LECTURE NOTE 1

PRAGMATIC THEORIES

Descriptive pragmatic approach

The descriptive pragmatic approach to accounting theory construction is an inductive

approach - it is based on continual observation of the behaviour of accountants

in order to copy their accounting procedures and principles. Hence, a theory can be

developed from observations of how accountants act in certain situations. The theory

can be tested by observing whether accountants do, in fact, act in the way the theory

suggests. Sterling called this method the 'anthropological approach':

. .... if the accounting anthropologist has observed that accounting man normally records

a 'conservative' figure and generalises this as the 'principle of conservatism', then we can

test this principle by observing whether or not accounting man does in fact record a

conservative figure. If the accounting anthropologist sets forth the 'principle of diversity',

then we can test this principle by observing whether or not accounting man does in fact

record similar occurrences in different ways. And so forth.'

The descriptive pragmatic approach is probably the oldest and most universally used

method of accounting theory construction. Until quite recently, it was a popular way of

learning accounting skills - future accountants were trained by being apprenticed or

articled lo a practising accountant.

However, there have been several criticisms of this approach to accounting theory

construction:

• The descriptive pragmatic approach does not include an analytical judgement of the
quality of an accountant's actions; there is no assessment of whether the accountant

reports in the way he or she should.

• This approach does not provide for accounting techniques to be challenged, hence it

does not allow for change. For example, we observe practising accountants' methods

and techniques and teach those methods and techniques to students. Those students

will become practising accountants whom we will observe in the future to learn what

to teach, and so on.

• The descriptive pragmatic approach focuses attention on accountants' behaviour, not

on measuring the attributes of the firm, such as assets, liabilities and profit. In taking

a descriptive pragmatic approach, we are not concerning ourselves with the semantics

of accounting phenomena.