ABSTRACT
Chambers entered accounting at a time when there was little in the way of theory, or indeed grounded research. Much was achieved along the way. Importantly, after graduating from university, his practical experiences during World War II in industry and the Prices Commission, coupled to his post-war development of management education programs at Sydney Technical College, the Australian Institute of Management, and at the Australian Administrative Staff College, Mount Eliza, saw him immersed in the consideration of accounting’s role in resolving practical problems. An early address in this area was titled ‘Management in Wonderland.’ Those experiences also pushed him to the forefront of the movement by educators, practitioners and regulators for improved education programs for managers and commerce programs for accountants. His considerable practitioner connections resulted in significant consultancies throughout the 1950s–1970s and his participation from the mid-1960s in what became known as the Sydney General Management Group. This coincided with the formulation of his theory of Continuously Contemporary Accounting (CoCoA). Evidence of these contiguous theory and practitioner pathways has not previously been discussed.
Chapter 5 discusses the early management lectures and ideas that underpinned, amongst other things his first book, Financial Management. Published in 1947, it went through three later editions, the last one in 1986. Articles on the practice and teaching of accounting soon followed. Education and vocational training were differentiated, something not previously stressed in the accounting literature. But accounting (he did not differentiate internal from external accounting) was considered together with finance and management. These areas were viewed as integrals, not isolates.
Chambers’ theoretical developments arose from attempts to resolve simultaneously recurring accounting problems—asset valuation issues generally, but specifically in takeovers with related asset-stripping sagas and in accounting’s inability to allow the prediction of company failures, in various failed regulatory attempts to account properly for price and price level changes, and the legal anomalies in corporate financial reporting—rather than, as conventionally had been the case, treating them as isolated problems. Regarding Chambers’ 1960s and ’70s articles on price and price level accounting Gaffikin said these were a way of ‘selling’ CoCoA. This claim has been reconsidered more recently by Persson and Napier. The analysis in chapters 6 and 8 provides counter evidence to support the claim that, since the late 1940s, price and price level changes were integral in honing Chambers’ thinking about accounting, finance and management. Any ‘selling’ aspect was incidental.
To begin a theoretical breakthrough in the mid-to-late 1950s he sought to delineate the function (part of a conceptual framework) of accounting, with major contributions in 1955 and 1957—‘Blueprint for a Theory of Accounting’ and ‘Detail for a Blueprint.’ Both proved seminal works in this regard. In contrast with the professional accounting standards setters’ view of what a conceptual framework entails, Chambers saw it as the commercial setting within which accounting sits. He articulated the function of accounting in Accounting, Evaluation and Economic Behavior, namely: ‘to provide detailed and aggregate financial information as a guide to future action.’ This was embellished later with the statement that: ‘the discovery of the facts which at any time predict the limits of action, is thus strictly a scientific function, a continuous research function, inasmuch as the facts are continually changing. Its processes will necessarily be carried out with the same detachment from the facts, and the same pertinacity in seeking the facts, as any other scientific inquiry.’ Hence, accounting needed to satisfy a ‘decision usefulness’ criterion. Capturing this feature are the titles of two of his major early works, the 1957 Accounting and Action and Accounting, Evaluation and Economic Behavior, as well as in 1969 the first collection of his articles, Accounting, Finance and Management.
The theoretical and empirical work embodied in Accounting, Evaluation and Economic Behavior both presaged CoCoA and conflicted with many contemporary conventions in accounting practice. Yet it was consistent with a large body of economics literature on money, prices, price changes, price level changes and price structures, the tenets of measurement theory, new insights in communication theory, and the common-sense rules of financial calculation.
Specifically, CoCoA is predicated on accounting being founded on legal, ethical and mathematical principles and to satisfy several economic propositions, thereby providing data that would be generally relevant for all uses by parties interested in business decision making. It requires that a business’s wealth be measured by the unencumbered current general purchasing power it commands: over some time period, income arises if there is an increase in the entity’s net wealth; and a loss, when there is a decrease. Net wealth is the aggregate of the face values of its cash and other liquid assets plus the cash equivalents of its severable physical assets, less the contractual amount of its liabilities. The cash (or monetary) equivalent of separable physical assets is taken to be best indicated by their current selling prices. Transactions are accounted for in a manner consistent with traditional double-entry bookkeeping and the matching principle is used systematically.
