ACCOUNTING DECISIONS 175
Dent traced the introduction of a revised corporate planning system, the amend-
ment of capital expenditure approval procedures and the revision of budgeting
systems, each of which gave power to business managers, and described how
accounting played a role ‘in constructing specific knowledges’ (p. 727).
Roberts (1990) studied the acquisition and subsequent management of ELB Ltd
by Conglom Inc. Following acquisition, ‘the dominance of a production culture
was instantly supplanted by the dominance of a purely financial logic’ and the sale
of the European operations to a competitor ‘signalled the dominance of corporate
financial concerns over long term market concerns’ (p. 123), although this was
reinforced by share options, bonuses and managers’ fear of exclusion. Accounting
information was:
able to present an external image of ‘success’...and hence conceals the
possibility of the damaging strategic consequences for individual business
units of Conglom’s exclusive preoccupation with financial returns. (p. 124)In adopting a critical perspective, Miller and O’Leary (1987) described the construc-
tion of theories of standard costing in the period 1900 – 30, which they viewed as ‘an
important calculative practice which is part of a much wider modern apparatus of
power’ aimed at ‘the construction of the individual person as a more manageable
and efficient entity’ (p. 235). The contribution of standard costing was to show
how ‘the life of the person comes to be viewed in relation to standards and norms
of behaviour’ (p. 262).
Laughlin (1996) played on ‘principal and agent’ theory to question the legitimacy
of the principal’s economic right to define the activities of the agent. He coined
‘higher principals’ to refer to the values held, particularly in the caring professions
(education, health and social services), which could, he argued, overrule the rights
of economic principals. These higher principals could be derived from religion,
professional bodies or personal conscience.
Broadbent and Laughlin (1998) studied schools and GP (medical) practices
and identified financial reforms as ‘an unwelcome intrusion into the definition of
professional activities’ (p. 404), which lead to resistance in the creation of ‘informal
and formal ‘‘absorption’’ processes to counteract and ‘‘mute’’ the changes’ (p. 405).
Similarly, Covaleskiet al.(1998) studied the ‘Big Six’ accounting firms, where
management by objectives and mentoring were used as techniques of control,
revealing that the ‘discourse of professional autonomy’ fuelled resistance to
these changes.
Finally, the limitations of formal accounting have been identified in academic
research. For example, Preston (1986) explained how ‘the process of informing
was fundamentally different to the formal or official documented information
systems’ (p. 523). In Preston’s study, managers arranged to inform each other,
predominantly through interaction, observation and keeping personal records
but to a lesser extent through meetings. It was through these interactions that
managers found out what was going on. They found ‘the official documented
information to be untimely, lacking in detail and sometimes inaccurate’ (p. 535).
The overhead allocation problem is illustrated in the next case study.