Morality in Accounting

By Ahmed Riahi-Belkaoui | Go to book overview

Secrecy

Truth in accounting implies the need to avoid secrecy. Secrecy is the act of concealing a fact or blocking information about it or evidence of it from reaching interested publics that can benefit from knowing it. Moral considerations argue against secrecy. As stated by Sissela Bok,

given both the legitimacy of some control over secrecy and openness, and the damages this control carries for all involved, there can be no presumption either for or against secrecy in general. Secrecy differs in this respect from lying, promise-breaking, violence and other practices for which the burden of proof rests on those who would depend on them. Conversely, secrecy differs from truthfulness, friendship, and other practices carrying a favorable presumption. 97

Because accountants are not at liberty to disclose secrets that may benefit users, it raises questions about the limitations of narrative truth in accounting as compared to historical truth.


CONCLUSIONS

This chapter has clearly posited that truth in accounting is an elusive goal; it is not attainable. It is best stated by William Vatter as follows:

It is perhaps inevitable that the human mind should tend to view truth as an absolute or an ideal; such a view has merit in the attempt to make really precise explanations of scientific phenomena. But there are places where this ideal cannot be applied. The real world of business is nearly always too complicated for simple answers to questions, and accounting is no exception. Yet the search for single-valued truth persists in the notion that there should be some "right" or "best" way to present facts. This appears to some extent to underlie the general-purpose report, but it may be seen elsewhere. The search for "uniformity" or comparability in the presentation of financial data (even the idea that like things ought to be reported by the same methods, while unlike ones should not), the emphasis upon consistency, the pressure for conforming to specified forms of analysis and presentation, are all expressions of the single-valued truth idea. This conception affects the specification of accounting principles, supporting the view that there must be some basic formula or set of rules which, if established, could be depended upon to produce correct or proper results, that some set of principles can be established as "the" basic way to report financial "facts." The trouble is that truth is not simple and unitary; facts arise only in context, and they must be abstracted and interpreted for communication. 98

Accounting is reduced to scenarios where possibilities of truths are present if approximated by such criteria as neutrality, objectivity, reliability, and/or hardness and adapted to different roles of accounting and scenarios where impossibilities of truth are prevalent in cases involving measurement, income smoothing, choice of accounting techniques, asset valuation, cost allocation, relying on a standard of evidence, and using narrative truth.

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Morality in Accounting
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Preface ix
  • 1 - Fairness as a Concept of Justice in Accounting 1
  • 2 - Ethics in Accounting 25
  • 3 - Examples of Ethical Issues and Cases 75
  • 4 - Honesty in the Accounting Environment 119
  • 5 - Accounting and Social Responsibility 149
  • 6 - Truth in Accounting 177
  • Conclusions 201
  • Notes 202
  • Bibliography 206
  • Index 209
  • About the Author 213
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