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JAMES ROBERTSON
The accounting profession is on the move; it has a accounting are the schoolmen of the declining
long way to go. A double-edged conclusion, no capitalist age, this could in fact be precisely what
doubt, but it emerges quite clearly from two they are. Certainly theirs is a theological dispute of
important developments that have taken place in a rarefied metaphysical kind, so far as the business
recent months. Both have occurred, as it happens, manager is concerned who is trying to
in Britain. But the conclusion applies with equal communicate simply and clearly to his employees
force to the accounting profession in other the significant financial facts about the company
countries. My purpose here is to try to place it in in which they work.
the broader perspective of the changes now taking For practical business managers, and for the
place in the business system world-wide. generality of interested laymen, controversies of
The first of the two developments was the this sort inevitably fan the embers of doubt. If
publication of The Corporate Report in July 1975 even the experts make such heavy weather of the
by the Accounting Standards Steering Committee basic concepts, like profit, which business people
in London. That discussion paper was described in have traditionally used in thinking about their
the foreword as “the first step, not the last word”. affairs, then maybe the time has come to look
It was intended to be “the starting point for a rather hard at the practical validity of those old
major review of the users, purposes and methods concepts in modern conditions and, if necessary,
of modern financial reporting.” There can be no to look for something more serviceable. A few
doubt that it will, indeed, point the way not only years ago, a number of well publicised episodes
to important advances in traditional forms of brought home to common sense minds that “a
financial accounting, but also to the introduction true and fair view” of profit could cover a
of new requirements and new methods for multitude of sins. Common sense now begins to
reporting in non-financial terms, such as state- wonder what, if anything, “profit” actually means.
ments on employment and on corporate objec-
tives, and various forms of social accounting. That
the accountancy profession itself should have CHANGING ROLE OF BUSINESS IN SOCIETY
taken this important and far-reaching initiative is a
clear indication that the profession is on the move. These doubts are, of course, symptomatic of
The length of the journey upon which changes that run much wider than matters of mere
accountants are setting out - the scale of the task accountancy techniques. The role of the business
which they now face - is suggested by the second system is changing rapidly within a rapidly
of the developments to which I referred. This is changing world society. This means that the rights
the controversy that has erupted in recent months and obligations, the functions and objectives, of
in Britain and elsewhere over the right way to deal the various participants in business activity are
with inflation accounting. The controversy has changing. The participants’ relationships with one
been conducted with a complexity of argument another are changing, as the balance of power
and an intensity of feeling which would have done shifts between employees, investors, customers
credit to the schoolmen of the declining Middle and the public. Institutional relationships are
Ages in their disputes with one another about the changing also, including those between business
physical attributes of angels. And, although it may managements, trade unions, fmancial institutions,
sound unkind to suggest that the eminent and government departments. As new require-
protagonists in a dispute about inflation ments and expectations are laid on business
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92 JAMES ROBERTSON
enterprises, the yardsticks for measuring their proposals for change in accounting and reporting
performance, the methods for reporting it, and the requirements and the structural changes that are
people to whom it must be reported, are bound to taking place or are envisaged in the business
change too. As changes continue to be made in the system, emerged very clearly.
rules and scoring system for the game, new At the second of the conferences held during
problems are bound to present themselves to those the course of this project, we considered the
whose job it is to keep the score, to check that it multinational aspect. The discussion brought out
has been properly kept, and to present it clearly to clearly that new dimensions will be added to the
the people who are entitled to know it. An accounting and reporting requirements laid on
example of such a problem that is worrying more multinational companies, as governments became
and more companies in Britain today is how to more sensitive to their activities, as pressure
present financial accounts to employees and to becomes stronger to clarify their corporate
shareholders without making either or both of responsibilities, and as international codes of
them unhappy and confused. conduct for multinational business activities take
Business thinkers in the industrialised countries shape. We also, incidentally, considered the
are, in short, fully embarked on the process of possible impact that new modes of communication
re-conceptualising the role of the business system may have on reporting procedures. Structured
in society (Robertson, 1974). Changing methods processes of group learning in “workshops”, and
of accountancy are related to changing corporate the use of film and other visual aids are among the
responsibilities; to changing systems of ownership, methods being developed by business manage-
decision, control and accountability in business ments for the training of their managers and
(including changing systems of representation, salesmen. But these methods, and the potential use
consultation and participation); and to the of other audio-visual methods as aids to conveying
changing institutional structure of modem information about the financial, economic and
industrial economies. It is not possible to social performance of businesses has hardly yet
understand the pressures of change now making begun to be explored. The development of
themselves felt in the sphere of accountancy, animated visual exposition on film of the patterns
except in this wider context. of money flowing through a firm, and similar
This came out very clearly in the course of a exposition of the patterns of money flowing
project on the legal and financial structure of through the economy as a whole, could be of great
business enterprise which I recently carried out for significance for disseminating a wider understand-
the Anglo German Foundation for the Study of ing of the way the business system works. A bit far
Industrial Society. At one of the conferences held out, perhaps? I believe that these possibilities are
as part of that project, we explored the links very real, and that forward looking accountants
between a number of currently topical questions. will have a major part to play in developing them.
These included : participation; industrial
democracy; two-tier boards; the so-called social
responsibilities of business managements and
financial institutions; the changing sources of NEW YARDSTICKS FOR THE PUBLIC SECTOR
investment finance for industry; the changing
impact of corporate taxation on business decision- The search for new yardsticks against which to
making; the significance of government controls measure the social performance of business
on company prices, company wages and salaries, enterprise, e.g. as regards the safety and health of
and company dividends; and the scope for profit employees or the reliability of products, has been
sharing and employee share ownership schemes. At paralleled by the attempt to develop new criteria
the same conference we also discussed the of efficiency in the public sector. Is a hospital
implications of various new approaches to giving value for money? Or a school? How is their
company accounting and reporting, such as added efficiency to be assessed?
value accounting, human asset accounting, social In 1968-1969 I acted as Adviser to the Pro-
audit, and other methods of evaluating and cedure Committee of the British House of Com-
appraising the non-financial performance of mons. The Committee was then carrying out the
companies. The inter-relationship between re-appraisal of parliamentary control of public
WHENTHENAMEOFTHEGAMEISCHANGING 93
maximising model is being replaced by the basis for codes of good conduct, while codes of
multiple objective model of the firm. The business good conduct provide a basis for new legislative
school fraternity now faces a major re-think here. provisions.
It will not be very long, of course, before the
discussion about “social responsibilities” begins to
SOCIAL RESPONSIBILITY bear more directly on the professions - and, in
particular, the legal and fmancial professions -
Many of the changes I have mentioned focus involved in the business sytem. So far as the law is
upon the notion of social responsibility. Social concerned, the traditionalists argue that laws will
responsibility is, of course, a rather curious term. never be anything other than monuments to the
What responsibilities other than social problems of the past; that lawyers should simply
responsibilities could a corporate body possibly try to do what they can for their clients in the
have? There are none. For this reason I prefer to existing state of the law; that the good lawyer will
talk about corporate responsibilities. And, of exploit the loopholes and inadequacies of the law;
course, it is precisely our shifting perceptions and that the good business lawyer may thereby
about corporate responsibilities that are the expect to make money for his clients and
central feature of the changes now coming over therefore for himself. A similar point of view is
the business system worldwide. It is these changes expressed about bankers, accountants, stock-
that create the pressure for new corporate brokers and other financial professions: it is their
structures, new legislation to regulate business job - their responsibility - to interpret and
activity, new patterns of financial investment and exploit the financial system as it exists, for the
financial reward in commerce and industry, and benefit of their clients and themselves. Neither the
new accounting and reporting procedures. legal professionals nor the financial professionals,
The importance of this was recognised in a so this argument runs, should feel any
proposal put forward in the course of the project responsibility for the legal or financial system and
to which I referred earlier. This was that in each its effect upon business enterprises; it is no
advanced industrial country there should be at legitimate concern of theirs to try to improve the
least one organisation, established independently system or keep it up-to-date.
of government, industry, the financial institutions Other people argue, however, that we should no
and the trade unions, to promote the development longer accept that the law must always be out of
of procedures to match the changing social date. They claim that the law should reflect the
responsibilities of business. Such a “Clearing changing realities of modem society; that the
House for Corporate Responsibility” could be an “creative power of the law” should positively
information centre on the subject of corporate shape these changing realities; and that members
responsibilities; it could publish a journal on the of the legal profession should be required to take
lines of “Business and Society Review” in the seriously their social responsibility to improve the
United States; it could provide the co-ordination state of the law and keep it up-to-date. A similar
for an Action Research Programme, in which a argument is put forward about the financial
number of companies could co-operatively develop professions: that they have a social responsibility
their own routines for monitoring their social to see that the financial system is designed to serve
performance; it could encourage innovation in people’s needs efficiently and fairly; and that they
social accounting; it could promote understanding should be held socially responsible for improving
of corporate structures and procedures (such as it. The argument, in summary, is that the legal and
co-operatives or profit-sharing) which reflect the financial professions administer the rules and
multiple responsibilities of business enterprise, scoring system for the game, and they must accept
spread awareness of the success achieved by them some degree of professional responsibility for
in other countries, and encourage the imaginative making them work well.
use of the ideas underlying them; it could be a As this debate gathers momentum, together
repository of know-how about Codes of Business with discussion of all the other aspects of change
Conduct, including codes of conduct for multi- in the business system today, the accountancy
national companies; and it could facilitate the profession will, I believe, be better placed to play
well-known evolutionary process whereby the its part than most of the other branches of the
good practice of individual enterprises provides a financial and legal professions. In Britain, at least,
WHEN THE NAME OF THE GAME IS CHANGING 95
the accountancy profession is already on the possibility that there may be quite a long way to
move. It is clearly preparing itself for the go.
BIBLIOGRAPHY
Robertson, James, Profit or People? The New Social Role of Money (Calder and Boyars, 1974).