Accounting is a very broad field of science. Because it can combine with various other fields of science, including social sciences. One of the accounting sciences which is the result of a combination with other fields of science is Behavioral Accounting. The following is a complete explanation of one of the branches of accounting science.
Definition of Behavioral Accounting
Accounting is a very broad field of science so it can be combined with other fields of science. One of the fields of science that can be combined with accounting is social science. The result of the combination of accounting science and social science is known as Behavioral Accounting.
In this field of science, human behavior is taken into account to see its effect on accounting data. Not only in a one-way form, this field of science also studies how accounting influences human behavior.
Especially when making decisions related to business. In other words, this branch of accounting studies the relationship and influence between human behavior and the accounting system and vice versa.
Scope of Behavioral Accounting
In this branch of accounting, decision-making must involve how a person behaves as a consideration. By considering human behavior, it makes the emergence of social aspects in the field of accounting science. The scope of accounting related to human behavior includes:
1. Studying human behavior and behavior towards construction, building, and consuming accounting information systems applied in a company or organization. That is, the scope of accounting can see how leadership style can affect the nature of accounting control and design in the company or organization.
2. To examine the effect of the existence of an accounting information system on all human actions, which means seeing the effect of the accounting system on performance, productivity, cooperation, to decision making.
3. A method that explains and predicts human actions and behavior and creates a strategy to change those actions. The point is to use accounting to influence human behavior and overcome the resistance of human behavior.
Aspects of Behavioral Accounting
This branch of accounting also has various important aspects like other branches of science. By Schiff and Lewin (1974) said, there are five important aspects that exist in one of these accounting fields. The five aspects are:
1. Organizational Theory and Management Behavior
The discussion about the behavior of the components of the corporate entity is discussed quite deeply in this modern organizational theory. The attention of modern organizational theory explains their behavior as a basis for seeing the motives for the various actions they take.
The modern organizational theory sees that there is an influence from the interaction between each element in an effort to support the goals of an organization or company.
More specifically, modern organizational theory in accordance with what was conveyed by Schiff and Lewin focuses on the behavior of each component in directing organizational goals, providing motivation, to displaying characteristics in problem-solving.
Because under certain conditions, motivation plays an important role in the commitment that affects job satisfaction. The purpose of an organization or company is seen from the perspective of modern organizational theory, is the result of the process of influencing each element.
The influence on each of these elements results in motivation and organizational commitment. So when viewed further, there is a reciprocal relationship between organizational commitment and job satisfaction.
2. Budgeting and Planning
In addition, the goals of the organization or company must also be formulated and make it the focus of budgeting and planning. In addition to goals, budgeting and planning must also be focused on seeing the behavioral interactions of each individual.
Budgeting, the level of difficulty in achieving goals, to conflicts between goals are part of the dimensions referred to in this area. All these dimensions must be considered so as to create harmony between the goals of the organization or company with the goals of each individual.
The alignment between these two important parts can later become the foundation for the development of an organization or company by the management team.
3. Decision Making
Another aspect that is included is the decision making which is the focus of modern organizational theory. In this theory, there are three models introduced as decision-making methods, namely: the normative model, the paradoxical model, and the descriptive model. The normative model is a state of decision-making by someone according to the circumstances they should be.
While the normative model discusses the opposite of the normative model. The descriptive model in decision-making theory looks at a person’s condition when making decisions by looking at the facts. The information used when making this decision is accounting information.
4. Control
Another aspect that is no less important in an organization or company is the control aspect. The level of control is directly proportional to the size of an organization or company. So that the level of control will be more incentive along with the development of an organization or company.
This aspect relates a lot to the individual’s performance and adaptability to the surrounding environment. An important part in the control aspect is the existence of a clear organizational structure, administrative hierarchy, and internal control.
In the latest developments in the control aspect, the environment plays a key role in controlling the operations of an organization or company. Previously, the environment was not included in this control aspect.
5. Financial Reporting
Behavioral aspects in the accounting field also include how financial reporting includes income smoothing, the reliability of accounting information, to the relation of accounting information to investors.
In this case, income smoothing is due to the existence of special information owned by the management to realize its interests in the part to carry out earnings management.
Benefits of Behavioral Accounting
The field of behavioral accounting provides enormous benefits for managers or management of an organization or company in making decisions. In this field of science, you can see how the decision-making process is seen from the existing accounting system.
This field of science has a very close relationship with the economic sector. This field of knowledge becomes the science that is most needed when the decision-making process occurs.
The greatest benefits can indeed be felt by managers when making decisions. Because the manager’s emotional condition seeing accounting data will have an impact on the decisions that will be taken by them.
Examples of Problems and Applications in Behavioral Accounting
Generally, there are three examples of problems that are often encountered when conducting research related to one of these accounting fields. The three examples of these problems are about decision-making by accountants and auditors, their effect on the functioning of the accounting system, and how the results have an impact.
These three problems are closely related to the application of this field of accounting science. Behavioral accounting plays a very important role in an organization or company. In particular, how accounting data can influence decision-making at the management level.
And conversely, this branch of accounting also looks at how decision-making at the management level can have an influence on the accounting system or information obtained. In essence, this branch of accounting is the branch of science that is most needed today.