“Accounting is not a science: It has been developed to serve a purpose”. A statement
that might be controversially discussed nowadays since the collapse of the socialism,
growing globalisation and the convergence of international financial markets have
forced national accounting systems to change during the last decades. This paper
will examine the validity of this statement in particular on the example of the recent
development in Poland. First it will briefly introduce the social and economic
environment in Poland under socialism, its transition to a market economy and the
current situation and future prospects. Second, the economic and social development
of Poland will be related to changes in the polish system of accounting and financial
reporting. A short view on the development of the accounting profession will be
given. Finally, a conclusion will compare the given statement with the polish situation
and give proof for its validity. After World War II Poland introduced a planned economy urged by the Russian
paradigm. Private property was restricted to agriculture, manufacturing and few
business services. In the late 70th Poland went into serious economic struggles
emerging from a high level of public debt from reinforcing the industrial sector.
Poland had to face sustainable inflation problems which finally lead to the breakdown
of the communistic regime (Roberts et al, 1998b). It was replaced by a coalition
government under leadership of the trade union movement „Solidarnosc“ in 1989. [...]
Table of Contents
1. Introduction
2. The economic situation in Poland
2.1 Poland under socialism
2.2 Poland in transition
2.3 The current situation and future prospects
3. The change in accounting
3.1 Accounting under socialism
3.2 Accounting in transition
3.3 The new accounting and future development
4. The Auditing Profession
5. Conclusion
Objectives and Topics
The primary objective of this paper is to examine the validity of the statement "Accounting is not a science: It has been developed to serve a purpose" by analyzing the recent economic and accounting transition in Poland. The research explores how the shift from a planned socialist economy to a market-oriented system necessitated comprehensive reforms in financial reporting, auditing, and accounting standards to facilitate foreign investment and economic stability.
- Historical evolution of the Polish economic environment from socialism to transition.
- Transformation of accounting systems and the emergence of market-oriented financial reporting.
- Development of the professional auditing sector in Poland.
- The relationship between economic policy, investment needs, and accounting standardization.
- Critical evaluation of accounting as a purposeful tool rather than a purely scientific discipline.
Excerpt from the Book
3.1 Accounting under socialism
The former Polish accounting system was under the direction of the Ministry of Finance. Instead of having general principles from the commercial code and taxation laws there was financial laws. These laws covered financial accounting. Accountancy was reduced to economic record keeping and financial statements produced but not published. The uniform chart of accounts was used during the period of 1940-1989 (Bailey, 1988).
Even though some of their accounting principles in this period were based on valid accounting theory; the subsidies and excessive taxation made the measurement of entity results unreliable:
Going concern was not an issue because of state guarantees. A manager of an inefficient company could be fired or its employees denied a customary bonus. Financial losses did not lead to bankruptcy because the government would provide an infusion of capital or subsidize sales prices on an ongoing basis.
Summary of Chapters
1. Introduction: This chapter introduces the core argument that accounting serves a practical purpose and outlines the paper's focus on Poland's transition from socialism to a market economy.
2. The economic situation in Poland: This section details the historical shift from a centrally planned economy to a social market economy, emphasizing the challenges and recovery process in the 1990s.
3. The change in accounting: This chapter tracks the evolution of accounting practices, contrasting the rigid socialist systems with the newly adopted standards required for a market economy.
4. The Auditing Profession: This part examines the transformation of the auditing field, including the evolution from state-controlled "correctness" verification to the establishment of modern chambers for certified public accountants.
5. Conclusion: The concluding chapter synthesizes the findings to affirm that accounting is a functional instrument driven by economic and social needs rather than a static science.
Keywords
Accounting, Poland, Socialism, Market Economy, Financial Reporting, Auditing, Transition, Ministry of Finance, Privatization, Foreign Investment, Economic Reform, Standardisation, Chartered Accountant, Transparency, Comparability.
Frequently Asked Questions
What is the fundamental focus of this research paper?
The paper evaluates the statement that accounting is not a science, but rather a discipline developed to serve specific socio-economic purposes, using the transition of Poland as a primary case study.
What are the key thematic areas covered in the work?
The research covers the economic history of Poland under socialism, the subsequent transition to a market economy, the parallel evolution of accounting systems, and the professionalization of the auditing sector.
What is the primary research goal?
The goal is to prove the validity of the premise that accounting serves a purpose by demonstrating how Polish accounting standards adapted to meet the demands of foreign investors and EU integration.
Which methodology is employed in this study?
The paper utilizes a qualitative analysis of historical economic developments, legislative changes in the accounting sector, and secondary literature to build its argument.
What core topics are addressed in the main chapters?
The chapters address the economic transition from socialism, the radical shift in accounting and financial reporting, the growth of the auditing profession, and the necessity of harmonizing Polish standards with international practices.
What keywords characterize the work?
Key terms include Accounting, Poland, Socialism, Market Economy, Financial Reporting, Auditing, and Transition, highlighting the interplay between national reform and international standards.
How did the role of the state influence accounting under socialism in Poland?
Under socialism, accounting was entirely under the direction of the Ministry of Finance, serving as a tool for economic record-keeping rather than financial transparency, with no risk of bankruptcy due to state guarantees.
What does the paper conclude regarding the nature of accounting?
The paper concludes that accounting is not to be regarded as a science, as it continuously adapts to the changing socio-economic drivers and specific requirements of the market environment.
- Quote paper
- Markus Bruetsch (Author), 2003, Accounting and Socio-economic changes in Poland, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/14845
