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s a mandatory audit a preposterous idea or the ending of an anachronism?

Mandatory Audit for Cost and Management Accounts

B.C. Ghosh, J.G. Oliga and B. Banerjee Although there are ongoing debates about the merits and demerits of (financial) accounting regulation, today it is a fact of life. Financial accounting standards govern preparation of published financial statements, and these are subject to mandatory, statutory audit. The object of such regulation is to make firms report more fully, more accurately, and more truthfully and fairly than might otherwise be, all for the purpose of protecting the public interest as well as inducing investors' and other external users' confidence in the credibility of the financial reporting system. But these regulatory measures do not apply to the second wing of accounting, the internal, cost and management accounting system. The difference in treatment is presumably based on the fact that the product of financial accounting is primarily intended for external users, while that of cost and management accounting is for private, internal use. This article offers, from both conceptual and institutional standpoints, an exploratory discussion of the idea of extending mandatory audit to cost and management accounts. What emerges from the discussion is that the idea of mandatory audit for internal accounting information poses a formidable dilemma: it is conceptually compelling and yet practically problematic.

The article illustrates this dilemma by citing the case of India, the first country ever to legislate mandatory audit for cost accounts, but only for specified industries and not on a continuous, annual basis. Interviews with a number of Indian industrialists about their experience and views on the merits of auditing cost accounts as legislated by the government revealed mixed reactions, evidence of the presence of a deeply perceived dilemma. The article concludes that the whole idea, far from being preposterous, is conceptually compelling. But, from an institutional standpoint, it could be that the present worldwide practice of no requirement for the mandatory audit of internal cost and management accounts is an anachronism. The implication is that perhaps more studies in the future should begin to address this seemingly intractable issue. Financial versus Management Accounting Private sector or enterprise accounting has conventionally been dichotomised into the external wing (financial accounting) and the internal wing (management accounting). While the former represents externally oriented financial information and reporting, mainly for external users, the latter is concerned with internally oriented accounting information for (managerial) organisational decision making and control. This dichotomy has led to a corresponding difference in the legislative treatment of the two wings for purposes of statutory audit. Statutory audit is mandatory for the external wing. The internal wing is considered a purely private matter, and as such falls outside the purview of public concern and regulation. However, does this orthodox accounting scenario have valid conceptual foundations? Specifically, is the very notion of a dichotomy conceptually tenable in relation to this domain of social activity? In the next subsection, we examine the notion of dichotomy against the alternative notion of "dialectic" as a means of illuminating, from a conceptual standpoint, the problem of differential audit treatment for the two wings. Dichotomy or Dialectic? That many systems exhibit tendencies, mechanisms, processes or forces that constitute opposing polarities does not seem to be in dispute. It is, however, the way of conceptualising the nature of those polarities in different contexts that is the cause of much controversy and confusion. Specifically, under what circumstances is it valid to speak of a polarity as a dichotomy, a simple continuum, or a dialectic[1]? Voorhees[2] has made an important contribution to the analysis of three approaches to unity in terms of duality. First, the positivist conception of polarities is in terms of dichotomies. This is an either/or classificatory approach, in which each pole is different and subsists for itself, without any essential need to be referred to the other : a case of mutually exclusive opposition[3]. The structuralist perspective, however, sees the positivist conception as

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inadequate to cover two other cases : the both/and situation, and the neither/nor situation. The both/and case is a situation of inclusive opposition, where each opposing pole constitutes a negation of the other, such that each opposite is nothing in itself and for itself and hence meaningless except by implying a relation to the other[3]. The underlying logic here is the Hegelian dialectical reasoning that translates into the discursive formula : thesis + antithesis = synthesis. The neither/nor approach extends the dialectical logic by including cases where change is instantaneous and discrete (quantum changes, as in mutations) [2]. While the structuralist perspective provides an important pointer to the limitation of the positivist concept of dichotomy, the role of human agency is conspicuous by its absence. Both perspectives rely on one or another of nature's dimensions of space, time and cycles. In contrast, the interpretative approaches seek to ground the explanation of opposing polarities not only in constraining objective reality, but also in the active role of human agency. From an interpretative point of view, Gharajedaghi[4] has given an insightful elaboration of the nature of polarities, clearly distinguishing between the unidimensional and the multidimensional concepts of opposing realities. Dichotomy as a unidimensional concept treats polarities as if they were all isolated (independent), discrete entities. For instance, the polarity in the statement that "a person is either dead or alive". A simple continuum, although still unidimensional, recognises the possibility of gradations between the two extremes (e.g. relatively tall/short). But it is only the dialectic that recognises the multidimensional nature of polarities, and the mutual interdependence of their opposing tendencies, which not only co-exist and interact, but also form a complementary relationship (e.g. the north and south poles of a magnet, stability/variation tendencies, fragmentation/integration tendencies, etc.). Thus, in a context of social conflicts, Gharajedaghi sees dichotomies as representing no more than a win/lose struggle situation which calls for a solution in terms of the best possible outcome for one side at the cost of the other. Simple continua call for a compromise or resolution of the conflict, which is nothing more than a superficial integration of the opposing sides. It is only the dialectic that permits the possibilities of a win/win struggle (as well as lose/lose and win/lose possibilities); in this case, the conflict can be dissolved (i.e. removed) in such a way that a new framework that encompasses both poles emerges from the discursive process of "thesis-antithesis-synthesis". In relation to the so-called two wings of accounting, it can now be argued that they constitute not a dichotomy but a dialectic. As such, differential audit treatment would appear to be conceptually unwarranted. In the first place, the so-called two wings reflect but two moments which constitute a unity in the circuit of capital, from exchange to production and back to exchange, cf.[5]. The external wing highlights the "exchange moment", the human activities that reflect the interfacing of the system with

its environment (constituents). In the input-transformationoutput model of organisational activities, the external wing focuses on the transformation of money capital to commodity capital (inputs) and commodity capital back to money capital (outputs). The internal wing, on the other hand, is essentially concerned with the "production moment", where commodity capital as inputs is transformed into productive capital for the purpose of creating new commodity capital with higher added value. Without this unity between the exchange and production moments, the very circuit of capital is inconceivable. Each moment presupposes the other, and has no meaning in and of itself. Thus, from a conceptual standpoint, the supposed dichotomy invalidly truncates the recursive circuit of capital, thereby ignoring the importance of the relationship between the notions of efficiency (as reflected in the production moment) and effectiveness (the exchange moment). And yet both notions are presupposed in the very purpose of mandatory audit for financial accounting. "Truth and fairness" in statutory audit are, in the final analysis, vicarious notions for the state of organisational efficiency and effectiveness, at least to an extent. Certification by auditors, for instance, of a company's improved performance will make it more credible to investors. In the second place, the differential treatment ignores the autopoietic (the need for living systems continuously to renew themselves) nature of social systems[6-9]. The inherent open-closed duality of autopoietic systems (a human organisation is supposedly such a system) implies that the autonomy characterising the internal reproductive processes of organisational closure is just as essential as the dependence that derives from the openness of a system to its external environment. As Bednarz[9, p. 60] cogently elaborates, autopoietic systems are characterised by the simultaneity of openness and closure. They are "open with respect to structural interaction with the environment, and closed with respect to organisation". For accounting, the external wing reflects the "open" moment; the internal wing the "closed" moment, which is "intrinsically self-referential" [9, p. 58]. Both moments constitute a unity which cannot be dichotomised for differential treatment. A third aspect of the dichotomy is that the differential treatment ignores the reflective-constitutive dialectic, whereby internal transformation processes necessarily have important, and yet often unintended, consequences for the external. In his structuring theory, Giddens[10] has extensively elaborated on the nature of the relationship between the constitution of agents and external social structures. The two represent a duality in which structure is a medium as well as an outcome of action. In accounting, the external wing focuses on the social structural aspects, while the internal wing is more concerned with the active (autonomous) aspects of human agency and action. However, the internal self-referential activities influence and shape the nature of the external output-environment interface which in turn influences the internal wing. Thus,

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the differential treatment of the two wings is conceptually indefensible.

Institutional Dilemma

However, social science debates are seldom settled on the basis of conceptual considerations alone. Normative questions and policy considerations are often more compelling. Similarly, this debate faces a formidable institutional dilemma. On the one hand, the idea of mandatory audit for the internal wing is simply a logical extension of the societal desire to foster optimal allocation and utilisation of scarce economic resources. The present worldwide practice of ignoring the internal wing for audit purposes naively assumes that reactive responses by organisational constituents (actual and potential) constitute a necessary and sufficient control mechanism. Obviously, while the "necessary" part of the social control condition is not in doubt, the "sufficient" part is seriously doubtful. One cannot just assume that internal controls currently in place in an organisation are sufficient for its purpose. A properly constituted internal audit system will certainly help in this matter but existence of such an internal control system cannot be taken for granted in all situations (certainly not in a developing country context). Besides, though internal auditors in certain circumstances can do more than external audit, their independence may still be doubted. Hence organisations and their management must also be made to respond in specific ways as a result of revelations from mandatory audits of internal cost and management accounts. On the other hand, one has to accept that, in a free market economy, the operation of these very agencies is predicated upon the need for individual autonomy and the spirit of enterprise to innovate, initiate and experiment. This is incompatible with an all-embracing regulatory framework, which is likely to stifle the entrepreneurial spirit, encouraging instead conformity and bureaucratic behaviour. In other words, the entrepreneurial decisions on how to run one's business would be seriously compromised by the framework of a regulatory straitjacket. It is this institutional dilemma that perhaps accounts for the present differential audit treatment. However, more than two decades ago, one country (India), in a pioneering move, sought to break away selectively from this orthodoxy. We now look at this Indian experiment.

Government of India by Act of Parliament. Since then, cost and management accounting has made significant progress in India. In particular, cost audit has been made mandatory in large segments of industry in India. The ICWAI has been engaged in a number of government activities such as the Panel for Rehabilitation of Sick Industry, Fixation of Prices, Electricity Tariff Commission. These are mainly socialist ideas, a hallmark of the nation. It is at present seeking a role in the following areas too[11]: (1) valuation of inventories by practising cost accountants before the annual accounts are certified by the financial auditors; (2) mandatory employment of qualified cost accountants in organisations of a certain minimum size; (3) monitoring of loans given by state-owned financial institutions; (4) appointment of cost accountants in practice as nominee directors on the Boards of Sick Industries (these are companies which are not profitable but the Government wants them to continue to provide employment). As a result of the efforts made by the ICWAI, the Department of Tourism has accepted the proposal that, besides chartered accountants, cost accountants in practice can now certify room tariff earnings in all hotels. The Fertiliser Co-ordination Committee under the Ministry of Fertilisers and Chemicals have included certification of fertiliser pricing by practising cost accountants. Fertiliser prices are subsidised in India. Several other developments took place at the instance of the ICWAI. However, here we focus upon one significant aspect only, namely, the auditing of cost accounts. The need to introduce the auditing of cost accounts was recognised in the late 1950s by several influential members of the accountancy profession in India. They felt that this would make it imperative for companies to maintain appropriate cost records in a systematic manner. The Council of ICWAI thus insisted that cost accounts should be maintained on a generally accepted basis and that, once this was done, an audit of cost accounts should also be carried out so that areas of weakness could be brought to the attention of company management. Because of these efforts, we now find a provision in the Indian Companies Act for maintenance of cost records by selected companies in a prescribed manner as and when felt necessary. By another provision in the said Act, the Government has also assumed power to order audit of those cost accounts by a qualified person. We now deal with these legal aspects relating to the maintenance of cost records and their audit.
Power to Order Cost Audit

The Indian Experiment

Two years after independence from the British, the Government of India set up its first professional accounting institute, The Institute of Chartered Accountants of India (ICAI) by Act of Parliament in 1949. Shortly thereafter India felt the need for a separate institute to oversee the development of cost and management accounting practices in India, chiefly (to begin with) in the state-owned manufacturing companies in many sectors. So, in 1959 another institute, namely The Institute of Cost and Works Accountants of India (ICWAI), was established by the

The power to order cost audit is contained in Section 233-B of the Indian Companies Act 1956. This was introduced in 1965 and was thefirstof its kind in the world.

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The prerequisite of a cost audit is the maintenance of proper books of accounts which are required to be maintained by rules prescribed under Section 209(1)(d) of the Act. Section 209(1)(d) states that: Every company shall keep at its registered office proper books of accounts with respect to: in the case of a company pertaining to any class of companies engaged in production, processing, manufacturing or mining activities, such particulars relating to utilisation of material or labour or to other items of cost as may be prescribed, if such a class of companies is required by the Central Government to include such particulars in the books of accounts. The relevant portion of section 233-B, as amended to date, reads as follows: Where in the opinion of Central Government it is necessary so to do in relation to any company required under clause (d) of subsection (1) of section 209 to include in its books of accounts the particulars referred to therein, the Central Government may, by order, direct that an audit of cost accounts of the company shall be conducted in such manner as may be specified in the order by an auditor who shall be a cost accountant within the meaning of the Cost and Works Accountants Act 1959. Where sufficient number of cost accountants are not available for conducting the audit of cost accounts of companies, the Government may by notification in the Official Gazette direct that, for such period as may be specified in the said notification, such Chartered Accountants within the meaning of the Chartered Accountants Act, 1949, as possess the prescribed qualifications may also conduct the audit of the cost accounts of companies. The auditor under this section, i.e. the section relating to cost audit, shall be appointed by the board of directors of the company with the previous approval of Central Government. An audit conducted by an auditor under this section shall be in addition to an audit conducted by an auditor appointed under section 224, i.e. normal annual audit of company accounts. An auditor for cost accounts shall have the same powers and duties in relation to an audit conducted by him under this section as an auditor of a company has under sub-section (1) of section 227, i.e. normal company audit, and such auditor shall make his report to the Central Government in such form and within such time as may be prescribed and shall also at the same time forward a copy of the report to the company. The addition of a proviso to subsection (2) to section 233-B requires that, before the appointment of any auditor is made by the Board, a written certificate shall be obtained by the Board from the auditor proposed to be so appointed to the effect that he is entitled to be so appointed. The Government of India has also issued Cost Accounting (Record) Rules for maintenance of cost statements for various industries. Up to March 1987, 35 industries have been brought under the purview of Cost Accounting (Record) Rules. They are (ICWAI, 1986-87) Cement, Cycles, Rubber Tyres and Tubes, Caustic Soda in any form, Room Air-conditioners, Refrigerators, Automobile Batteries, Electric lamps, Electric Fans, Electric Motors,

Motor Vehicles, Tractors, Aluminium, Vanaspati, Bulk Drugs, Sugar, Infant Milk Food, Industrial Alcohol, Jute Goods, Paper, Rayon, Dyes, Soda Ash, Nylon, Polyester, Cotton Textiles, Dry Cell Batteries, Sulphuric Acid, Electric Tubes and Pipes, Power-driven Pumps, Internal Combustion Engines, Diesel Engines, Electrical Cables and Conductors, Ball and Rubber Bearings, and Milk Food. The ICWAI has been actively pursuing with the Company Law Department the case for also including the plastics industry, mini-steel plants, the general engineering industry, polymer and chemical industry under Cost Accounting (Record) Rules. According to information available to the authors up to 31 March 1987, 5,367 units in 34 industries were covered by these rules as shown in Table I below. Table I. Annual Number of Establishments (Units) Covered under the Cost Accounting (Records) Rules in the 1977-87 Period
No. of Units Covered under Cost Audit 490 707 366 432 745 356 405 457 468 472 469 5,367

Calendar Year 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987

Source: Professional Directorate of ICWAI Various Issues: 1977-87. Note: Thus, on average, 481 units per year have been brought under the purview of Record Rules during 1977-87.

As pointed out earlier, under Section 233-B, the Government issued from time to time, as a secondary step, orders under section 233-B for cost audit in the selected industries falling under the purview of the record rules. Accordingly, the statutory cost audit has so far only been selective. It is also not necessary that a cost audit of a company be conducted every year as a regular feature: 458 and 462 cost audits were ordered by the Government during 1985-86 and 1986-87, respectively. But in 1987-88 the number exceeded 1000. These cost audits, however, are restricted to periods as specified in the order, usually the last financial year cost records of the company.

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At present, many companies do not maintain any cost accounting records in the year in which there is no mandatory cost audit. But, for conserving the scarce resources of the country, or for utilising them to the best possible advantage, the ICWAI has been insisting on regular maintenance of proper cost accounting records and a continual cost audit. After all, this must have been the basic rationale for the introduction of new legislative measures. Way back in 1978, a high-powered Expert Committee on the Companies Act and the Monopolies Act (known as the Sachar Committee) recommended, among other things, continuous audit both as a step in the direction of consumer protection and as an advantage to the company itself. The matter has been pending before the Government of India since then. As an interim measure, the Government has recently agreed to order cost audit on a biennial basis.
Cost Accounting Records and Audit

Cost Audit as an Annual Feature

(8) R&D expenditure. (9) By-products and the bases for their valuation. (10) The methods followed for valuation of WIP and finished products. (11) Cost statements. (12) Intercompany transactions, etc. The possibility of widening the scope of cost audit can be better understood from a reading of clause 16 of the Annexure to the Cost Audit Report, as laid down by Cost Audit (Report) Rules 1968, under the heading "Auditor's observations and conclusions". It includes, amongst others, suggestions for improvements in performance, if any, by: (1) rectification of general imbalance in production facilities; (2) fuller utilisation of installed capacity; (3) concentration of effort on areas offering scope for (i) cost reduction, (ii) increased productivity, (iii) removal of key limiting factors causing production bottle-necks; (4) improved inventory policies. It shows that a cost auditor may go well beyond the mere question of maintenance of prescribed records in a proper manner so as to give a "true and fair" view of the cost of production activities and the marketing of the product. This is a daring vision and intent of considerable magnitude. Is it likely to succeed? Is it worth emulating elsewhere?
Lacunae in Cost Audit Report Rules and Cost Audit

The ICWAI has so far published 30 booklets giving details of cost accounting records requirements and cost audit (report) rules relating to various industries. A typical booklet will have the following sections: (1) A brief summary of the industry. (2) Key points regarding cost accounting and cost audit requirements in the industry. (3) A recommended costing system. (4) Guidelines for a cost audit programme. (5) Cost accounting records rules as prescribed for that industry by the Department of Company Law Affairs. The prescribed rules will typically require records to be maintained with respect to (among others): (1) Raw materials, consumables stores, wastages and rejections, etc. (2) Salaries and wages including overtime and piecerate wages earned and any wages and salaries to be allocated to capital works. (3) Service department expenses and the bases for equitable apportionment; the amount to be capitalised should be shown separately. (4) Utilities consumed, e.g. water, power, steam, etc. (5) Workshop repairs and maintenance and the bases for charging out these expenses to various departments/jobs. (6) Depreciation. (7) Works administration, selling and distribution overheads and the bases for their absorption on jobs and capital works.

It is not the intention of the authors to give a conclusive opinion on the suitability or otherwise of this concept of mandatory cost audit. Nevertheless, a few drawbacks of the present system deserve mentioning.

All companies engaged in production, processing, manufacturing and mining activities are not yet covered by Cost Accounting (Record) Rules, as may have been intended under section 209(1)(d). And, why is the service industry excluded, given its significance in India today? Indian hotels are notorious for overcharging, for instance. Prescribing separate rules for each industry involves too much time, effort and delay. Instead, rules could perhaps be standardised for a group of industries like Engineering, Chemical and Process, Mining, Textiles, etc. When there is no cost audit there is a provision for certification by the financial auditor of the Company regarding maintenance of cost accounting records on the basis of prima-facie evidence of maintenance of cost records. But in many cases the reality is otherwise.

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In the rules framed so far, there is no scope for getting information on variable costing, which may be useful for the cost auditor in his comment on pricing policies followed. And, although standard costing is already accepted by the Government as a basis for inventory valuation, there is no provision to report how variances are analysed and what steps are taken on them. Further, the previous year's figures are not required to be included in the Report. Thus, a comparative picture on costs cannot be obtained. A firm of cost accountants cannot undertake cost audit in its own name. This acts against proper development of the profession of cost audit as an individual cost auditor cannot afford to maintain a permanent establishment unless he is assured of continuous work to sustain it. It is also interesting and perhaps significant to note that the shareholders do not have, as a matter of right, access to the cost audit report. But many of the above can be overcome by suitable amendments in the Act or in the Cost Audit Report Rules. The experience gained by the industry on the one hand and the Company Law Board and the ICWAI on the other may be taken into consideration while taking any further steps in the matter. Before we conclude, a few lines on the industry view may also be pertinent. The Industry View The authors interviewed, as a separate exercise, 14 senior industry officers, mainly from the eastern parts of India, and their views on the mandatory maintenance of cost records and cost audit can be summarised as follows: Good management is not proper maintenance of cost and management accounts alone and the Government has assumed a somewhat paternalistic role in this respect. Some agree that without legislation it could have been a long time before some of the companies maintained proper management accounting records; once having maintained them, however, they discovered their usefulness. A proper database is now available to many companies for short- and long-term decision making and pricing decisions. The cost of record maintenance has gone up significantly. There is an uneasy feeling about possible future further Government intervention. Some of the requirements should be simplified and there ought to be continuing research in this respect.

Proliferation of audit in this fashion is unhelpful. Management accounting is a matter of internal management and decision-making support. Some regarded the whole proposition as atrocious. Some also thought that information obtained through cost audit may be abused by the Government (it is of interest that Chakrawarty[12] reported that India's Income Tax Department has used cost audit reports to detect hidden profits).

Summary We have mentioned earlier that, in the Indian experiment, cost audit reports go well beyond financial audit and the information contained in the cost audit reports discloses such matters as operational inefficiencies regarding the utilisation of installed capacities, consumption of materials, utilisation of manpower, abnormal wastages in process/production and the reasons therefor, proper utilisation of available financial resources, the deficiencies in the system of cost accounting currently followed, correctness of the cost computed, and the overall profit made per unit. The reports are also expected to disclose shortfalls in achievements against targets and the persons/cost centres responsible for such shortfalls. Thus, the data available in the cost audit reports should create cost consciousness in the management, thereby leading to better efficiency, lower costs, higher profit and, possibly, in some cases a reduction in consumer prices. The progressive managements of the industries covered by Cost Accounting (Record) Rules have already started recognising the usefulness of the statutory rules and have voluntarily introduced continuous internal cost audit in some cases. From the information gathered it transpires that in the units where cost audit has been ordered and reordered by the Company Law Board, the second and subsequent cost audit reports revealed improvements in terms of better cost control and hence overall performance [13]. It is to be hoped in the Indian context that, as the concept of cost audit gets into mainstream industry by the inclusion of more and more industries within its scope, fruitful results will ensue. These developments might possibly have prompted authorities in some other Asian countries (e.g. Bangladesh, Pakistan, Sri Lanka) to consider incorporating similar provisions in their Companies Acts. However, it is likely that, as India becomes more open economically and privatisation gains momentum, the whole question may have to be re-examined. Much further research is also perhaps necessary before further international recognition of the idea is accorded. At the root of the matter is the question of whether financial audit in its present form is sufficient universally. The answer is inextricably tied to the issue of mandatory audit for cost and management accounts.

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Conclusion Present worldwide practice is that statutory audit is mandatory only for the external wing of accounting: financial accounting and external reporting. In discussing the idea of extending such mandatory audit to the internal wing, we have come to the conclusion that the idea, far from being preposterous, is infeetconceptually compelling. From a "systems-environment linkage" perspective, three persuasive reasons can be advanced in support of the idea. First, differential treatment of the two wings of accounting leads to an unwarranted and fallacious dichotomisation of the "external" from the "internal" dimensions of organisational reality. By polarising the (external) exchange moment and the (internal) transformation moment of the input-transformation-output cycle, the dichotomy truncates the recursive circuit of capital, thereby ignoring the importance of the relationship between efficiency and effectiveness in organisational life. Secondly, the differential treatment ignores the autopoietic nature of social systems. The inherent open-closed duality of autopoietic systems implies that the autonomy characterising the internal reproductive processes of organisational closure is just as crucially important as the dependence that derives from the openness of a system to its external environment. Systems do not merely depend upon or react to their environmental contingencies; they also actively participate in the creation of their future environments through what are intrinsically self-referential activities. Finally, the differential treatment ignores the reflective-constitutive dialectic, whereby internal transformation processes may and do have important, yet unintended, consequences for the external. On the other hand, from an institutional standpoint, internal accounting for transformational activities is privy to the firm and hence potential disclosures, because of mandatory audit and a regulatory strait-jacket, may ultimately prove to be detrimental to the very survival of the firm. Such a regulatory measure may, in the long term, seriously inhibit the entrepreneurial spirit, the very foundation of corporate business and economic growth and development. This institutional dilemma is well illustrated

by India's pioneering experiment. Not only has the Government of India had to move cautiously (and perhaps even hesitantly) by imposing regulatory measures only selectively; the experiences of the companies that have undergone the experiment also reflect a mixed reaction about the potential benefits from the experiment.
References

1. Oliga, J.C., "The Quantitative vs Behavioural Aspects of Management Accounting: Wings of Dichotomy or Dialectic?", Proceedings (Supplementary) of the 31st Annual Meeting of the International Society for General Systems Research, Budapest, Hungary, 1987. 2. Voorhees, B., "Trialectical Critique of Constructivist Epistemology", in Dillon J.A., Jr (Ed.), Mental Images, Values, and Reality, Society for General Systems Research, Louisville, Ky, 1986. 3. Colletti, L., "Marxism and the Dialectic", New Left Review, Vol. 93, 1975. 4. Gharajedaghi, J., "Social Dynamics: Dichotomy or Dialectic?", in Ragade, R.K. (Ed.), General Systems, Society for General Systems Research, Louisville, Ky, 1986. 5. Fine, B. and Harris, L., Re-reading Capital, Macmillan, London, 1979. 6. Maturana, H. and Varela, F., Autopoiesis and Cognition, D. Reidel, Boston, Mass., 1980. 7. Varela, F., Autopoiesis: A Theory ofLiving Organization, Elsevier, New York, 1981. 8. Zeleny, M. (Ed.), Autopoiesis, Dissipative Structures and Spontaneous Social Orders, Westview, Boulder, Colo., 1980. 9. Bednarz, J., Jr, "Autopoiesis: The Organisational Closure of Social Systems", Systems Research, Vol. 5 No. 1,1988, pp. 57-64. 10. Giddens, A., The Constitution of Society, Polity Press, Oxford, 1984. 11. Rao, A.V.S., Practising Members' Meet, New Delhi, 1988. 12. Chakrawarty, P., "Auditing Industrial Performance: India's Experience", Managerial Auditing Journal, Vol. 2 No. 2, 1987. 13. Institute of Cost and Works Accountants of India (ICWAI), 1986-87 AnnualReport;1987Cost Audit: Social Objectives.

B.C. Ghosh and J.C. Oliga are at the Nanyang Technological Institute, Singapore; B. Banerjee works in the University of Calcutta, India.