Applying Wand and Weber's Surface and Deep Structure Approaches to Financial Reporting Systems

Abstract

Wand and Weber's fundamental premise is that 'a physical-symbol system has the necessary and sufficient properties to represent real-world meaning'. Their representation of real-world meaning flows from three possible information system models: representational, state-tracking and de-compositional. We address these three types of information system in the context of financial reporting systems and we use purchased goodwill and other intangible assets to selectively critique their characteristics. The principle feature of this critique is the comparison that is made throughout the paper between an economic and an artefactual (physical-symbol) representation of assets, particularly the intangible ones, in the financial reporting domain. Wand and Weber (1990a, p. 61) state that surface structure characteristics manifest the nature of the interface between the information system and its users and organizational environment, whereas deep structure characteristics manifest the meaning of the real-world system that the information system is intended to model.

Ambiguity of financial environmental information

“…' (Group Controller 8) In this sense, financial environmental figures are no different from other financial reports; for example, statements of fair value require the expert opinions of accountants (Bennett et al, 2006). As noted by Tollington and Spinelli (2012), financial reports are not just representations of the firm's economic reality, but also the result of a process in which they are constructed, negotiated and evaluated by company employees. The figures also are constructed by accountants, who may view the data as statements of their expert judgement and professional opinion (Ahrens, 1997).…”

“…Similarly, while financial accounts are deemed to be an accurate representation of a firm's economic reality, they are also representative of a firm's socially constructed processes (Tollington and Spinelli, 2012). Importantly, gaps between organizational actions and their representation exist also because accounts are not the outcome of a deterministic process, but rather are constructed by accountants.…”