Are Accounting Standards Memes? The Survival of Accounting Evolution in an Age of Regulation

Abstract

This paper employs memetics to argue against the view that standardisation overwhelms the evolution of accounting. I suggest that, in an unregulated setting, accounting procedures constitute classic memes and survive according to their fitness for their environment, which is predominantly a matter of their suitability for investment decision-making. In a standardising regime, the standardising canon embodies a special kind of meme encoding ideas as actions to be imitated to realise those ideas. Evolutionary pressures and the canon develop in tandem, although not necessarily synchronously.If we accept the central tenet of memetics, which is also the assumption underlying the argument challenged here, that memes emerging before regulation were responsive to evolutionary pressures, we can analyse the responsiveness of the standardising canon by examining its relationship to a counterfactual continuation of the pre-regulated regime. The degree of synchronicity is an empirical, but elusive, question and we should follow Dennett’s recommendation that we settle for the philosophical realisations we can glean from memetics.I argue that three factors are of importance in addressing the question. Accounting memes function within a dense ecology, limiting radical and destabilising change. There has been a high degree of continuity, permeability and commonality in the intellection driving development: the same thinking has influenced policy design wherever it has taken place. Finally, the principal determinant of successful adaptation did not change on the transition to standardisation and the canon and its vehicles have survived. Consequently, we can conclude that standardisation has not disrupted the development of accounting.

A pragmatist neoclassical accounting research agenda for identifiable intangibles

“…8. Rutherford (2020a, b) illustrates how a number of methodologies in the social sciences provide scope for researchers with disciplinary expertise relevant to the subject of their research to apply that expertise; the sort of approach proposed in this paper comes nearer to social science methodologies than is apparent if one only focuses on the neo-empirical and critical social-theoretical paradigms most often encountered in accounting scholarship.…”

“…Accounting knowledge has an unusually tightly organised, rigorously defined, integrated and exhaustive structure at the very heart of both its intellection and its quotidian practice, a structure imposed by the architectonics of double-entry bookkeeping and the primary financial statements and the way accounting practices relate to them. This structure determines the relations of its core constituents to each other and demarcates core from periphery, for example, financial statement items from supplementary disclosures (Rutherford, 2020a). The architectonics bind on accounting knowledge by constraining the scope for liberal construction of that knowledge: an object cannot, for example, display characteristics of an asset and an expense, and an object cannot be recognised as an asset peripherally, for example, only in a supplementary statement.…”

“…Pragmatism's evolutionary approach highlights how knowledge survives, or fails, through time and Rutherford (2020a) discusses the mechanisms involved. In the main, the evolution of accounting knowledge is memetic rather than genetic: accounting practices, including accounting policies, are cultural items, like other customs, routines and ideas, copied from person to person by imitation, broadly understood.…”

“…It is sometimes suggested that accounting standardisation represents an arbitrary interference in the evolution of professional practice (see Rutherford, 2020a for sources) but Rutherford (2020a) argues that a number of factors tend to ensure that standardisation does not significantly disrupt the discipline's development. These include the dense ecology within which accounting functions – the highly organised architectonics already referred to, combined with strong practitioner commitment to the performance arising from it expected of them by their peers – which limits the scope for radical and destabilising change, together with the permeability between standard-setting bodies and the rest of practice, and, hence, the continuity and commonality in the intellection driving change.…”

Surprizing Management

“…In other words, does standardization preclude surprise in how rules change over time? Rutherford's (2020) conclusion is that the development of accounting is not disrupted by standardization. We can hence continue to be surprised.…”