Accounting--A Social Institution: A Unified Theory for the Measurement of the Profit and Nonprofit Sectors

This book attempts what for many in the accounting profession has been the impossible: a unified accounting system for measuring and reporting the performance of human service organizations as well as firms in the profit sector. The model developed recognizes the centrality of the consumer and the significance of optimizing consumer preferences whether the consumer is an individual purchasing services and products in the profit sector or the consumer is society in the role of consumer-payer of the services and products of human service organizations. Equating society as the consumer-payer of human services leads to the use of societal income as a measure of the effectiveness of human service organizations. Accounting is a social institution whose chief function is measurement. Given a statement of goals, accounting should measure the achievement of these goals. Thus accounting can be viewed as a feedback system to report the differences between goals and their achievement. In a democratic society, the economic goal for its members should be their continuing gains in independence from a self-sufficiency viewpoint and satisfaction of their needs and wants from a consumption viewpoint. These are common goals in the profit and nonprofit sectors. The societal model developed by Herson, Gordon, and Cherny has long-run implications for the professions of accounting, human services, economics, and political science and the book will be a provocative work for professionals in these disciplines for some time to come.

Table of Contents:
Preface Introduction Executive Summary The Organizational Model Societal History: Background of the Problem Societal Model: The Propositions The Methodology of Measuring Systems Profit and Nonprofit Accounting--A Unified Approach A Review of the Literature Empirical Applications of the Model Consequences and Implications Postscript and Guide to the Literature Index

About the Author :
JULIUS CHERNY is a professor of accounting at Iona College, a partner in a management consulting firm, and the research director of the Price Institute of Entrepreneurial Studies. His theoretical and practical knowledge and experience in accounting, mathematics, and economics provide a systematic perspective for this work. ARLENE R. GORDON is currently a senior consultant to The Lighthouse Inc., where she served as Associate Director since 1973. Her experience in developing an integrated management information system for the evaluation of social and rehabilitative services provide the insights that contribute to the need for and application of the proposals in this work. RICHARD J.L. HERSON, retired partner from a firm of certified public accountants is former executive director of The Bruner Foundation. He brings a rare combination of accounting experience and knowledge of the profit and nonprofit sectors to the problem of evaluating resource allocation within our society.

Review :
." . . a bold, long-needed and highly relevant volume in dealing with a vital (and generally neglected) sector of the economy. It will stimulate more research and will serve as a yardstick by which subsequent analysts will have their efforts measured."-Robert A. Kavesh Marcus Nadler Professor of Finance and Economics Stern School of Business New York University "Accounting: A Social Institution is the first book to do an in-depth study to reconcile financial and not-for-profit accounting theory . . . This text will be a splendid supplement for accounting courses and particularly for advanced accounting students searching for a theoretical framework. It is must reading for accounting academics, practitioners and executives with interest and/or responsibility in the nonprofit arena."-Keith B. Ehrenreich Professor of Accounting California State Polytechnic University "Just as unified theory of matter has proved elusive to physicists, a unified theory of accounting has proved elusive to financial managers. Now, for the first time, there is a breakthrough book, Accounting: A Social Institution, which illuminates a measuring rod for performance of profit and nonprofit organizations. In the years to come, anyone interested in the complexity of evaluating the financial status of an institution will be required to turn first to this seminal work."-Herbert London Dean, Gallatin Division New York University "The book is particularly valuable because it does not simply attempt to provide a practical system for accounting in [service delivery] organizations. Instead, it begins with a set of fundamental assumptions about the social value of human service organizations (HSOs), providing the intellectual framework for the evaluation of these institutions in relation to the social value which they purport to furnish. In particular, the grounding on the three fundamental propositions sets the stage for the reader to consider not just the technical "balance sheet," but the underlying values on which HSOs rest."-David H. Warren Director, University Honors Program University of California, Riverside ?An extremely thought-provoking proposal to present a unified theory for measuring the profit and nonprofit sectors. A systematic multidisciplinary (financial accounting, microeconomics, social science) perspective is offered as a solution to make accounting reports more informative to decision makers as they allocate resources for the betterment of society. Three authoritative practitioners provide an excellent blend of theory and practice, although their writing is dense at times. They delineate the need to change rather than revise our social system to eliminate the dichotomy between the rights of the individual, particularly the disadvantaged, and the collective society. The book consists of nine extensively footnoted chapters and a short but excellent bibliography. Chapter 3 is an outstanding review of societal history of dealing with the disadvantaged. Chapter 2 provides the organizational and societal models underpinning their theory. Chapter 8 presents the empirical application of the model which could benefit from some insights from management accounting. Required acquisition in the area of social accounting for any academic library.?-Choice "An extremely thought-provoking proposal to present a unified theory for measuring the profit and nonprofit sectors. A systematic multidisciplinary (financial accounting, microeconomics, social science) perspective is offered as a solution to make accounting reports more informative to decision makers as they allocate resources for the betterment of society. Three authoritative practitioners provide an excellent blend of theory and practice, although their writing is dense at times. They delineate the need to change rather than revise our social system to eliminate the dichotomy between the rights of the individual, particularly the disadvantaged, and the collective society. The book consists of nine extensively footnoted chapters and a short but excellent bibliography. Chapter 3 is an outstanding review of societal history of dealing with the disadvantaged. Chapter 2 provides the organizational and societal models underpinning their theory. Chapter 8 presents the empirical application of the model which could benefit from some insights from management accounting. Required acquisition in the area of social accounting for any academic library."-Choice