions affect others, both now and in the future. It is important for chartered accountants to contribute to shaping the moral order and accountability infrastructures of organisations and society.
This broad-scope stewardship role in society needs to be emphasised to those considering the profession and what they can broadly attain by entering its ranks. This would allow future accountants and their representative professional bodies to enable organisations, people and nature to flourish with an overarching concern for, and concentration on, “the sustainable utilisation of resources and proper accountability to stakeholders”.
The framework below shows how this multidimensional definition can be applied to reflect and understand the comprehensive nature of accounting. It uses a framework of fundamental questions, developed for each of these key conceptions of accounting: technical practice, social practice, and moral practice.
Figure 1, from Meditari Accountancy Research, Carnegie, Gomes and McBride (2023, p. 12 ) based on Carnegie, Parker and Tsahuridu, (2021a,b).
The key questions posed at the top of Figure 1 help to guide the application of this new definition of accounting.
Ethics is not just about reading and knowing the words in the Code of Ethics and using one's imagination, but specifically about applying what's written to specific circumstances or arrangements that arise in practice. This includes situations where the temptation of motives premised on greed, ignorance, fear, ego or vanity or, sadly, even risking criminality can cloud or distort the judgement of an involved party to make decisions which rather favours personal-interest or organisational-interest than necessarily the public interest.
The upholding of the centrality of morality is vital in the accounting profession, especially as professional accounting bodies themselves advocate to their members the responsibility to act in the public interest. The importance of the centrality of morality can never be overlooked nor ignored. The risks of doing so, include cases of disregarding conflicts of interests, failing to weed out “bad apples” and by condoning or tolerating what is often termed as “culture driven by profit” rather than an expected culture premised on “acting in the public interest”. These cases discredit the profession and, accordingly, can reduce its attractiveness for just the entrants the profession needs; those who want to act in the public good and make a difference in the world.
In conclusion, this definition of accounting and the compatible framework in Figure 1 are firmly intended to position chartered accountants as leaders in addressing the major challenges facing us all. This is attractive – and indeed stimulating –both to current and prospective students and potential entrants to our profession who want to make a difference. It seeks to inspire the brightest and best to enter the accounting profession with the prospect of truly making a difference, with a broad-scope orientation towards enabling the flourishing of organisations, people and nature and shaping a better world for all.
Garry Carnegie FCPA, CA, Emeritus Professor of RMIT University, Department of Accounting, Melbourne, Victoria, Australia.
Lee Parker FCPA, Research Professor of Accounting, Adam Smith Business School, University of Glasgow, Scotland, UK.
Jennifer Rose FCA, Senior Lecturer, Alliance Manchester Business School, University of Manchester, England, UK.
[1] Carnegie, G., Parker, L. and Tsahuridu, E. (2021a), “It’s 2020: what is accounting today?”, Australian Accounting Review, Vol. 31 No. 1, pp. 65-73, first published online on 22 November 2020, available at: https://onlinelibrary.wiley.com/doi/epdf/10.1111/auar.12325 and Carnegie., Parker, L. and Tsahuridu, E. (2021b), “Redefining accounting for tomorrow”, Knowledge Gateway, IFAC, 6 April, available at: https://www.ifac.org/knowledge-gateway/preparing-future-ready-professionals/discussion/redefining-accounting-tomorrow
[1] Source: Carnegie, G.D., Gomes, D. and McBride, K. (2023), "COVID-19 and accounting as multidimensional technical, social and moral practice: a framework for future research", Meditari Accountancy Research, Vol. 31 No. 1, pp. 1-26, available at: https://doi.org/10.1108/MEDAR-10-2022-1826
