From instrumentalism to realism in accounting
Keywords:Accounting practices, economic substance, faithful representation, professional judgment, regulatory framework, relevance.
AbstractHow, by their nature, the humans cannot have perfect knowledge, the only absolute thing is relativity, this being present in all their actions. In accounting, given its subject matter, it can talk of the relativity of the values that characterize the events in the life of an organization, this being caused by a wide variety of factors. In a previous article (Enachi, 2012) was identified a particular paradigm with visible effects in accounting practice, more precisely, it was talked about the transition from instrumentalism to realism in accounting. This paper supports the previous assertions and after explaining the accounting implications of the two fundamentally different approaches tries to provide solutions for bringing accounting closer to reality. A literature review is conducted to identify the limits that accounting presents in its attempt to capture the truth and the factors responsible for these limits. The main conclusion is that the quality of the professional judgments exercised in creating and implementing a system for accounting representation of reality, although partially controlled, is essential in increasing the reliability of the information provided by accounting.
Adelson, M. and Cho T., (2002, April 16). Accounting vs. reality: Can we handle the truth?. Retrieved from http://www.markadelson.com/pubs/Accounting_vs_Reality.pdf
Amernic, J. and Craig R., (2009). Understanding accounting through conceptual metaphor: Accounting is an instrument?. Critical Perspectives on Accounting, 20(8): 875-883. DOI:10.1016/j.cpa.2009.06.004
Anonymous, (1979), February. Accounting reality. Journal of Accountancy, 147: 78-80. Retrieved from http://search.proquest.com.ux4ll8xu6v.useaccesscontrol.com/pqcentral/docview/198268725
Boghean, F., (2005). Utilizarea instrumentelor contabilităţii financiare în procesul de asistare a deciziilor. The Annals of the “Stefan cel Mare” University of Suceava. Fascicle of the Faculty of Economics and Public Administration, 5: 49-53. Retrieved from http://www.seap.usv.ro/annals/ojs/index.php/annals/article/view/88/89
Bullock, C. L., (1974), July. Accounting conventions and economic reality. The CPA Journal, 44: 19-24. Retrieved from http://search.proquest.com.ux4ll8xu6v.useaccesscontrol.com/docview/212253335
Byrne, G. R., (1952), November. Accounting judgment. New York Certified Public Accountant, 22: 657-661. Retrieved from http://search.proquest.com.ux4ll8xu6v.useaccesscontrol.com/pqcentral/docview/214558101
Colasse, B., (1995). Contabilitate generală (Ediţia a 4-a). (Tabără N., Trans.). Iaşi: Editura Moldova. (Original work published 1993).
Couchman, C. B., (1940, April). Realism in accounting. Journal of Accountancy, 69: 255-365. Retrieved from http://search.proquest.com.ux4ll8xu6v.useaccesscontrol.com/pqcentral/docview/198215366
Enachi, M., (2012). Paradigm shifts in accounting. In Todoroi D. (Ed.), Crearea Societăţii Conştiinţei: Materialele Primei Teleconferinţe Internaţionale a Tinerilor Cercetători, 7-8 Apr., Chişinău (pp. 67-73). Chişinău: Editura ASEM.
Grady, P., (1968), March. Realism and professionalism in accounting. New York Certified Public Accountant, 38: 179-185. Retrieved from http://search.proquest.com.ux4ll8xu6v.useaccesscontrol.com/pqcentral/docview/214527606
Hines, R. D., (1988). Financial accounting: In communicating reality, we construct reality. Accounting, Organizations and Society, 13(3): 251-261. DOI:10.1016/0361-3682(88)90003-7
Instrumentalism, (2006). In Britannica Concise Encyclopædia (Rev. and exp. ed., p. 945). Chicago, IL: Encyclopædia Britannica.
Ionaşcu, I., (1997). Epistemologia contabilităţii. Bucureşti: Editura Economică.
Kam, V., (1973), February. Judgment and the scientific trend in accounting. Journal of Accountancy, 135: 52-57. Retrieved from http://search.proquest.com.ux4ll8xu6v.useaccesscontrol.com/pqcentral/docview/198280161
Lau, M. Y., (2005). Ontological and epistemic claims of realism and instrumentalism. American Psychologist, 60(4): 345-346. Retrieved from http://psycnet.apa.org/index.cfm?fa=buy.optionToBuy&id=2005-05480-016
Lo, K., (2007), May. Alternate accounting realities?. Beyond Numbers, 463: 6. Retrieved from http://search.proquest.com.ux4ll8xu6v.useaccesscontrol.com/docview/200661494
Maali, B. and Jaara O., (2014). Reality and accounting: The case for interpretive accounting research. International Journal of Accounting and Financial Reporting, 4(1): 155-168. Retrieved from http://www.macrothink.org/journal/index.php/ijafr/article/viewFile/5468/_19
Menzel C., (2003). Reference ontologies - Application ontologies: Either/or or both/and?. In Grenon P., Menzel C., Smith B. (Eds.), Proceedings of the KI2003 Workshop on Reference Ontologies and Application Ontologies (pp. 1-10). Germany: Sun SITE Central Europe. Retrieved from http://ceur-ws.org/Vol-94/ki03rao_menzel.pdf
Minu, M., (2002). Contabilitatea ca instrument de putere. Bucureşti: Editura Economică.
Munteanu, M., (2002). Cunoaşterea în contabilitate între doxă şi episteme. O perspectivă p(a)ra(di)gmatică. Contabilitatea, Expertiza şi Auditul Afacerilor, 8: 15-21.
Pohoaţă, I., (2011). Fundamente epistemologice şi metodologice ale ştiinţei economice. Bucureşti: Editura Economică.
Risk, J. M. S., (1982), June. Realism in accounting. IEE Proceedings A (Physical Science, Measurement and Instrumentation, Management and Education, Reviews), 129(4): 274-284. DOI:10.1049/ip-a-1.1982.0052
Searle, J. R., (1993). Rationality and realism, what is at stake?. Daedalus, 122(4): 55-83. Retrieved from http://www.jstor.org/discover/10.2307/20027199?sid=21105548042843&uid=2&uid=4
Searle, J. R., (1995). The construction of social reality. New York, NY: The Free Press.
Shapiro, B. P., (1997). Objectivity, relativism and truth in external financial reporting: What’s really at stake in the disputes?. Accounting, Organizations and Society, 22(2): 165–185. DOI:10.1016/S0361-3682(96)00017-7
Stuebs, M. T. Jr. and Thomas C. W., (2009), January. Improved judgment in financial accounting: A principled approach. The CPA Journal, 79: 32-35. Retrieved from http://search.proquest.com.ux4ll8xu6v.useaccesscontrol.com/pqcentral/docview/212242116
Tweedie, D., (2003), October. Facing up to reality: Accounting that tells it as it is. British Actuarial Journal, 9(04): 719-723. DOI:10.1017/S1357321700004335
Vollmer, G., (2004). New arguments in evolutionary epistemology. Ludus Vitalis, XII(21): 197-212. Retrieved from http://www.academia.edu/8492525/new_arguments_in_evolutionary_epistemology.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) after official publication, as it can lead to productive exchanges as well as greater citation of published work (See The Effect of Open Access).