CHAPTER

Critical
Perspectives of
Accounting

•3 LEARNING OBJECTIVES

individuals who hold power,

Upon completing this chapter readers
wealth and social status, while
should:
undermining the positions of
have gained an insight into others;
particular perspectives that
understand that the disclosure (or
challenge conventional opinions
non-disclosure) of information can
about the role of accounting within
be construed to be an important
society; understand the basis of
strategy to promote and legitimize
arguments that suggest that
particular social orders, and
financial accounting tcnd5 to
maintain thc powcr and wcalth Uf
support thc positions of
elites.
514
12.1 Introduction 515

Opening issues
 s we saw in Chapter 6, conceptual framework projects promote approaches
to financial accounting that are built on qualitative characteristics such as
neutrality and representationalfaithfulness. How do arguments regarding the
unequal distribution of power between different social groups challenge
assumptions of the neutrality and objectivity of financial reports?

'-12.1
-Inttödüétion
n previous chapters we explored numerous issues, including how accounting may be
used to assist in decision-making(Chapters 5 and 6); reduce agency and political costs
(Chapter 7); maintain or assist in bringing legitimacy to an organization (Chapter 8);
and satisfy the information demands of particular stakeholders (Chapter 8). We also
considered how the practice of accounting could be modified to take into account some
social and environmental aspects of an organization's operations (Chapter 9), as well as
considering how accounting disclosures might impact on share prices (Chapter 10). In
this chapter we provide an overview of an alternative perspective about the role of
accounting. This perspective, which is often called the critical perspective, explicitly
considers how the practice of accounting tends to support particular economic and
social structures, and reinforces unequal distributions of power and wealth across
society. In doing so, this form of accounting research rejects the view that accounting
simply provides an objective and unbiased account of particular transaction and events.

The view promòted by researchers operating from a critical perspective is that

accounting, far from being a practice that provides a neutral or unbiased
representation of underlying economic facts, actually provides the means of
maintaining the powerful positions of some sectors of the community (those
currently in power, and with wealth) while holding back the position and interests
of those without wealth. These theorists challenge any perspectives which suggest
that various rights and privileges are spread throughout societyl — instead they
argue that most rights, opportunities and associated power reside in a small (but
perhaps well-defined) group, often referred to as an 'elite'.
This chapter considers various (critical) arguments about the role of the state
(government), the role of accounting research and the role of accounting practice in
sustaining particular social orders that are already in place — social orders that some
researchers argue function on the basis of inequities, where some individuals (with
capital or wealth) prosper at the expense of those without capital and where accounting
is therefore regarded as one of the tools used by those with (more) capital to help
subjugate (undermine) those without (or with considerably less) capital. We will see
that researchers adopting a critical perspective often do not provide direct solutions to
particular inequities, but rather seek to highlight the inequities which they perceive to
exist in society, and the

1
The assumption that there is a spread of rights.and privileges across different groups within society is commonly
referred to as pluralism.
516 Chapter 12 Critical Perspectives of Accounting

role which they argue accounting plays in sustaining and legitimizing those
perceived inequities. Because the theoretical perspectives investigated in this
chapter make calls for changes that will have broad impacts across society, the
perspectives are quite different to the other theories addressed in other chapters of
this book.

12.2 The critical perspective defined

nder the heading (or umbrella) of critical accounting theory, there are several
different specific perspectives on critical accounting. Therefore, a single critical perspective
is not easy to define. In broad terms, critical accounting theory is used to refer to an
approach to accounting research that goes beyond questioning whether particular
methods of accounting should be employed, and instead, critical theorists tend to focus on
the role of accounting in sustaining the privileged positions of those in control
ofparticularresources (capital) while undermining or restraining the voice of those without
capital. According to Roslender (2006, p. 250):
Critical Theory is intimately wedded to change. More specifically it is concerned with
the promotion of a better society, one in which the prevailing social arrangements
serve the interests of the mass of people, whose 'potentialities' are perceived to be
constrained by those arrangements already in place
Critical Theory seeks to provide a form of knowledge that is questioning of the
prevailing social arrangements, i.e. an alternative knowledge. More than this,
however, the resulting knowledge will serve as an input into a process of reflection
by society's members on the nature of their involvement within the prevailing social
arrangements and how this might be changed, for their benefit. Critical Theory is not
concerned with the provision of insights for their own sake but for the purpose of
informing the transformation of 'what is' into what those who experience it wish it
to be, through a process of interaction and reflection. Or put another way, Critical
Theory aims to promote self-awareness of both 'what is' and 'what might be', and
how the former might be transformed to install the latter.

Roslender (2006, p. 264) further states that from a critical perspectivë:

Simply interpreting or understanding what we chose to study is not enough. The
purpose of the exercise is to turn this learning to the advantage of society, i.e. the promotion
of a better society. The presupposition is that there are many things about the existing social
arrangements that merät changing. 'Traditional' theory does not subscribe to this axiom. It is
this quality that distinguishes 'critical' theory from traditional theory. This is not to imply that
all of those scholars who elect to embrace other ways of seeing are committed to the
reproduction of the existing social arrangements, rather that they do not avail themselves of a
way of seeing, CliLical Theory, that explicitly links understanding and change to the
enactment of the philosophy of praxis (a philosophy in which 'theory' informs 'practice' and
vice versa). Viewed in a slightly different way, Critical Theory makes no pretence of
 being objective. Those who embrace a Critical Theory perspective do so because they
recognise and value its partiality.

Financial Edition
Accounting
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