The Role of Accounting in Organizations and Society
Accounting plays an important role in interfacing society and organization. As it is also mentioned in Burchell article “it is presumed that accountings are there to facilitate organizational and social actions.”As we know that accounting is helpful for structuring of organizational objectives, to reduce financial risk, to make financial decisions, it also helps organization to take into account different stakeholders interest like investors, suppliers, customer, etc, which automatically creates a strong bond between organization and society. There are three important accounting phenomenons’ that were discussed in Anthony Hopwood article.
Accounting as a changing phenomenon: …show more content…
An example of Northern Rock society/bank was unable to predict change in the market and the behavioural change of the market which made it bankrupt.
Accounting as a tool which serves to reinforce a interest of political actor. Accounting practices within an organization cannot be kept separate from organization and organizational activities cannot be isolated from society. Hence all three are interrelated with each other. In many countries accounting practices are intervene by political factors such as government, media social and environmental activist, labour unions etc. Accounting data is used in derivation and implementation of policies for economic stabilization, price and wage control. ( Gandhi, 1976). Similarly there also a direct political influence of government when it impose taxes, so business organizations have to redefine its accounting procedure and practices to avoid taxes and to maximize its profit. Similarly, while Auditing there are also lot of political actor which firm have to take into account. In Environmental Audit firms have to consider social stakeholders, and pressure from government. For example in Sheffield there were lot of firms before 1990s, but most of them are closed due to various factors one of which was environmental factor .Companies were asked to carry out environmental