THE THEORY OF ACCOUNTING AND CONTROL

in reading it tells us that in order to understand accounting and control, three main ideas must be
taken into account. The first is that the whole organization is a set of contracts between
individuals and groups of individuals. the second, tells us that the provision in the contracted
information helps us design and execute the contracts made and the third and last one tells us
that the control in the organizations is a sustained balance for the interests of its participants and
in this case it must distinguish the control of organizations

ORGANIZATIONS AS A SET OF CONTRACTS

Organizations have a different meaning for each agent. business enterprises, for example,
employers for those who work in the company; customers for suppliers of goods and services and
suppliers for their customers; benefactors for whom they receive their charity and investments for
those who invest in them; taxpayers for the government; and a threat to its impersonal
competitors and bureaucracy for the poor and pillars of free enterprise for the doctrinaires and
also organizations are seen in different ways as complex networks of human relationships, product
functions and hierarchies as garbage baskets and for They take pride in the culture and civilization
and since they are motors of change and these are also ridiculed because they are indecent and
are obstacles to the progress of society and also say that they have no problem with how they see
the organization since they are going to Use an old idea as it is supported by academics such as
Cyert and March, Simon, Barnard and Rousseau. and says that an organization is simply a set of
contracts with agents and that the contracts are mutual agreements, formal or informal as well as
inviting a friend to lunch that can be said to be a contract since it is an appointment and suppose
that the agents They are rational and do not consciously choose what we like.

PURCHASED FACTS FOR CONFLICT RESOLUTION

disputes waste resources and the provision of knowledge helps resolve disputes and unresolved
conflicts between agents weaken and destroy, as the complex fabric of socio-economic exchanges
from which much of our prosperity is derived, strikes and closures of Companies are example. The
practice of collecting and sharing information carefully originates the demand to satisfy the
fundamental demand as a means to preserve the socioeconomic system. Sharing knowledge and
expectations is important for acculturation and socialization. Conflicts that take place within
families, neighborhoods, at work and trade can be prevented or resolved with the help of common
information. The judicial system is based on written documents and witnesses, two forms of
shared information. however, only a small proportion of the conflicts reach the judicial offices.
Many conflicts are resolved quickly and at low cost thanks to the systematic provision of shared
information outside of any formal conflict resolution system. The definition of executable
contracts between agents requires common knowledge, the information is common knowledge
among agents. In the story of the emperor's new suit, the young man shouts that the emperor was
naked, and everyone knew that the emperor had no clothes; he only made common knowledge.
when contracts use variables that are not common knowledge. they can generate disputes or
deceptions. Common knowledge is more than the observation of others. When everyone is aware
of the event, but not of what others know, some may be tempted to use that information to take
advantage of it, creating conflicts that can be avoided. Common knowledge helps reduce such
conflicts and losses in concomitant accounting and agent contracts. however, common knowledge
is a theoretical abstraction. translating it into practice is difficult as making a mathematical point
on the board visible. no physical representation of a point can be missing dimension, although the
lack of dimensions is the essence of the mathematical definition of points can be taught as
geometry, design and build bridges and achieve another large number of advantages that arise
from abstractions without insisting on that the physical and practical analogies are true in relation
to everything that is associated with fundamental concepts. The definition of a common concept
also does not have an exact representation in the practical world.

When saying what to do, it is possible to face two types of uncertainty, you decide under
imperfect information if the rules or structure are common knowledge, but nothing is known
about the events and actions of others. the game of roulette example is imperfect information
because players do not know where the ball will stop, all players know the rules and opportunities
for different results, similarly, when we think of accounting as an information system for making of
decisions all parties know the rules of the game and accounting as an information system for
decision making and accounting only provides information on various events and on the actions of
others if we do not know the structure of the situation take decisions in circumstances more
difficult, called incomplete information. in the Wizard of Oz, Dorothy undertakes a game of
incomplete information, she does not know the rules or the players of a game and accounting only
provides information about various events and about the actions of others. it must function as
complete information as incomplete among the most uncertain and complex information
environment. Some parts of the accounting and control by public disclosure of financial
statements. may seem redundant until we consider organizations as incomplete sets of
information

CONTROL IN ORGANIZATIONS LIKE BALANCE AND BALANCE.

conflict and cooperation coexist in economic exchanges, the desire to achieve what we want
causes contrary instincts of cooperation and total surplus, is the maximum amount that the buyer
is willing to pay and the minimum amount that the seller is willing to accept. the sum of the
consumers and the producer is the adhesive that directs agents towards cooperation, trust,
reputation and exchange.

the current price of the transaction determined the division of the total surplus between the seller
and buyer, this generates conflict, competition, fear and threat to weaken the organizations.
control in organizations moderates this centrifugal force that helps mitigate and resolve conflicts.
When the conflict dominates the cooperation, the organization disintegrates. Pan American
Airlines, which was once one of the largest companies, closed because of a conflict between
employees and shareholders that could not be satisfactorily resolved for both.

the idea of control differs control of organizations.

the first has a balance connotation between the interests of the different agents, the second
suggests the manipulation and the exploitation of some agents by others, the control of the
organizations implies that it is an instrument of an agent or a group of agents who use it to
achieve their objectives highlighting the disparity in the relative powers of negotiation between
agents and others, the concept of contrl of the organizations in a symmetrical way, from the point
of view of several participants. In a modern corporate company, not even the main executive
contola to the rest of the organization because the ceo is also subject to the control of the
company. we will concentrate on the control of organizations are the main and most general
problems.

This accounting book is found in the work of Yuji Ljiri, who describes accounting as "a system to
facilitate the proper functioning of accountability. Relations between interested parties"
highlighted this accounting form of the dominant approach until then of the Usefulness for making
decisions, in three parts:

1. the importance of the process, as well as the product of accounting.

2. The accounting system, I see as a result of the balance of the game between the parties and not
as something arbitrarily chosen by the accountant and the symmetry of relationship between the
delegate of responsibility and who assumes responsibility (is lower between the principal and the
agent) in opposition to the asymmetry inherent in the metaphor of the master server

3. This last idea refers to the analysis of Barnard and Simon on the relations of authority and
historically, the analysis of Rousseau on the relationship between the gorbenante and the
governed. the consetimiento of the governed is as important in these relations as the capacity of
the ruler.

In this book we assume that individuals choose actions to achieve the objectives, subject to the
limitations of their environment, knowledge and ability and are rational in the sense that they do
not deliberately choose courses of action whose results are undesirable. The assumption of
rationality relates the objectives of people with their actions.

this book is divided into three parts and this leads to talk about accounting and control and the
execution of contracts the six chapters of the second part examine the attitudes and actions of the
three classes (investors, administrators and auditors) the attention is focused in the attitudes and
actions of the agent.

MICROTECA OF ACCOUNTING AND CONTROL

These organizations are composed of individuals since they are provided and have the right to
receive compensation. In the search to find their own interest this can induce both the conflict and
copreracion. accounting and control systems are designed to ensure that conflicts do not
dominate the instinct of cooperation

and this is achieved through five functions and these are:

1. measure the contributions of all agents

2. measure and distribute the rights of each member

3. inform members about the degree of compliance with the contract

4. distribute information so that your liquidity factor markets

5. so that I can distribute certain information such as knowledge in order to help reduce the
negotiation cost in contracts
and the contracts that define their rights and obligations vary since it depends on the nature of the
resources and these resources are willing to offer changes and these agents are also willing to
participate in an organization while receiving some compensation from the organization so they
can get it. another place in exchange for the resources you have to contribute

THE ADMINISTRATORS AND THE INCOME

administrators are the most important in companies since their interests and behavior are the key
to understanding the structure and accounting and control of the company and its contribution to
the company is difficult to measure and control systems is designed so that the companies can
understand it your compensations, promotions and retentions are linked to the production data.

Senior management and their subordinates directly negotiate contracts since the public financial
information and design and the way to enforce their management contracts are not governed by
the company's standards and managers are supervised by inersionices and auditors. who deal with
many companies.

and this is that also the managers have to adopt different types of accounting methods to be able
to adjust to their own interests and the contracts are designed for their own understanding and
this document can also be understood by many riddles about the accounting forms with the
leases, portfolios difficult to collect and the investment amounts.

HAREHOLDERS, SECURITIES MARKETS AND AUDITORS

the shareholders are in second place and their contracts have four characteristics

1. the shareholders have confidence in your company to deliver all the money before they can
receive any refund

2. rights over resources are a waste

3. Your contractual rights are transferable and the stock markets of companies usually have
enough liquid

4. and the shareholders have the right to choose administrators and auditors as they wish

and the administrators are those who control the information generated from the company and
they are obliged to disseminate it selectively and since the shareholders need information to
protect the interests for administrative incompetencies or misappropriation and this is why the
companies contract the independent audit and require disclosure of verified information

the fees of the audits are the price that the shareholders pay so as not to find any deception by
the erroneous reports of the managers and to avoid that they buy insurance against the
negligence and if the information is not reviewed this can play an unsatisfactory state and
exaggerate a good performance

the role of the administrators in the process is more complex since the audit fees reduce the net
income of the company for its shareholders, for example the financial remuneration of its
administrators
all shareholders, administrators and auditors increasingly seek better accounting programs that
allow them to improve their economic conditions

MACROTEORIA OF CONTROL AND ACCOUNTING

the accounting conventions differ from their economic characteristics the conventions are those
that generate an economic value for the coordination of the agents and this tells us that none of
the values arises from the election of the conventions

CRITERIA OF SOCIAL ELECTION, MECHANISMS AND STANDARDIZED

the normalization of some aspects of accounting capture the benefits of social coordination. and
this leads us to say that it is difficult to say what is good for an individual and it is more difficult to
say what is good for a society.

the consequences of decitions are often incite and broad in time to have a standard a person must
retrieve data on individual preferences and then combine this data to know what is good for
society even if we collect some physical data can cost us and more It is difficult for a person to
reveal their private tastes and information and the most difficult thing is to know what the
individual and a society wants at the same time.

in this we can say that there are two ways to achieve rules and norms as restrictions and as reward
functions or as a punishment and if we think of them as restrictions the rules tell us what to do
and if we think of it as a reward or as punishment the rules simply give us a reward and as a
punishment for any choice without restriction.

and there are also several levels of accounting standards and a variety of motivations underlying
normalization

GOVERNMENT AND ORGANIZATIONS OF PUBLIC GOODS

the government performs three functions in accounting

first the government is a contracting agent in normal companies occasionally as customers or

sellers and always as tax collectors

since the government has to deal with millions of taxpayers and this makes the tax economy
impose relatively objective accounting methods. the bilateral monopoly between the federal
government as client and the contractors as defense

second the government always current as a large company to be able to establish laws, rules and
regulations in some parts of the accounting and negotiations between the participating agents of
an organization.

Finally, the government is itself an organization. And these contracts must also be carried out and
executed efficiently and many non-profit organizations differ significantly from commercial
organizations.