Munro, R.

English

Although double entry bookkeeping forms the basis of one of the oldest
and most powerful knowledge systems used within organizations,
accounting procedures and the information produced by accountants have
increasingly come under attack.

Despite some very different criticisms, it is argued in this thesis
that the source of the problems is a common one. The hypothesis of
this thesis is that the present need to articulate financial statements
is largely psychological, arising from misconceptions about the systems
nature of double entry, and diverts attention from the proliferation of
ad hoc rules with which accounting information is manipulated.
Introduction of a more formal systems approach not only offers a more
rigorous basis for accounting systems, but sets aside these
misconceptions and the psychological grip of 'automatic' articulation.

However, the notion of 'system' is not clear. Systems theory, despite
a vogue in nearly every discipline, is in poor array. In particular,
it has been criticised for its 'boundary' problem, a lack of
definition~ and its 'reification', its remove from the individual
actor, leading to a consequent puzzle in how systems adapt. A partial
solution to the first problem is offered through developing a systems
logic to handle systems 'arrangements' and exemplify closure. A
solution to the second problem is achieved through integrating the
theory of signs with the notion of closure and subsequently developing
a formal basis for a knowledge system to be applied in Part II. The
role of knowledge systems in the context of organizations is then
discussed.

In Part II, a fundamental analysis of money indicates that three types
of money signs are required to capture the full information set in
money signs and suggests the development of three systems models, using
the formal basis for knowledge systems developed earlier. A comparison
of the controls in the systems models with the 'information control'
school is then given, followed by an historical analysis of double
entry. The latter is felt to be particularly required in this area,
given both the long history of the use of double entry and the
intricacy of the argument that the system leads to an 'artificial'
articulation of reports. The theme of articulation is then developed
further and it is also demonstrated how the systems models, despite
different valuation bases, can be said to articulate or 'reconcile',
thereby forming an integrated system.

The results from Part II are not only suggestive of the robustness of
the formal basis for knowledge systems, but indicate possibilities for
wide application elsewhere. Within the thesis, the centre to the
crisis in accounting has been identified, not as anomalies arising from
the use of historic cost (although these certainly exist), but from an
artificial and logically unnecessary closure being imposed on the
reporting system whose source is to be found in the balancing
phenomena. However, while the earlier discussion on the organizational
context for knowledge systems suggests that the further articulation of
management accounting with other reports is still problematic, the
systems model offers a solution to the articulation problem in external
financial reporting

Munro, Rolland

Edinburgh Research Archive

Knowledge systems, articulation and accounting: the development of a formal basis for knowledge systems through the integration of a systems logic with the theory of signs in order to investigate the articulation problem in accounting

https://era.ed.ac.uk/bitstream/1842/7301/1/370591.pdf

Knowledge systems, articulation and accounting : The development of a formal basis for knowledge systems through the integration of a systems logic with the theory of signs in order to investigate the articulation problem in accounting.

Knowledge systems, articulation and accounting : The development of a formal basis for knowledge systems through the integration of a systems logic with the theory of signs in order to investigate the articulation problem in accounting.

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