Many people see accounting as little more than techniques, concepts and procedures—that is, as technical practice. These are considered the “nuts and bolts” of accounting not only by the general public but by many accountants themselves.

Accounting is seriously misrepresented, however, if it is seen only as technical practice. Accounting is a practice that underlies and enables organizational action and much of human activity. In this way, accounting is fundamentally a social practice, which guides and influences the behavior of people in organizations and society, thereby impacting our lives, as well as organizational and social functioning and development.

When we understand the full dimensions of accounting we also get to appreciate how morality is at its core and how it cannot be adequately conceived as a purely instrumental or technical pursuit. A moral practice can be understood as a practice whose actions or inactions influence others now and in the future, and helps shape the moral order of organizations and societies, which in turn affects individual and organizational behaviors.

As far as accounting education is concerned, when accounting is perceived as technical practice alone, the key question is how to do accounting. However, when accounting is understood as social and moral practice, the key questions are: “What does accounting do?” and “What should accounting do?” Students, educators and professional programs need to respond to all these questions. Accounting needs to be studied, understood and practised in the contexts in which it operates, whilst also appreciating the impact of accounting in its contexts.

We are living in what may be described as the “calculative era”—an era where we trust or even respect performance figures of different forms and are driven within our respective organizations to adopt and achieve or exceed certain Key Performance Indicators (KPIs). This is where the nuts and bolts of accounting become pervasive in governing our lives and shaping our behaviors.

Accounting makes visible and calculable the objects and activities that are at the center of management. These representations appear to be factual and, therefore, give the impression of being objective and unable to be challenged. A prime example of perceived facts in action is commonly expressed in organizational, departmental and personal KPIs.

KPIs are typically designed and prepared by professional accountants using a multitude of accounting data to enable actions and behaviors and disenable actions and behaviors.

Accountants typically produce the information on which KPIs are based, thus confirming the privileged position of the accounting profession in society.

KPIs are effectively invisible, yet they literally float in the air in business, public and social organizations. They operate, for example, on airplanes, trains and buses, at Lord’s Cricket Ground, in banks and within local governments. They impact behavior in organizations of any kind that touch upon our lives.

Accounting in modern times is powerful because of its privileged position as a key means of directing and governing organizations, economies and societies. Appreciating accounting’s social dimension enables its moral dimension to emerge and erase the falsehood of accounting as an amoral endeavor. The appreciation of accounting as technical practice, social practice and moral practice constitutes the full dimensions of accounting.

On giving precedence to accounting’s full dimensions, accounting is no longer perceived as mere technique or tool whose characteristics are neutral, if not benign. That would ignore the social and moral dimensions of the practice. An accountant is not a craftsman or a craftswoman but a professional who has to possess and use expertise, as well as make professional and moral judgements. Accounting has ends as well as means. To use Aristotle’s examples, accounting as a profession is more like health is to medicine than is a ship to shipbuilding.

Fortunately, a self-aware accounting profession has an opportunity to become more accountable for its effects. Focusing on accounting’s social and moral impacts would bring a new dimension to performance measurement and management.

The impacts of accounting relate to both intended and unintended consequences. While the intended consequences are generally imagined and may be overestimated, thus resulting in the introduction of a KPI or a set of KPIs to measure a desired phenomenon, the unintended consequences, which may be negative or positive, are often given little or no thought by accountants. Our corporate scandals are littered with KPIs gone wild leading to endemic misconduct and misrepresentation. Think of Wells Fargo as a case in point.

We can all share personal experiences in working with, or rather against, our own and others’ KPIs, which have had negative or harmful unintended effects on behavior in organizations, with adverse implications for organizational and social functioning and development.

Within a university department, for example, academics may be given targets to apply for external research grants rather than be given a target of actual research income to be attracted. The result may be to become a high performing department on the number of grant applications alone, irrespective of whether any research income has been derived. A hypothetical department may, for example, have submitted 12 mediocre grant applications to a particular research funding body, only to have all of them rejected. The KPI adopted, however, didn’t measure what it should have; it was rather a failure.

In the interest of extending and enhancing accountability, professional accountants need to become more mindful of the impacts of performance measures adopted and reported to directors, management and staff, including the full consequences of using certain KPIs or a set of KPIs. Such KPI Effects Reporting, hopefully, would result in accountants taking a comprehensive “big picture” approach as strategic leaders and business partners, being cognizant of how some KPIs may be totally inconsistent with others, thus resulting in confusion, lack of morale, and potential mediocrity in organizational performance.

Importantly, professional accountants ought to possess a broad vision of the impacts of what accounting touches and changes, including the consequences, whether intended or not. The broad vision, together with a well-nourished moral imagination whereby moral solutions to complex problems can be imagined and developed, will allow accounting to be the foundational profession of business and beyond. Alas, it is not only the accounting profession that needs to focus on its social and moral content and obligations. The profession needs to better engage with all its stakeholders, so they see it as such too, and not as a mere technical practice.

Eva Tsahuridu, PhD

Business Ethicist, Board Director

Dr. Eva Tsahuridu is a business ethicist who has been researching, teaching and advising on business and professional ethics for over two decades.  Eva is currently a board director and advisor.  She is the section editor of Practice in Business Ethics of the Journal of Business Ethics, an executive editor of Philosophy of Management and the deputy chair of the Australasian Business Ethics Network. Eva writes for practitioner and academic publications and her research interests include personal and organisational ethical conduct, whistleblowing, ethical and professional standards and philosophy of management.

Garry Carnegie

Emeritus Professor, Department of Accounting, RMIT University

Garry Carnegie is an Emeritus Professor of RMIT University having served as Head, School of Accounting and Professor of Accounting at RMIT from 2010 to 2017. Prior to joining academe in 1985, Professor Carnegie gained experience in the IT industry, professional accounting services and in financial services. Prior to joining RMIT, he held full-time professorial posts at Deakin University, Melbourne University Private/The University of Melbourne, and at the University of Ballarat (now Federation University Australia). He was the Editor/Joint Editor of Accounting History for a continuous period of 25 years and is an Associate Editor of Accounting, Auditing & Accountability Journal. He is Joint Editor of the EE Handbook of Accounting, Accountability and Governance.