Accounting, Representation and Responsibility

Deleuze and Guattarí Perspectives

Niels Joseph Lennon

• Publisher: Routledge
• Year: 2020
• ISBN:
  9780429640704
• Edition: 1
• Topic: Business
• Subtopic: Managerial Accounting
• Index: Business

In organizations, accounting produces organizational knowledge that affects decision-making and managerial action. Companies placing importance on shareholder value sometimes tend to elevate accounting to a higher truth criterion for justifying managerial actions. Yet, the nature of accounting renders it difficult to argue that accounting information necessarily produce a better basis for decision-making than arguments which are not based on accounting. This is because, as previous research has also argued, accounting counts some things but omits many others, while managers are accountable for much more than what accounting actually counts.

Using a theoretical apparatus from Deleuze and Guattarí, this book illustrates that accounting-based actions such as making management decisions, maintaining organisational responsibility and hierarchical control are manifestations of the ways in which accounting is composed. This concise introduction will be invaluable for researchers and advanced students of management accounting exploring responsibility accounting and accountability.

Part I
Theoretical plateaus

1 Introduction

In our everyday lives we are surrounded by different elements and things. These, as obvious as they seem in our everyday lives, can theoretically be understood as signs that our minds decode and assign with meaning. In his work with Felix Guattarí, the French philosopher Gilles Deleuze offers some postmodern theoretical concepts to understand how this process works (Deleuze, 2004; Deleuze & Guattarí, 2004). Accounting is no different than other elements and things we engage with. Accounting information acts essentially as signs that users, whether they are accountants, top-level managers or lower level managers/decision makers, decode with a meaning; the actor signifies the sign. Through the process of signification, the user creates an understanding of the message that the accounting calculation provides. This is the accounting ontology I unfold in this book. In that way, the book offers an alternative, postmodern view on accounting that differs from the mainstream idea of ‘accounting as representation’ (Ijiri, 1975; Ryan, Scapens, & Theobald, 2002).

The postmodern literature has already shown the importance of understanding how an accounting sign¹ is formed through processes of fabrication in order to understand its organizational and social effects (Chua, 1995; Preston, Cooper, & Coombs, 1992; Robson, 1992). Postmodernism turned causality upside down by arguing that in order to create effects, accounting (as well as other inscriptions) assembles a collective network of relations in organizations, and the organizational effects are therefore mediated by the composition of this collective.

However, while the present postmodern literature proves this point well, the process of signifying accounting information – that is, the process by which users ascribe meaning to accounting information – also affects managerial action and decision-making in non-intentional, non-prescriptive ways. This aspect of postmodern thought is not yet described in the accounting literature. In short, signification of signs happens within a regime that together conditions how the sign is signified.

This book focuses on these processes of engaging with accounting information and signifying the meaning of this information to use it to guide managerial action. I do so by studying the role accounting plays in managerial action in a responsibility center, where accounting information is used for accountability purposes.

Accountability

Accountability is the act of giving and receiving accounts of one’s conduct and has deep roots in Western culture (Munro, 1996). One central way of rendering people in organizations accountable is to construct accounts of their conduct, for example, through responsibility accounting. Due to the central role accountability plays in accounting for control (Zimmerman, 2011), the literature has discussed accountability from a variety of theoretical points of views, including financial considerations (Ijiri, 1975), ethics (Messner, 2009; Roberts, 2009), management technologies (Kirk & Mouritsen, 1996) and accountability as an everyday practice, with deep roots in the construction of society (Munro, 1996). Another, related, stream of accounting literature describes responsibility accounting as a method to render business unit managers accountable.

Responsibility accounting treats economic responsibility through delegation. The organization delegates a particular part of a budget to the manager in charge of a business unit. Thereby, this manager is in principle evaluated based on one single number, dependent on which kind of responsibility center the manager is in charge of; these numbers can be revenue, costs, profit, return on investment (ROI), economic value added (EVA) or other measures. The idea of this is to hold the manager responsible for the decisions he or she makes in accordance with the decision rights, the responsibility center is assigned. Thus, accountability is measured in terms of the decisions’ effects on financial numbers (Zimmerman, 2011).

On the practical side, responsibility accounting is about constructing business units in which managers are held responsible for (parts of) the business unit’s finances. Briefly, if a manager has decision rights over both the revenue and the cost side of the business unit, it is a profit center. If the manager has control over the cost side only, it is a cost center; and if the manager can control revenue exclusively, but does not have decision rights over the cost side of the business unit, it is a revenue center. If the manager has decision rights over investments within the business unit, it is considered to be an investment center. Then, as mentioned, the different responsibility centers are made responsible for certain financial figures according to which responsibility center it is. An investment center is typically responsible for ROI, residual income or EVA; a profit center is responsible for profit (revenue – controllable costs of operations) (Merchant & Van der Stede, 2007) and a revenue center is responsible for the revenue line, its profit and loss statement, but typically cannot control the cost side and thus is not responsible for that part (Merchant & Van der Stede, 2007; Zimmerman, 2011).

Purpose and contribution of this book

The purpose of this book, which focuses on the themes of accounting, representation and responsibility, is to zoom in on what responsibility means in an accounting context. Accounting is by the functionalist, mainstream research perspective often understood as a practice of representation. However, when closely examining the practice of accounting as a technology for rendering people in organizations responsible, it soon becomes visible that this process of representing certain things through accounts works differently than what the theory of representation would suggest. Our aim is to show that accounting does not represent performance, customer behavior or other social phenomena as the representation theory would suggest. Rather, it presents these things in new and surprising (and often contradictory and conflicting) ways. Thus, accounting certainly has the capacity to render people accountable through numbers, but this accountability, and what it means for managers to be accountable, is significantly different from what conventional theory suggests.²

Thus, this focus means that our attempt is to describe more deeply how accounting, representativity and accountability relate. I do so by studying how managers’ decision space is constructed and deconstructed by various objects in the practice in which the managers operate. Our claim is that the signification of accounting information is affected by these objects that managers engage with in their daily work.

More specifically, the book contributes by examining how accounting mobilizes a certain version of what it means to be accountable, but accountability is a network of relations in many different, and often contradictory, directions. This goes against accounting as representation because these relations mean that accounting does not represent certain things, but it presents in a new version of these things, often through numbers, calculations (e.g., ratios and other performance indicators) and other kinds of visualizations of performance (graphs, trends, colors of different variance levels and so on).

Thus, accounting is composed of heterogeneous circumstances that shape managers’ decision opportunities and space of possible actions (decision space), and, as a result, the accounting version of managers’ accountability is generalized and sometimes disconnected from the reality in which it is mobilized. In popular terms, one could say that accounting counts some matters and leaves other out, but accountability is a broader social phenomenon related to the accountable subject, and its composition is exterior with relations in many different directions that the subjects must think about.

Notes

1. 1 Accounting signs are often called accounting ‘inscriptions’ in this stream of research.
2. 2 ‘Conventional’ refers to mainstream, functionalist accounting theory.

References

1. Chua, W. F. (1995). Experts, networks and inscriptions in the fabrication of accounting images: A story of the representation of three public hospitals. Accounting, Organizations and Society, 20(2/3), 111–145.
2. Deleuze, G. (2004). Difference and Repetition. New York, NY: Continuum.
3. Deleuze, G., & Guattarí, F. (2004). A Thousand Plateaus. New York, NY: Continuum.
4. Ijiri, Y. (1975). Theory of Accounting Measurement. Sarasota, FL: American Accounting Association.
5. Kirk, K., & Mouritsen, J. (1996). Spaces of Accountability: Accounting Systems and Systems of Accountability in a Multinational. In R. Munro & J. Mouritsen (Eds.), Accountability. Power, Ethos and Technologies of Managing (201–224). London: International Thomson Business Press.
6. Merchant, K. A., & Van der Stede, W. A. (2007). Management Control Systems. Upper Saddle River, NJ: Prentice Hall.
7. Messner, M. (2009). The limits of accountability. Accounting, Organizations and Society, 34(8), 918–938.
8. Munro, R. (1996). Alignment and Identity Work: The Study of Accounts and Accountability. In R. Munro & J. Mouritsen (Eds.), Accountability. Power, Ethos and Technologies of Managing (1–19). London: International Thomson Business Press.
9. Preston, A. M., Cooper, D. J., & Coombs, R. W. (1992). Fabricating budgets: A study of the production of management budgeting in the national health service. Accounting, Organizations and Society, 17(6), 561–593.
10. Roberts, J. (2009). No one is perfect: The limits of transparency and an ethic for ‘intelligent’ accountability. Accounting, Organizations and Society, 34(8), 957–970.
11. Robson, K. (1992). Accounting numbers as “inscription”: Action at a distance and the development of accounting. Accounting, Organizations and Society, 17(7), 685–708.
12. Ryan, R., Scapens, R. W., & Theobald, M. (2002). Research Methods and Methodology in Accounting and Finance. London: Thomson.
13. Zimmerman, J. L. (2011). Accounting for Decision Making and Control (7th ed.). New York, NY: McGraw-Hill.

2 What can accounting learn from Deleuze?

Post-structuralist research has informed accounting since the first research papers were published toward the end of the 1980s and the start of the 1990s, after Hopwood’s call for more contextual and organizational-focused accounting research (Hopwood, 1978, 1983). The journal Accounting, Organizations and Society played an important role in directing accounting research toward that end (see Miller & Oleary, 1987; Miller & Rose, 1990; Robson, 1991, 1992 as examples of this turn). Since then, research incorporating insights from post-structuralist thought has grown steadily and actor-network theory (ANT) has become a major theoretical inspiration. The seminal paper by Robson (1991), which included the notion of translation in accounting, became a landmark due to its ambition and potential to expand our knowledge about what accounting does in organizational and managerial practice and in society at large, a perspective that provided significant new insights about accounting. This was followed up by a number of publications drawing on the perspective of ANT (such as Chua, 1995; Mouritsen & Bekke, 1997; Preston, Cooper, & Coombs, 1992; Robson, 1992).

ANT may be considered as extending the lines of post-structuralist thinkers such as Foucault, Serres and Deleuze, affording an empirical or ethnographic version of post-structuralist thought (Law, 2009; Mol, 2005). Deleuze was a major influence in the post-structuralist literature and also a great inspiration to ANT. Yet, in accounting, researchers have been reluctant to do research inspired by Deleuze’s scholarship, and only few papers draw explicitly on Deleuze’s scholarship (Martinez, 2011; Martinez & Cooper, 2017; Neu, Everett, & Rahaman, 2009). It is our contention that many new insights may be provided by exploring continuities and discontinuities between Latour’s ANT and Deleuze’s theory on assemblage in relation to accounting. As such, this chapter will describe assemblage theory and how it is used to study responsibility accounting in the empirical case later in the book.

Assemblage theory emerged in Gilles Deleuze’s work and his collaboration with Felix Guattarí (Deleuze, 2004; Deleuze & Guattarí, 2004) and was extended in Manuel DeLanda’s Assemblage Theory (DeLanda, 2006). This line of thought will be connected to the organizing properties of accounting as described by Miller and Power (2013).

Assemblage theory

Assemblage theory and Del...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Table of Contents
• Acknowledgments
• Part I Theoretical plateaus
• Part II Empirical plateaus
• Epilogue
• Index