Third Biennial International Accounting Research Conference

1. SOME REFLECTIONS ON THE ARCHETYPES AND THE COLLECTIVE UNCONSCIOUS IN COST ACCOUNTING: AN EXPLORATORY STUDY Third Biennial International Accounting Research Conference

2. BASIC PREMISSES The adoptions of the costing method usually known as “full cost”, materialized in the forms of absorption costs and of “activity based costing”, generates inadequate information for the profitability analysis in the managerial field.  Individuals behave guided by their faiths (or beliefs) and values and a great part of those faiths and values that condition people’s behavior strongly flow from unconscious processes.

3. HYPOTHESES  H1: Based upon the premise that certain concepts and procedures have been proven to be not useful for the process of making managerial decisions in the field of cost accounting, a hypothesis is established that such concepts and procedures are nevertheless accepted for managerial purposes, by decision makers, by professors and by researchers, who have high intellectual levels, linked to the area of cost accounting. In this way it can be inferred that certain causes of natural behavior should exist that drive and induce these people to accept such concepts.

4. HYPOTHESES  H2: Based upon the premise that the process of reflection induces people to change their perceptions, faiths, values, concepts and behavior, a hypothesis is established that the Master’s/Doctorate Course in Controllership and Accounting from the School of Economics, Administration and Accounting (F.E.A.) of the University of São Paulo (U.S.P.), due to its approach of stimulating the process of reflection, constitutes an effective instrument to change the form of thinking of the students.

5. OBJECTIVES  The fundamental objective of this work is to develop a reflection on the causes of the acceptance of concepts that have been proved as ineffective for the administration of companies by a large number of people in the accounting area, using the fundamental concepts of the Jungian path of psychology. Exploratory work To raise propositions No conclusive Indicates the sense of direction

6. METHODOLOGY OF RESEARCH  Review of the literature on the Jungian path of psychology;  Review of fundamental works in the area of cost accounting backed by the focus of this study;  Exploratory research made among the students of the Master’s/Doctorate Course in Controllership and Accounting of F.E.A. - U.S.P.

7. FUNDAMENTAL CONCEPTS OF JUNGIAN PSYCHOLOGY INDIVIDUAL’S TOTAL PERSONALITY visualized like a sphere composed by several layers: the most external layer relating to the field of conscience; the layer immediately below corresponding to the personal unconscious; and in the sequence we have the layer of the collective unconscious, where the archetypes appears.

8. SELF-UNCONSCIOUS OF A DETERMINED GROUP. The psychology of a Brazilian is not, with certainty, equal to the psychology of a Japanese man or woman. Jung observes that: “as well as we can ponder the existence of a corresponding differentiation to each race, to each tribe, to each family, we too can also verify the existence of an unconscious layer that corresponds to each one of those human groups”. This concept is fundamental for the logical linkage of this work in the field of cost accounting

9. THE INFLUENCE OF THE UNCONSCIOUS IN HUMAN CONDUCT The unconscious factors in a general way, impact a great deal to the performance of human beings. If the individual doesn’t act (to think and to perform) consciously he or she will do it in a unconscious way. Jung mentions that: “The great decisions of human life are, in rule, much more subjected to the instincts and other mysterious unconscious factors than to the conscious will... ”. Jung affirms that reflection is an extremely important instrument to get conscious:”In my opinion, faith doesn’t exclude reflection ( the strongest weapon of man)”.

10. COLLECTIVE UNCONSCIOUS AND ARCHETYPE: A PARALLEL WITH THE UNCONSCIOUS OF COST ACCOUNTING  The factors of the unconscious are present in the different dimensions of human performance: in religion, in the family relationship, in the field of technical professions, in sciences, in sports, etc.  Although we cannot characterize the existence of archetypes and collective unconscious in the field of accounting, according to the precepts of Jung’s theory, we can however, make a parallel with the one the was named self-unconscious by a determined human group.

11. COLLECTIVE UNCONSCIOU AND ARCHETYPE: A PARALLEL WITH THE UNCONSCIOUS OF COST ACCOUNTING  The characterized group is composed of professional in accounting, students, authors, professors, users of the accounting information.  In our opinion, accounting is a millenarian activity which possesses a common psychic base that is similar to the concept of group self-unconscious, constituting of a type of collective unconscious of accountants and people subject to their influence, in the breast of which an unconscious stratum exists with specific form-thought.  The existent form-thought in this “unconscious of accounting”is very strong because it is incorporating customs, traditions, habits and thought systems that have been accepted by many individuals for centuries, perhaps millennia.

12. SOME BRIEF REFLECTIONS ABOUT THE FORMATION OF THE UNCONSCIOUS IN COST ACCOUNTING  The procedure of calculation of the total cost of the product and formation of prices starting from costs plus total margin already belonged to the group unconscious of cost accounting. Double entry bookkeeping appears in XII and XIV centuries in the north of Italy; German system by Schamalenbach based on ideas developed in the XVI century; Calculation of product costs in the old “manor” of England since the XII century

13. SOME BRIEF REFLECTIONS ABOUT THE FORMATION OF THE UNCONSCIOUS IN COST ACCOUNTING  We can infer that “full cost” procedures came to be formed by the sediment in the collective unconscious of a group of people in accounting bind by the process of repetition in a conscious or unconscious way for more than eight hundred years.  Those procedures was influenced by unconscious forces similar to archetypal forces.  In 1929: Consolidation of archetypes.  In 1936: Some reflection by Jonathan N. Harris  The decades of the 60’s and the 70’s: rich in reflections, but...  In 1937: German RKW

14. SOME BRIEF REFLECTIONS ABOUT THE FORMATION OF THE UNCONSCIOUS IN COST ACCOUNTING  The decade of 80’s: decade of criticism to cost accounting;  “ABC” system:developed influenced by the dominant archetype;  “ABC” correspond to the old “archetypes” of the group self-unconscious of accounting, only remodeled in form and sold within modern clothing under its own terminology of the XX century.

15. THE EXPLORATORY STUDY Two groups each formed by twenty students:  Group A: students recently admitted into the program;  Group B: students that already concluded the program; Premises: Both groups have equivalent intellectual levels; The referred course conciliates reflection process that can lead to conceptual changes.

16. THE EXPLORATORY STUDY The research document used constituted of a group of ten statement with tree alternatives: a) I agree fully b) I disagree completely c) I neither agree, nor disagree The statements were established in a way to differentiate the researched groups

17. ANALYTIC EVALUATION ILLUSTRATION 1: Evaluation of Item 1 Item 1 - The method of absorption costing, applied in compliance with the accounting principles, is an inadequate method for the inventory valuation of work in process and of finished products and for the verification of the managerial result of an industrial company shown by the accounting process.

18. ANALYTIC EVALUATION ILLUSTRATION 2: Evaluation of Item 2 Item 2 - The balance sheet and the Income Statement, prepared in accordance with the accounting principles, generate important information for the managers of companies.

19. ANALYTIC EVALUATION ILLUSTRATION 3: Evaluation of Item 3 Item 3 - The unit product cost computed in agreement with the absorption costing method is an important element in the process of calculation of the sale price and analysis of profitability of products.

20. ANALYTIC EVALUATION ILLUSTRATION 4: Evaluation of Item 4 Item 4 - The system “ABC - Activity Based Costing”, through the cost drives and activity centers, does not constitute an effective tool for the strategic administration of indirect costs of a company.

21. ANALYTIC EVALUATION ILLUSTRATION 5: Evaluation of Item 5 Item 5 - The budget is actually a system of accounting information of the area of the Controller and not an instrument of the financial area of the company.

22. ANALYTIC EVALUATION ILLUSTRATION 6: Evaluation of Item 6 Item 6 - The standard cost of a product corresponds to the correct cost. The actual or historic costs is jus a cost that occurred.

23. ANALYTIC EVALUATION ILLUSTRATION 7: Evaluation of Item 7 Item 7 - When a country has low inflation, as it is now in Brazil, it is not worthwhile to have procedures in the accounting system to handle inflationary effects.

24. ANALYTIC EVALUATION ILLUSTRATION 8: Evaluation of Item 8 Item 8 - The accounting principles constitute guidelines and safe orientations for the generation of effective information for the process to take managerial decisions.

25. ANALYTIC EVALUATION ILLUSTRATION 9: Evaluation of Item 9 Item 9 - It has come the time for the system of accounting to register physical quantities and not only monetary values.

26. ANALYTIC EVALUATION ILLUSTRATION 10: Evaluation of Item 10 Item 10 - The use of market prices in accounting, instead of prices actually incurred, operates against the principle of objectivity, placing at risk the process of generating reliable accounting information.

27. GLOBAL EVALUATION -pos: average of the answers considered appropriate (positive) in the light of the established premisses in this work. -neg: average of the inadequate answers (negatives) -ind: average of the answers of the type that neither agrees nor disagrees (indifferent)

28. TABLE 1: Classification of the Researched Results GROUP A GROUP B Items -pos -neg -ind -pos -neg -ind Item 1 40% 35% 25% 65% 15% 20% Item 2 5% 70% 25% 70% 5% 25% Item3 55% 35% 10% 85% 0% 15% Item4 10% 55% 35% 45% 35% 20% Item5 10% 60% 30% 50% 30% 20% Item6 20% 65% 15% 70% 5% 25% Item7 85% 0% 15% 90% 0% 10% Item8 10% 55% 35% 80% 10% 10% Item9 45% 30% 25% 75% 0% 25% Item10 50% 10% 40% 75% 10% 15%

29. Average-group B Average-group A ind pos ind 19% 33% 26% neg 11% pos neg 70% 41% ILUSTRATION: Global Evaluation

30. CONCLUSIONS  The results of group of students recently admitted in the Master’s /Doctorate Course indicate the validity of H1 hypothesis.  The study in synthesis indicates the validity of H2 hypothesis. The course leads students to reflection that change positively their form of thinking.  Among the students that had already passed through the Course, some were not able to get rid of the old thought systems.  Researchers and the investigators of accounting should be in a process of constantly questioning the concepts and techniques to get the truth in terms of scientific knowledge.