Organisational Plurality

All the above comments tend to presuppose that the goals of an organisation are established by the owners and communicated, albeit imperfectly, down the managerial hierarchy to influence decisions and actions of those working in the organisation on behalf of the owners. The double-entry structure of the accounting database reflects and reinforces this overall principal-agent relationship. However, in large organisations the reality is quite different. The organisation is a political coalition with every constituent individual or group: shareholders, directors, divisional managers, department managers, foremen and workers all having their own individual goals and spheres of influence. At all levels, the temptation to put individual or group interests first frequently influences the decisions taken. The 'creative' use of accounting information, which often provides the only formal information source used to evaluate an individuals decisions and performance,

often enables individuals pursuing private goals to conceal their actions from higher tiers of the hierarchy, particularly where accounting systems are poorly designed and accounting numbers are relied on excessively for performance appraisal.

The pursuit of private interests that conflict with the organisation's owners' interests might go as far as fraud, but they will much more frequently be characterised by a tendency to make the most of 'perks', avoid hard work, take decisions that favour friends etc. Of course an opposite effect may also occur where an individual who works hard and takes the best possible decision in the interests of the organisation's owners' based on detailed operational knowledge not available to higher levels of the organisation, finds that his or her good performance is not properly reflected in formal reports and goes unnoticed and unrewarded.