See

discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/222279147

Critical Accounting Research: A View from

England

Article in Critical Perspectives on Accounting August 2002

DOI: 10.1006/cpac.2002.0543

CITATIONS READS

31 160

1 author:

Jane Broadbent
Royal Holloway, University of London
112 PUBLICATIONS 3,371 CITATIONS

SEE PROFILE

All content following this page was uploaded by Jane Broadbent on 24 June 2015.

The user has requested enhancement of the downloaded file.

Critical Perspectives on Accounting (2002) 13, 433449
doi:10.1006/cpac.2002.0543
Available online at http://www.idealibrary.com on

CRITICAL ACCOUNTING RESEARCH: A VIEW

FROM ENGLAND
JANE B ROADBENT
Royal Holloway, University of London, Egham, Surrey, TW20 OEX, UK

This paper seeks to provide a review of the state of critical accounting in

England. The paper first seeks to define the role and nature of critical accounting,
demonstrating the breadth of the area of concern yet arguing for the importance
of theory. The interested nature of accounting is demonstrated. Following this, an
argument is made as to why accounting is important. This argues that accounting
information can be used as a steering device to impose and control the interests of
particular groups. It suggests accounting is both a tool and a creator of modernity.
Accounting information is argued to be malleable. The paper differentiates the
programmatic use of accounting and its technologies, providing some examples
of their usage in the public services, particularly the Private Finance Initiative in the
UK. Finally, the paper reviews the state of critical accounting in England, arguing
for the need to ensure that a new generation of critical accounting researchers
is supported. The need for research into the impacts of funding and regulative
regimes in the higher education sector is highlighted.
c 2002 Published by Elsevier Science Ltd.

. . . I have come to see sociologys ultimate task, not as that of reporting neutrally the facts
about an objective social world, but as that of engaging actively in the world in order to
create the possibility of alternative forms of social life (Mulkay, 1991, p. xix).

This paper seeks to provide a review of the state of accounting in England,

exploring the work of those who have taken a more critical approach to the
understanding of accounting data and its effects on society. In reviewing what has
been labelled critical accounting1 , we should recognize that critical accounting
is not separate from accounting practice in general. Instead, it is simply a means
of reflecting or interacting with accounting information in order to challenge
the understandings that are conventionally generated. Nevertheless there is a
commonplace recognition of a body of work that is loosely coupled under this title
and hence it is reasonable to accept and work with this label. The paper provides a
personal view and the review is therefore partial. Although it seeks to be inclusive
of a range of work that has developed in England it uses as its main foundation the
area of accounting in the public services2 . The bounding of the geographical area
itself is rather difficult to operationalize and I have sought to look at work generated

E-mail: j.broadbent@rhul.ac.uk
Received 24 September 2001; accepted 15 October 2001

433
10452354/02/ $ - see front matter c 2002 Published by Elsevier Science Ltd.

434 J. Broadbent

in England. This is somewhat arbitrary and will also mean that some relevant work
is perhaps not discussed; for this I apologize.
In developing this review, the paper seeks to make an argument as to why critical
accounting must be regarded as important. In the first section I seek to clarify what
I mean by critical accounting, accepting that this may not be everyones view, but
also seeing this as a means by which to ground the argument. Next the paper will
consider why accounting matters, because if accounting is insignificant then the
idea of critical accounting is also trivial. The paper closes with an argument for
critical accounting and some discussion of its state in England from the perspective
developed.

What is Critical Accounting? Definitions and Roles

The notion of seeking to provide a definition of critical accounting is problematic

and hence in this section the focus moves more towards locating its role. Gray et al.
(1996, p. 21, 22) argue that
[A]ccounting is an activity which conventionally involves identifying, collecting, describing,
recording, processing and communicating information in financial terms about the
economic events of an entity, to groups and individuals who have a need or right to
the information. This is usually assumed to be for decision-making purposes and is also
assumed to contribute to the social welfare of the nation.

The definition alerts us to the technical activities of accountingrecording, clas-

sifying and communicating information; it must be remembered however that this
activity is not objective and value free. Hence, the broad role of critical accounting
might be seen as one that makes transparent the assumptions and taken-for-
granted values that lie behind accounting. Integral to this is the idea of social
welfare. This is well expressed by Gray et al. (1987) who in their definition of social
accounting note their assumption that companies do have wider responsibilities
that simply to make money for their shareholders (p. ix). Taking a position that
is sympathetic to the above views also assumes the general orientation of con-
ventional accounting and accountants is geared towards the centrality of capital
and the assumption that the wider good is served by the success of capitalism.
In essence the latter view is characterized by the assumption that the needs of all
elements of society are congruent and not conflictual. This is clearly contestable.
There are many discussions of what the project of critical accounting might be.
Examples are provided by Cooper and Hopper 1987; Laughlin, 1999; Sikka and
Wilmott, 1997; Tinker, 1985, all of whose work has contributed and helped to provide
the context for the ongoing development of critical accounting in the UK. All, in differ-
ent ways, highlight the issues of praxis, change, context and interdisciplinarity. They
bound the area of consideration beyond the organization, and also contemplate the
interactions between individuals, the organization and society. Embedded in this is
an evaluatory thrust that I shall seek to privilege. This, in turn, provides an impetus
for the provision of context because evaluation can best be undertaken in knowledge
of a context. This means that contextual descriptions are necessary but not sufficient
for critical accounting. Evaluation must move beyond description of context.
 English Critical Accounting 435

There are many approaches that would seek to offer contextual discussions of
accounting practices. In reviewing alternative approaches to research in the public
sector (Broadbent & Guthrie, 1992) it was, therefore, possible to identify literature
that is deeply contextual and that seeks for change, but which is not critical in
focus. To put this in context, consider the implementation of new public management
(NPM). In various nations, and particularly in the UK, there was critique of the status
quo and attempts that were seeking to develop new forms of accounting that would
lead to change. This followed the ideas of authors such as Osborne and Gaebler
(1993) who called for changes that affected the accounting information produced.
They sought to use accounting as a control device that consolidated particular
interests rather than open it up for challenge. I would, in contradiction, see the
aim of critical accounting research as seeking to raise questions about the use of
accounting, rather than to implement it without question (Broadbent et al., 1996).
Alongside the overtly normative work that has been developed in relation to NPM
there has also been much case study work in the area. This work has developed
deep descriptions of NPM and whist not necessarily advocating managerial uses
of accounting there has often been a lack of critical focus (Olson et al., 1998,
provides a range of papers to illustrate the diversity). Hence the notion of evaluation
is important, but the basis for evaluation remains to be clarified.
One definitional solution would allow the alignment of critical accounting with the
various streams of thought that make up the Frankfurt School of Critical Theory that
is recognized in the social sciences more generally. This would provide a range of
theoretical approaches that allow the location of critical accounting research in a
Marxist framework and could encompass the consideration of directly Marxist and
labour process type approaches. It would allow the location of critical accounting
in the context of the resistance to the dominance of capital. Thus some theoretical
framework for evaluation would be provided. However, to locate critical accounting
solely within such boundaries can be seen to be exclusionary of other theoretical
approaches and this I see as problematic. For example it could be argued that
the feminist approaches (for example Cooper, 1992) that might seek to debate
different visibilities and take a more post-modern approach have sought to subvert,
albeit in a very different way. Whilst the tight bounding and labelling of an area of
thought through a particular theoretical label is likely to be artificial at best and
probably unhelpful, nevertheless some level of theoretical underpinning is arguably
important. Without a theoretical framework as a basis for analysis it is difficult to
know how we can justify the difference of our endeavours to that of a journalist or
a politician. That is not to demean any of these activities, but to differentiate the
academic task. Perhaps this belief is another element of an argument that critical
accounting should move beyond description.
If we are to take the evaluatory thrust seriously then we must also take seriously
the issue of what is appropriate change. Again, theoretical input and context are
equally important. I hold to the view (Laughlin & Broadbent, 1996) that what is
appropriate should be open to judgement by all the stakeholders. This choice to
assert the rights of all stakeholders to have views in this respect maintains the view
that accounting should be oriented to broader issues of social welfare and not be
simply asserting the interests of capital. However, when it is not possible for all
436 J. Broadbent

stakeholders to come to some consensus on what is appropriate then there is a

need to have agreement as to whose views should prevail. This alerts us to the
issue that the stakeholders have different relative power and raises the difficulty that
some interests are likely to assert their power to achieve their own interests. This is
clearly problematic, but despite the difficulty does provide an ideal.
The issue of power raises much debate and complexity. The power of the state
to regulate and the power of capital to control resources have material effects but
are not monolithic. Resistance is always possible when regulation goes beyond the
societally acceptable bounds (Laughlin & Broadbent, 1993; Broadbent & Laughlin,
1997). The papers by David Cooper, Dean Neu and Christine Cooper, in this
volume, demonstrate resistance. That accepted, the governments structural role
provides it with a particular positional power and the role of the state in England and
Wales3 is arguably equated with the needs of a capitalist society (Offe & Ronge,
1982). Critical accounting must be questioning of the particular power of any group
to define what is appropriate. (It should not be contentious to claim that in a capitalist
society the interests of capital are also likely to have a particularly dominant voice.)
Hence the power of the state and capital are strong. The positional power of the
state gives it particular advantages in legitimating its own point of view (again this is
illustrated in the work of David Cooper, Dean Neu and that of Christine Cooper in this
volume). Thus, critical accounting work challenging the views of the state is likely to
be at a disadvantage. Whilst we might recognize this we should not be deterred.
Not only can positional power affect accounting information, so can embedded
and taken-for-granted assumptions that remain invisible because they seem to
represent the neutral status quo4 . Critical accounting should resist this and argue
for the provision of information sets that resist the status quo. For example, some
work has demonstrated resistance to the patriarchal and gendered values that
lie behind accountings taken-for-granted construction (Cooper, 1992; Broadbent,
1998) or has sought to give visibility to gendered relationships (Pahl, 2000). Critical
accounting must continue to provide some visibility for different accounts and the
various interpretations of existing accounts. Change may well be slow but without
countervailing visibilities then little is likely to change at all. If new accounts
can be provided then discourses are opened up in ways that were previously not
possible and new ways of thinking may well be germinated. It is in this manner the
possibility of learning and deep change may be generated. It is in the provision and
dissemination of new ideas that the role of the academic is grounded.

What is the Relevance of Accounting?

The second question raised is whether accounting is at all important. This raises the
question of whether the role of accounting is of any consequence in societal terms.
If accounting is of no consequence then the issue of what type of critical accounting
we might seek to develop or use is immaterial. This question is pertinent, as
questions have been raised about the future of accounting in the UK. Discussion of
this issue also provides some insights into issues relevant to accounting researchers
in England.
 English Critical Accounting 437

In July 2000, on his appointment, the CIMA President, Mike Jeans noted that
the Chartered Institute of Management Accountants (CIMA) would be seeking
to move its emphasis much more towards management. This is an official and
explicit recognition of an implicit trend highlighted by Peter Armstrongs work
with colleagues (Armstrong & Jones, 1992). These events suggest moves by
a professional body to distance itself from existing commonsense commercial
constructions of accounting.
Accounting education in the UK is also in some flux following the disbanding of
the Board of Accreditation of Accounting Educational Courses (BAAEC), which
provided a means by which exemptions from the professional qualification could be
gained by academic studies5 . All the UK professional bodies have recently re-visited
their examination content and there seems to be a constant concern about the
extent to which the examinations are testing the appropriate skills required by
accountants in practice. Tony Tinker, writing in the US but also addressing his own
professional association, the UKs ACCA, has sounded warnings as to whether
accounting education is equipping the accountants of the future with the requisite
skills, suggesting a need to develop more information technology input. The
broader skill set that Tinker suggests (Tinker & Koutsoumandi, 1997; Tinker, 1998)
is required is based on the argument that accounting graduates do not simply
enter the large accounting firms. The converse should also be recognized: i.e., that
professionally qualified accountants do not provide all accounting services, and the
accounting firms themselves are recognizing this. British audiences have drawn on
the work of Parker (forthcoming) and Albrecht and Sack (2000) who provide exten-
sive discussions of the perceived failings of accounting education to meet the more
diverse needs of the profession as currently constituted. The interest in accounting
education has been particularly illustrated by the work of Fiona Anderson-Gough
and Keith Hoskin, who with a range of colleagues have been involved in a large
research project for the ICAEW in this area (see for example, Hoskin et al., 2001)
We must also be alert to the importance of recognizing the increasing differen-
tiation of the provision of accounting services. The big five accounting practices
have different interests to the sole practitioners; the needs of the commercial firms
are also differentiable. Equally, the development of IT systems means that account-
ing services can be provided at a geographic distance from the activities being
recorded. In the midst of all these changes and challenges Tinker reminds us of
the importance of the role of education in equipping students to deal with change
and suggests that it is not currently managing to do this. Tony Lowe (as the British
Accounting Association (BAA) Distinguished Academic) in his address in March
2001 to the BAA Annual Conference in Nottingham University argued for the role
of a broad social science education. It is perhaps the latter approach that will
bring the flexibility of thought that is needed to develop dynamic creativity. It is this
social science approach that can provide meaningful approaches to critical account-
ing. It is this emphasis on social science that has characterized the approaches to
accounting education that still exists in some institutions in England and Wales.
Despite the questioning of its nature and role, accounting will arguably remain
important. Accounting has been remarkably persistent (see, for example, Mahmoud
Ezzamels (1997) work that has shown that there was accounting of a sort in
438 J. Broadbent

Ancient Egypt). Accounting is not a simple recorder of reality, it instead is reflexively

implicated in the construction of reality (a point raised by others, e.g. Hines (1988)).
Hence the visibilities that accounting creates are important as they are implicated in
the political and ideological processes of society-they create visibilities (Hopwood,
1984) and those visibilities are partial (Broadbent, 1995). As noted earlier, the
visibilities are linked to various sets of interests. Current constructions of accounting
are arguably linked to the interests of capital and can also be seen as patriarchal,
although this is not inevitable as the realities that are created are mutable (Guthrie
& Parker, 1999). Accounts can be rendered in a number of different ways, despite
the regulation that surrounds its practices. In that sense accounting is useful.
However, there are other means by which interests and ideologies can be
furthered and the question still remains as to why accounting is important. The
ideas of Jurgen Habermas provide one theoretical framework to deal with this6 . This
provides a base for the argument that accounting is important because it provides
a powerful technology of control that can be drawn upon in many different ways. As
such it can be seen as part of what have been called the steering media of society.
The various steering media provide the processes and systems of governance (for
example, the laws and the institutions that organize them) that guide the operational
systems of society (for example, systems such as education or the health service).
The steering media guide in ways that are commensurate with the societal lifeworld.
The lifeworld is the nexus of subjective, intangible and taken-for-granted norms of
society. It follows that behind this is a view that the things that we do in society are
driven by what we, as a society, see as appropriate in cultural and normative terms
and that we set up mechanisms to steer societal actions in an appropriate fashion.
Whilst this view sees a place for cultures and norms as drivers of action, it also
recognizes that the structures of society are represented in a tangible institutional
form. Whilst there is much complexity in these ideas that has been developed in
detail in the papers cited above, the important development of the argument for my
current purpose is that steering is a structural process and accounting provides a
set of technologies that serves this process.
If the need for steering media is structural and a need that is therefore ingrained
both societally and organizationally (Broadbent et al., 1991), nevertheless there
could be other technologies of control. However, turning to Giddens (1990)
discussion of modernity allows the possibility of a further view on the persistence of
accounting and its centrality in steering. Giddens characterizes the nature of moder-
nity, seeking to explain its dynamism and its global scope. He sees the dynamism
of modernity as deriving from the separation of time and space; the disembedding
of social systems and the reflexive appropriation of knowledge (p. 16/17).
Accounting arguably can be seen as a technology of modernity as it not only
reflects various aspects of modernity but it also enables them. Thus accounting
information results from the separation of time and space and place but also
enables it. It provides a map of an entity that allows the development of control
at a distance. In Giddens terms accounting information reflects the disembedding
of social systems in that it is based upon the development of an expert system that
controls the symbolic token of money. Indeed, accounting is the technology that
operationalizes the use of the symbolic token. The existence of accounting, at the
 English Critical Accounting 439

same time, provides the opportunity for disembeddinghow much easier it is to

legitimize the reduction of jobs through the existence of financial losses than it is to
think about the effects on the individuals affected. Giddens goes on to argue that the
disembedding of systems relies on the existence of trust. Accounting paradoxically
provides a means of legitimating trust by being able to provide accounts and
accountants are the experts who mediate that system. Seal and Vincent-Jones
(1997) provide a view of the role of accounting in the development of trust in the
development of new relationships when contracts are developed. Finally, accounting
produces systematic information that is seen as integral to the reflexive development
of knowledge about society. It is part of the way in which things can be rationalized
by a call to reason rather than tradition. It is this rhetoric that has been used to
great effect by the UK Government and applied extensively in the public services in
England and Wales.
Accounting, thus, can be seen as a product and a producer of modernity and in
this respect can be seen to be a powerful element in the processes of steering at
both a societal and organizational level. Perhaps this is one reason why it persists
and indeed seems to thrive despite the arguments of its decline. Interestingly,
however, whilst accounting and accountants are often referred to in pejorative terms
it is the idea of the Audit Society (Power, 1997) that has captured more debate in
wider social and political circles in the UK.
Power notes the differences between the programmatic thrust of audit and the
technologies of audit; the programmatic thrust (Rose & Miller, 1992) refers to the
logic that informs the way that the more detailed technologies are employed. He
discusses the weak knowledge base of auditing (Power, 1997, p. 28) and it is
here that the linkages between auditing and accounting are relevant. Arguably,
the technologies of auditing rest on those of accounting. Equally the programmatic
thrust of the Audit Society can be associated with a way of thinking that has been
called Accounting Logic (Laughlin, 1992). This sees
(a) that for every entity the use of finance needs to be evaluated in terms of some
measurable outputs achieved and value added and
(b) that it is possible to undertake this evaluation in and through the finance
actually used and received (Laughlin, 1992, p. 4).
It is a logic that can be operationalized through the technologies of accounting, but
is also pervasive in management approaches more generally and, hence, exists at a
higher level of abstraction than conventional accounting as it is currently practised.
It is an approach that has informed much development in the UK public services
under the Conservative and New Labour administrations of the past 21 years. It
is the adoption of a way of thinking rather than simply the application of a set of
technologies. As such accounting logic might be seen as programmatic (Rose &
Miller, 1992).
The power of accounting logic, as is the case for the programmatic use of audit,
lies in the extent to which it is vague and mutable and easily transported from
situation to situation. In its programmatic dimension accounting logic is powerful, but
it leaves the possibility of the adoption of accounting technologies as ever possible
and in many ways appealing.
440 J. Broadbent

In essence the distinction between the programmatic way of thinking of account-

ing logic and its operationalization through the use of accounting technologies is
key. Arguably there is duality between the use of accounting logic and the need for
a technology of checking and accountability, hence the audit explosion. This can
be seen to have led to an increasing use of accounting technologies. These, in turn,
arguably provide an extensive form of control that is a powerful means of steering
and one that not only fits well with, but also is a powerful enabler of, modernity. It
is a steering device that can meet many needs, as a legitimator (before or after an
event), as an answer machine or as a means of learning: hence it is mutable and
can meet many needs. Given this trans-situational power it is unlikely that account-
ing in both its technological form and as a programmatic force, will be allowed to
declineit is too useful.

Accounting Logic and the Control of the Public Services: The Programmatic Focus

The use of accounting logic in its programmatic sense can be illustrated through
some of the initiatives that formed the NPM (Hood, 1991, 1995). As well as
illustrating the use of accounting logic this example illustrates an area where
academics from England have over the years been very active in developing
research and it remains an area that demands a good deal of interest. An early
example is Chris Humphreys work with the Police and the Probation Services
his wider comparative research in the public services continues (see for an
early example Humphrey, 1991); an example of a recently developed and as yet
unpublished study is that of Kurunmaki and Miller at LSE, who are working with
the Kings Fund7 to explore pooled budgets and partnership arrangements between
health and social care organizations.
NPM is not a unitary or monolithic concept but it has been premised by the general
programmatic assumption that inputs should be linked through to outputs and that
they should be measured in monetary terms. This approach is one that reflects a
linear mode of thinking and a belief that everything can be rendered measurable in
monetary terms. It is a mode of thinking that has been bolstered by concerns about
governance and accountability and the fact that, if this mode of control is adopted,
it also allows the development of systems of audit.
In this mode, systems such as Local Management of Schools have sought in
England and Wales to push the management of resources down to the level of
schools and away from the Local Education Authorities (see for example Edwards
et al., 1999a,b). At the same time schools have to demonstrate their educational
achievements through the measurement of educational attainments specified by
the government. If educational achievements are not sufficient to ensure that the
school has a good reputation then the system of open enrolment linked to funding
substantively via student numbers means that schools may find it difficult to maintain
viability. Teachers feared that the new processes of LMS when they were introduced
would not measure much of that they thought important (Broadbent, 1995) and
might change the nature of education. Similar worries about measurement have
emerged in the context of the university system of QAA in England and Wales. In
 English Critical Accounting 441

both sectors, league tables are used to give selective visibilities to the outputs of
each school.
The GP Contract made a more explicit linkage between performance and funding
by linking the payment of fees to GPs to their ability to achieve certain targets.
Thus GPs have had to reach targets for preventative activities such as cervical
screening and have had to demonstrate programmes of health promotion (Laughlin
et al., 1994). Although the GP Contract and LMS provide early examples of the
programmatic use of accounting logic the use of targets and performance league
tables is becoming more and more ingrained in government approaches to control
of the public services.
More recently systems of audit have been used to tighten the control over
public sector bodies and thus the OFSTED8 inspection regime has added to the
information that is provided for parents choosing schools. Equally the Quality
Assurance Agency (QAA) inspection (which designates measures of teaching
quality in the UK) and the Research Assessment Exercise (RAE) (which designates
UK research rankings) in universities are designed to provide information that
underlies the decisions about resource allocation. The allocation of resources is
driven either indirectly through the student enrolment processes, based (to some
extent) on reputation reflected in the league tables, or directly in the context of the
research grants based on RAE performance.
These different systems all seek to link resourcing (inputs) and performance
(outputs) and drive performance by the use of financial carrots and sticks (or
as one of my colleagues suggested by hitting them with the carrot). As such
the systems are ones that steer organizations and steer them often in ways that
allow the disembedding of the activities from their context, linking them to one
particular element of their context only, that of resourcing. This is achieved by the
programmatic use of an accounting logic that is different in each case, but that has
the same driving intention.

The Use of Accounting in PFI: Programmes and Technologies in Action

The power of accounting as a malleable and mutable steering device can be

illustrated by a short consideration of the Private Finance Initiative (PFI) in the
National Health Service (NHS) in the UK. This is a specific and recent application
of NPM and PFI has generated a good deal of recent research9 more generally. PFI
highlights the use of accounting technologies to explicitly boost the programmatic
approach of accounting logic.
PFI is one of the most recent attempts to control the public services and is one that
is moving away from the management of day-to-day resources and more towards
the control of capital expenditure. In making this change of focus the techniques
used are ones that directly illustrate the use accounting technologies and in the
context of a controversial initiative the technologies of accounting have been far
more influential than in some of the earlier NPM changes. Despite the centrality of
accounting technologies, the programmatic approach of accounting logic always
underlies the thinking.
442 J. Broadbent

The PFI was introduced in 1992. At that stage it was intended as a means of
bringing private finance into schemes within the public sector; it was seen as a way
of bringing private sector creativity to the public sector. In the larger NHS schemes
the PFI supplies a new hospital building which the private sector provider then
maintains and services for an annual fee. Ownership may be transferred to the
public services at the end of the contract period (which may be as long as 60 years)
following some disquiet about the residual ownership of assets. Clinical services are
provided by the public sector.
It was promoted in the first instance by the Conservative government as a way
to bring in investment that would not be possible otherwise because of macro-
economic borrowing constraints10 . This justification is not now accepted even
officially. Hawkesworth (2000) has shown that the amount of money spent on PFI
would not threaten the strictures that the members of the New Labour government
provided for themselves. The recent emphasis of New Labour is upon value for
money (vfm) and risk transfer. Other interpretations will be discussed below.
In the context of health, PFI is particularly controversial. In the face of a suggestion
that the PFI might well be a backdoor route to privatization a promise was made
that clinical services would be retained in the public sector. More recent discussions
have questioned whether this promise is sensible. The needs to make savings in
order to achieve the vfm demanded by PFI have been seen as downgrading of the
conditions of service of public sector employees. There is a vigorous debate about
the relationship between PFI and the reduction in bed numbers (Pollock et al., 1997;
Mayston, 1999). It is clearly a contentious policy.
PFI in the NHS was not immediately successful. The financial institutions were
worried about the extent to which the NHS trusts had the legal status to enter
into such contracts and who would take responsibility should the trusts fail.
Hence two Acts of Parliament were passed, one by the Conservatives when in
government (NHS Residual Liabilities Act, 1996) and one by the Labour government
(NHS Private Finance Act, 1997) when it came to power. These were to ensure
government guarantees in the case of the failure of any NHS trust. Following these
Acts the first large contracts were signed and the resulting projects are now starting
to come on stream.
Early Government rationalization of PFI schemes (linked to the macro-economic
argument that this would provide resources that the government could not as
borrowing limits might otherwise be breached) was founded on the Treasury view
that PFI was not an asset but was a provision of services. It was therefore seen
as an off-balance-sheet item for the public service organization. The Accounting
Standards Board (ASB) raised objections to the way in which PFI was accounted
for and they argued that PFI should be on balance sheet. This was arguably
the result of their worry there might be a more general return to the off-balance-
sheet financing that they had long fought against. There followed a debate and
consultation as to the accounting treatment for PFI. This centred upon whether PFI
was the provision of the asset of the property or whether in fact it was the provision of
a service and whether in consequence it should be on or off the public balance
sheet. The notion that PFI was simply an accounting trick to avoid the macro-
economic problems of increasing borrowing was denied. The debate was concluded
 English Critical Accounting 443

and the ASB position that PFI should be on balance sheet prevailed. However, the
Treasury interpretation of the standard was such that the PFIs were likely to off the
public sector organizations balance sheet anyway and this relates to the extent of
the risk transfer that has taken place11 . Clearly accounting technologies are heavily
implicated in the debate about the visibility that is afforded to PFI.
As noted, the New Labour government moved from the macro-economic
justification of PFI. They have however faced increasing pressure for greater
accountability for the PFI (as evidenced by the various controversies about its
working). New Labours argument for PFI is based on the view that it is justified
where it provides vfm and that the macro-economic argument is irrelevant12 . This
approach is symptomatic of the programmatic thrust of accounting logic as it links
the input finances to operational outputs and uses this as a means of justifying
PFI. Vfm is often justified through the claim that cost efficiencies are achieved
by the allocation of risk to the sector best able to deal with it. The method of
determining vfm is through a comparison of the risk-adjusted cost of undertaking
the scheme through the public sector (the public sector comparator) and that of the
PFI alternative. The cash flows associated with both schemes are estimated and
then discounted to give the net present costs of each and the valuation of the risk
allocation is also taken into account. In theory if the PFI scheme is more expensive
it is unlikely to proceed.
This procedure for calculating vfm is heavily dependent on the technologies of
accounting. All accountants know the difficulty of project evaluation, predicting future
cash flows and activity levels is fraught with problems and this dilemma is only
compounded by the need to choose at what rate to discount the flows. Clearly the
valuation of risk is a further complicated issue and hence the calculations that are
made to justify the choice of project are always open to challenge. Despite the frailty
of the figures they form a key element in the justification of the project. It has been
argued elsewhere (Broadbent & Laughlin, 2000) that there has been a demand
for more accountability from those who operationalize PFI. This has led to quasi-
managerial approaches being adopted. This means that more formal systems of
control have been imposed and this has meant that accounting technologies have
been heavily implicated. The use of these accounting technologies has not settled
the arguments and the debates about PFI continue.
This brief excursion barely scrapes the surface of the intricacy of PFI. However
there is sufficient illustration to of some of the reasons why I argue that accounting
will persist. In essence this argument is related to the extent to which the visibilities
that are created become resources to justify the particular approach that is required
by the institutional steering bodies (in this case the government). The example of
PFI demonstrates the centrality of the accounting treatment of an item in defining
the reality of a situation. Whatever the accounting treatment is, if a PFI scheme
is implemented then the hospital will be built and people will attend for treatment.
However, the expression of that scheme in accounting terms may well decide
whether it can be implemented or not, because of the differential visibilities that are
produced at the macro-level. The extent to which a particular accounting treatment
allows investment that might otherwise be impossible allows a justification of a
policy that might otherwise be seen as unacceptable. In that sense the accounting
444 J. Broadbent

treatment has both a material effect and a political one. Moreover, there has
been much activity to ensure that the PFI schemes are off the public service
organizations balance sheet and thus resources that have been spent on getting
the right interpretation might well have been spent elsewhere. This clearly is
another material effect.
Accounting is also used as a justification for the choice of scheme; a PFI scheme
has to be substantiated by the financial case that is part of the business plan. Hence
it becomes possible to justify a PFI scheme by the financial data. A PFI scheme can
only be adopted if in comparison with a similar public scheme it provides value
for money. Thus, the Dartford and Gravesham PFI scheme can be argued to have
saved 5 m because the financial figures, prepared by accountants and checked by
the National Audit Office, prove that is the case. Accounting thus provides another
type of reality; a reality that shows the efficiencies of the PFI route to procurement
of assets and services. In the case of PFI there have remained a good number of
criticisms of the initiative but the financial justification for the schemes has remained
one mainstay of the arguments to refute the criticism. To this extent the justification
of PFI is one that concurs with Accounting Logic as it substantively accepts the
linking of input finance to outputs.
Thus the realities of the PFI that have been created by accounting are used
in the context of steering the systems of society, in this case the hospitals. What
can be seen by this example is that accounting technologies themselves remain
important as a tool of control and justification and as Tinker (1985) argued becomes
a tool in adjudicating social conflict. What does seem to be the case is that in
this situation of PFI, where the controversy substantial, then as well as using the
general and programmatic thrust of accounting logic, there has been a recourse to
the technologies of accounting.

Critical Accounting: Why We Need It

The consideration of the use of accounting in the context of NPM above shows that
accounting technologies and accounting logic are important resources in the control
of organizations and in producing the realities of those organizations. Accounting
may be useful in this respect but nevertheless this does not mean it is necessarily
beneficial to society in general. Neither can accounting be ignoredwe have to find
ways of ensuring that our scarce resources are used wisely and it could be argued
to be unethical not to do this.
We need to ensure the use of accounting does not represent certain interests at
the expense of others. This can be achieved by seeking some way of re-embedding
accounting information into the context in which it is to be used and in which
decisions are to be made. Thus, the separation of time and space that accounting
information allows must be constrained, or at least recognized as problematic.
Constructions and interpretations of accounting information must pay attention to
the cultural imperatives of those it seeks to control as well as those who are using it
as a tool of control. It means that explicit discussions of the interests of stakeholder
groups need to be held. It also means that to allow these discussions and decisions
 English Critical Accounting 445

to be made knowledgeably we have to ensure that critical accounting research

makes plain the interests that are represented by the accounting figures presented.
As the debate on the Audit Explosion has made clear, in many areas of life
questions of accountability and governance are being asked. In order to make
ourselves accountable and ensure due governance we seek (or are forced) to
render our actions transparent. The use of accounting in both its programmatic
and its technological sense is associated with this; alongside this is the extensive
use of auditing. The deep irony is that the tools that are used are themselves are
not necessarily open and transparent. In measuring, we are using the malleable
measure of accountancy and can thus (will?) achieve an interested answer. We
need therefore to ensure that accounting practices themselves become transparent
and given that they are mutable and malleable they must be open to challenge.
Thus, because accounting is so important and because it should remain important
we must also ensure the persistence of the school of critical accountants and
encourage the development of a new generation of such scholars. My conclusion
rests on the view that the strength of an idea or an area of praxis comes from its
ability to engage with critique rather than ignore it.

Critical Accounting Today

The final issue to consider is the extent to which the accounting academic
community is addressing this challenge. What is the health of critical accounting
from my perspective in London?
The first point to be emphasized is that there is a home for critical research
in the UK; it has not been marginalized, as it seems to be the case in some
other geographic locations where other models of academic work prevalent. It is
perfectly respectable to engage in work that explores social and economic issues;
the interests of the profession are challenged; the impact of financial controls in
the context of the public services have been debated at length; the governance of
our firms has been debated and concerns have been raised in the context of how
accounting controls are used in developing economies. This is a positive aspect of
academic accounting in the UK and it emphasizes the need for us to reach beyond
our own geographic and cultural boundaries to ensure that we develop debates with
others. We need to ensure we are inclusive and recognize the lessons we can learn
from others. In a world with many cultures and languages communication can be
difficult and if we wish to resist the hegemony of the positive approaches we must
be active to encourage those who wish to engage with us.
The degree to which critical work has a wider impact on the society in which
we live is problematic to judge. First, and as argued earlier, power relations make
this difficult to achieve. Second, the emphasis in too much of the non-positivistic
work that takes place is upon generating description and understanding rather than
direct critique. Thus, the extent of evaluation is perhaps not as broad as it might
be. For both of the reasons above it becomes difficult to think of many examples of
how critical accounting research has been directly successful in changing policy or
practices. Whilst not wishing to underplay the importance of description in raising
446 J. Broadbent

understanding and promoting debate that can lead to change there is seemingly
some reluctance to move forward beyond this. It is easy for description to be
developed with little attention to any real emancipatory thrust and without this
case study work might slide towards banality. We need to debate this issue with
the view to answering the question as to whether we are critical enough, often
enough. Hence this forum is a welcome one. In developing this debate we must also
recognize that we cannot all be critical in the same way and the debate about the
use of different opportunities for engagement should recognize this. For example,
some may seek direct political engagement with government; others might seek to
engage with organizations and others through the processes of education.
Perhaps the most worrying aspect of academic life in London is the extent to which
we are ensuring that our stocks of knowledge are both nurtured and replenished.
There is a paucity of doctoral candidatesthe field of candidates is small, as the
rewards of working outside the academy are so much greater. Added to this is
the pressure to fast completion of doctoral work that funding bodies demand. The
performance indicator of completion time can constrain space for broader reading
and scholarship alongside empirical work. This is not a criticism of those who are
undertaking doctoral studies, just a worry as to whether there are enough of them
and concern about the pressures they are under. It is a lament about the dangers
of output measurement.
The demands of the University system are now immense: established academics
must administer that system and are bound by the effects of RAE targets and the
need to generate research funding. Perhaps one of the first tasks of a renewed
focus on policy and evaluation should be a critical evaluation of the sector in which
we work. There is a need to look at the impact of higher education funding policies,
the abolition of student financial support systems, the push towards commercial
funding of university activities and the measurement systems that are employed in
the name of performance management. We need to ensure that the syllabi that we
teach are liberal and demanding and prepare our students for creative thinking not
just application of pre-determined facts.
Finally, I have a reflection on being asked to write about accounting in England;
this provided the need for some reflection about regional differences. In the context
of the UK, a comparison of the state of the academies in England, Wales and Scot-
land under the new devolved structure, which is leading to diverse policies, promises
to be instructive. In these regions different concerns are tempering educational pol-
icy and whether this will lead to different environments that have differing propensi-
ties to foster academic research remains an important area of study. It may provide
some help in deciding how we might move forward. Beyond this we need to ensure
that we keep returning to these debates, as accounting is too important to ignore.

Acknowledgements

The helpful comments of Richard Laughlin, Amanda Ball and Tony Tinker are
acknowledged. Sponsorship from CIMA has enabled the research on PFI which
is being undertaken jointly with Richard Laughlin and Jas Gill.
 English Critical Accounting 447

Notes

1. I shall use this label as a shorthand, whilst accepting the general point that there is no real
differentiation between conventional and critical accounting, which are instead interdependent, as
described above.
2. This is used because it is the area I know best, rather than to suggest it is of particular significance.
3. And more generally in the UK as a whole, although some ideological differences between the Scottish
parliament and the UK government in Westminster are starting to emerge.
4. It should be recognized that the status quo itself is always value ridden and not neutral.
5. This is perhaps due to the introduction of subject benchmarking through the Quality Assessment
Agency, which is designed to provide a framework for the content and structure of accounting
degrees. It also reflects the extent to which the main funding body the ICAEW is increasingly reluctant
to grant exemptions for accounting papers in their own syllabus. Added to this is the fact that there
is an increasing competitiveness between the professional bodies that has undermined the joint
accreditation process.
6. Clearly theory choice is personal and there are other approaches that could be chosen. I focus this
paper on my personal preference (Broadbent et al., 1991; Laughlin & Broadbent, 1993; Broadbent &
Laughlin, 1997).
7. A national medical charity in the UK.
8. Office for Standards in Education.
9. See for example published work by Broadbent and Laughlin (1999), Hodges and Mellett (1999) and
Mayston (1999). Julie Froud and Jean Shaoul working with others also have important work currently
in progress as have the other authors and these are only a few examples of an important stream of
concerned research.
10. Whether these are self-imposed or imposed by the demands of global capital provided a debate that
would take a paper in its own right.
11. A crude explanation is that risk transfer to the private sector should take place under PFI and if this
is sufficient to justify vfm it will also be sufficient to ensure it is off balance sheet.
12. It follows that the on or off balance sheet argument should be irrelevant now. Anecdotal evidence
suggests that if a scheme is on balance sheet it will not be adopted however and hence there
remains some lack of clarity.

References

Albrecht, W. S. & Sack, R. J., Accounting Education: Charting the Course Through a Perilous
Future. www.aicpa.org.
Armstrong, P. & Jones, C., The Decline of Operational Expertise in the Knowledge Base of Management
Accounting, Management Accounting Research, 1992.
Broadbent, J., The Values of Accounting and Education: Some Implications of the Creation
of Visibilities and Invisibilities in Schools, Advances in Public Interest Accounting, Vol. 6,
1995, pp. 6989.
Broadbent, J., The Gendered Nature of Accounting Logic: Pointers to An Accounting that Encompasses
Multiple Values, Critical Perspectives on Accounting, Vol. 9, No. 3, 1998, pp. 267297.
Broadbent, J., Dietrich, M. & Laughlin, R., The Development of Principal-Agent, Contracting
and Accountability Relationships in the Public Sector: Conceptual and Cultural Problems, Critical
Perspectives on Accounting, Vol. 7, No. 3, 1996, pp. 259284.
Broadbent, J. & Guthrie, J., Changes in the Public Sector: a Review of Recent Alternative Accounting
Research, Accounting Auditing and Accountability Journal, Vol. 5, No. 2, 1992, pp. 331.
Broadbent, J. & Laughlin, R., Developing Empirical Research in Accounting: an Example Informed by
a Habermasian Approach, Accounting, Auditing and Accountability Journal, Vol. 10, No. 5, 1997,
pp. 622648.
Broadbent, J. & Laughlin, R., The Private Finance Initiative: Clarification of a Future Research Agenda,
Financial Accountability and Management, Vol. 15, No. 2, 1999, pp. 95114.
448 J. Broadbent

Broadbent, J. & Laughlin, R., Control and Legitimation in Government Accountability Processes: the
Private Finance Initiative in the UK, Conference of Government Accountability and the Role of the
Auditor Generals, (University of Alberta, September 2000).
Broadbent, J., Laughlin, R. & Read, S., Recent Financial and Administrative Changes in the NHS: a
Critical Theory Analysis, Critical Perspectives on Accounting, Vol. 2, No. 1, 1991, pp. 129.
Cooper, C., The Non and Nom of Accounting for (M)other Nature, Accounting, Auditing and
Accountability Journal, Vol. 5, No. 3, 1992, pp. 1639.
Cooper, D. & Hopper, T., Critical Studies in Accounting, Accounting, Organizations and Society, Vol. 12,
No. 5, 1987, pp. 407414.
Edwards, P., Ezzamel, M. & Robson, K., Situating Education in the Entrepreneurial Society: a Review of
the Rationalities of Local Management of Schools, Critical Perspectives on Accounting, Vol. 10, No.
4, 1999a, pp. 469500.
Edwards, P., Ezzamel, M., McClean, C. & Robson, K., New Public Sector Reform and Institutional
Change (London: Chartered Institute of Management Accountants, 1999b).
Ezzamel, M., Accounting Control and Accountability: Preliminary Evidence for Ancient Egypt, Critical
Perspectives on Accounting, Vol. 8, No. 6, 1997, pp. 563604.
Giddens, A., The Consequences of Modernity (Cambridge: Polity, 1990).
Gray, R., Laughlin, R. & Bebbington, J., Financial Accounting: Method and Meaning (London:
International Thompson, 1996).
Gray, R., Owen, D. & Maunders, K., Corporate Social Accounting: Accounting and Accountability (Hemel
Hempstead: Prentice-Hall, 1987).
Guthrie, J. & Parker, L., A Quarter of a Century of Performance Auditing in the Australian Federal Public
Sector: a Malleable Masque, Abacus, Vol. 35, No. 3, 1999, pp. 302332.
Hawkesworth, J., Implications of the Public Sector Financial Control Framework for PPPs, in P. Robin-
son, J. Hawkesworth, J. Broadbent, R. Laughlin & C. Haslam (eds), The Private Finance Initiative:
Saviour, Villain or Irrelevance?, IPPR Working Paper (London: Institute of Public Policy Research,
2000).
Hines, R. D., Financial Accounting: in Communicating Reality, we Construct Reality, Accounting,
Organizations and Society, Vol. 13 No. 3, 1988, pp. 251261.
Hodges, R. & Mellett, H., Accounting for PFI in the UK National Health Service, Financial Accountability
and Management, Vol. 15, Nos 3, 4, 1999, pp. 275290.
Hood, C., A Public Management for All Seasons?, Public Administration, 1991, pp. 319.
Hood, C., The New Public Management in the 1980s; Variations on a Theme, Accounting,
Organizations and Society, Vol. 20, No. 3, 1995, pp. 93109.
Hopwood, A, Accounting and the Pursuit of Efficiency, in A. Hopwood & C. Tomkins (eds), Issues in
Public Sector Accounting, pp. 167187 (Oxford: Allan, 1984).
Hoskin, K., Anderson-Gough, F. & Fitzgerald, L., Change and Resistance in Accounting Education
and Training: New Ways for a New Profession, Proceedings of the British Accounting Associa-
tion Annual Conference, (University of Nottingham, March 2001).
Humphrey, C., Accountable Management in the Public Sector, in D. Ashton, T. Hopper & R. Scapens
(eds), Issues in Management Accounting (Hemel Hempstead: Prentice-Hall, 1991).
Laughlin, R., Accounting Control and Controlling Accounting: the Battle for the Public Sector? Inaugural
Lecture University of Sheffield, 20th May, 1992.
Laughlin, R., Critical Accounting: Nature, Progress and Prognosis, Accounting, Auditing and Account-
ability Journal, Vol. 12, No. 1, 1999, pp. 7378.
Laughlin, R. & Broadbent, J., Accounting and Law: Partners in the Juridification of the Public Sector in
the UK? Critical Perspectives on Accounting, Vol. 4, No. 4, 1993, pp. 337368.
Laughlin, R. & Broadbent, J., Re-Designing Fourth Generation Evaluation: an Evaluation Model for the
Public-Sector Reforms in the UK? Evaluation, Vol. 2, No. 4, 1996, pp. 431451.
Laughlin, R., Broadbent, J. & Willig-Atherton, H., Recent Financial and Administrative Changes in
GP Practices: Initial Experiences and Effects, Accounting, Auditing and Accountability Journal, Vol. 7,
No. 3, 1994, pp. 96124.
Mayston, D., The Private Finance Initiative in the National Health Service: an Unhealthy Development
in New Public Management, Financial Accountability and Management, Vol. 15, No. 3, 4, 1999,
pp. 249274.
Mulkay, M., Sociology of Science: a Sociological Pilgrimage (Buckingham: Open University Press, 1991).
Offe, C. & Ronge, V., Theses on the Theory of the State, in A. Giddens & D. Held (eds), Classes, Power
and Conflict, pp. 249256 (Macmillan, London: 1982).
 English Critical Accounting 449

Olson, O., Guthrie, J. & Humphrey, C. (eds), Global Warning: Debating International Developments
in New Public Financial Management (Oslo: Cappelen, 1998).
Osborne, D. & Gaebler, T., Reinventing Government (New York: Penguin, 1993).
Pahl, J., Couples and Their Money; Patterns of Accounting and Accountability in the Domestic
Economy, Accounting, Auditing and Accountability Journal, Vol. 13, No. 4, 2000, pp. 502517.
Parker, L., (forthcoming) Back to the Future: The Broadening Accounting Trajectory, British Accounting
Review.
Pollock, A., Dunnigan, M., Gafffney, D., Macfarlane, A. & Majeed, F., What Happens when the Private
Sector plans Hospital Services for the NHS: Three Case Studies under the Private Finance Initiative,
British Medical Journal, Vol. 314, 1997, pp. 126671.
Power, M., The Audit Society: Rituals of Verification (Oxford: Oxford University Press, 1997).
Rose, N. & Miller, P., Political Power Beyond the State: Problematics of Government, British Journal of
Sociology, Vol. 43, No. 2, 1992, pp. 173205.
Seal, W. & Vincent-Jones, P., Accounting and Trust in the Enabling of Long-Term Relations, Accounting,
Auditing and Accountability Journal, Vol. 10, No. 3, 1997, pp. 406431.
Sikka, P. & Wilmott, H., Practising Critical Accounting, Critical Perspectives on Accounting, Vol. 8,
Nos 1/2, 1997, pp. 149165.
Tinker, T., Paper Prophets: a Social Critique of Accounting (Eastbourne: Holt, Rinehart and Winston,
1985).
Tinker, T., The Other Millennium Bomb: Education Malaise and Technological Change, Accounting and
Business, July/August 1998, pp. 1618.
Tinker, T. & Koutsoumandi, A., A Mind is a Wonderful Thing to Waste: Think Like a Commodity,
Become a CPA, Accounting, Auditing and Accountability Journal, Vol. 10, No. 3, 1997, pp. 454467.

View publication stats