Accounting Reports and Data – Useful to Whom?

1. An introduction

At Recte Bookkeeping, we are passionate about assisting small business owners to overcome obstacles to their joy and success. You’ve probably heard that before.

True, the products we offer are buy-and-large like any other firm: record keeping, bookkeeping, payroll, accounts payable and receivable, end-of-period reporting, etc. And yes, we strive to adhere to the same ethical practices, generally accepted accounting principles and regulations stipulated by the governing bodies that be, to ensure compliance. All of this is practically codified, ensuring qualitative characteristics that demonstrate a degree of usefulness in the product of the firm. But useful to whom? That is a question worth asking.

2. A sports statistician, a meteorologist, and a doctor walk into a bar

3. Red vs Blue

In the simplest scenario, the producer and the user are the same individual. To illustrate, let’s use the sports statistician. Suppose they are a hobbyist and the only user of the records they produce; he also considers himself to be the Red Teams’ biggest fan. After each game that the red team plays the statistician adds the new data to their master record, interprets the new totals, and communicates within himself. After the most recent game, they find that the blue team has, historically, demonstrated better performance than the red team. However, the red teams’ performance has increased steadily each game. Based on these signs the statistician suspects that the red team will overtake the blue team before the end of the season.

In this case, our sports statistician is the producer. His product is a text; an accurate record of player and team performance during the current season. He reads the text and interprets the meaning. Now, many different meanings could be interpreted from this text because it is made up of many signs that, when correlated, house many meanings. But our statistician is a fan of the red team and therefore only interested in one aspect: The success of the red team. This interest acts as a filter, providing the user/interpreter the means to “negotiate” with the text resulting in an exchange that generates the final product, knowledge, that satisfies the end user; himself.

In the case of our hobbyist sports statistician the interpretation of the text, negotiation of the text, and final exchange happen quickly and to some degree, steps may occur simultaneously. This process is known as “semiosis”, simply stated, the process of interpreting signs to create meaning.

But what about when the producer and the user are not the same individuals? As you can imagine the complexity of the process increases. For our next scenario let’s examine the work of the meteorologist.

4. Seven days of rain in Tucson

For the sake of brevity, we can move quickly through the first part of the meteorologist’s process. After collecting the text from his instrumentation and interpreting the meaning of the signs that the text is composed of, the meteorologist synthesizes multiple reports and negotiates with the text thus generating knowledge. But the meteorologist is not the end user nor is the end user another fellow meteorologist with the same prerequisite knowledge who can interpret the same meaning and generate the same knowledge. No, the end user in this scenario is a large audience of individual users tuning in via television and who rely on the meteorologist to communicate, not the text or signs, nor the reports he synthesized. No, the audience is interested in the final product; knowledge that satisfies the end user. So, that is what the meteorologist must communicate.

Interestingly, in this scenario, the knowledge conveyed by the meteorologist to the audience (let’s say, seven days of rain in Tucson) is yet another sign to be interpreted. Nonetheless, the work of the meteorologist is complete. This is because the final product, while another sign, requires significantly less prerequisite knowledge than the signs of the original text negotiated by the meteorologist. The audience is satisfied because they can readily engage in their process of semiosis to determine what the sign, seven days of rain in Tucson, signifies for them.

At this point, it is essential to note a sign and what it signifies are distinct entities. The aforementioned sign, seven days of rain in Tucson, is constant for all those watching the evening weather report but its significance (its meaning) will be different for each interpreter. This is largely because the significance of one sign is often impacted by other signifiers providing context for the interpretation of additional signs. For instance, for someone in Tucson who has plans to attend a golf tournament the significance of rain will be great while another who has plans to vacation outside the area that same week may find the significance of rain minor in nature.

With the two examples discussed thus far, we have focused a lot on the process, and yes, specifically the process of semiosis. Though, semiosis is a small cog in the much more expansive domain of semiotics – crudely defined as the study of signs and their use. Semiotics or, semiology, was developed by Swiss linguist Ferdinand De Saussure throughout his life. The field has continued to develop beyond the original framework of linguistics and has for some time now been considered a truly multidisciplinary field. At its heart though, semiotics is really about communication and the sharing of knowledge. That’s what we will focus on in our last scenario of the doctor.

5. An apple a day

Communication and semiosis are critical to the success of doctors. The need for healthcare professionals to interpret signs and communicate significant information to patients is ever-present and of critical importance; it can mean lives. Medical professionals have to interpret and negotiate texts like the sports statistician and deliver knowledge and signs to patients who rarely have the prerequisite knowledge to understand the sign’s significance without implementing additional communication methods like the meteorologist. Unlike the previous two examples, medical professionals often have to track the significance of signs over long periods and communicate face-to-face with a single end-user; often multiple times. No doubt the long-term benefits of a good doctor are hard to underestimate. The field of medical practices is a particularly rich area to draw from in the domain of semiotics.

But, what does any of this have to do with accounting?

6. Useful to whom?

As you may have guessed by now, like the three previous examples we have discussed, accounting is also a semiotic process. Recall that the goal of any semiotic process is not to simply communicate a text, sign, or synthesized report but to provide knowledge that satisfies the end user. With that goal in mind please reconsider the three scenarios we have discussed:

• Our hobbyist statistician was satisfied knowing his favorite team was on an upswing; not from the mere collecting of sports stats.
• Our meteorologist was satisfied after communicating significant information to his audience. And the audience was satisfied because they received signs that were significant to their decision-making process.
• And finally, the doctor’s patients are satisfied because they receive regular, timely information from their doctor that is communicated in a way that considers their subject-matter comprehension.

From these three examples, we can deduce that a semiotic approach to an accounting period would not be complete with closing the books; although this may provide accurate signs. And a semiotic approach to an accounting period would not necessarily end with the delivery of synthesized reports; although significant to the end user. A semiotic accounting period ends when the producer (accountant) provides knowledge that satisfies the end user.

Now, of course, the informational needs vary from one client to another and many factors must be considered but as you can see, a semiotic approach to accounting can be quite useful. In fact, at Recte Bookkeeping we are so excited about the possibilities and insights that are opened up by this approach that we are committed to continue exploring the implications and incorporating our findings into our processes.

So, back to the original question, “useful to whom?”. We ask that question every day.

It’s true that accurate, compliant data does minimize liabilities and that is valuable and useful. But as the end user, you may not find much use beyond that. If you are looking for more benefits, it could come in the form of a balance sheet or a profit and loss statement. Both reports are powerful tools but they are still texts that contain many signs that house many meanings. A lack of prerequisite knowledge could make negotiating or filtering the information to generate knowledge significant to key information you already possess a time-consuming event. And that’s the point, a semiotic approach to accounting clarifies the role of the accountant and leads to more value for the end user. Maybe you have a clear idea about what information satisfies your need for knowledge as the end user. Maybe you don’t, and that’s okay too, let’s have a conversation and define what’s useful to you.

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