Accounting Control Systems: A Viable System View

Abstract

Recent management control research considers how performance management systems (PMS), conceptualized as packages of controls with competing objectives, operate in an integrated fashion. Larger organisations must also consider how to achieve integration across organizational levels. It is not clear from traditional accounting-based frameworks how this coherence is achieved. The viable system model (VSM), a theoretical framework drawn from the field of organizational cybernetics, explains how components of control systems are integrated. Nonetheless, management control researchers fail to recognize the potential of the model. Their reluctance to use the VSM may reflect past criticisms of the model, including it is difficult to understand, cannot be applied in practice and provides no additional insights. Alternately, they may simply be unsure how the model accommodates accounting controls.

This paper finds the criticisms of the VSM to be unjustified and argues for greater use of the model in accounting control research. The intelligibility of the VSM is advanced by highlighting similarities between the model and accounting control frameworks, and developing an accounting-oriented VSM that clarifies how accounting controls are handled in the model. The practicability of the model is confirmed by using the VSM to depict the performance management system of a tertiary institution. The insights developed from the competed model extend those available through traditional accounting-control frameworks. Adoption of the VSM will enable control researchers to: succinctly depict multi-level control systems; assess the completeness (existence) of control systems; distinguish between dimensions of control; assess inter-level alignment of control processes; and synthesize the findings of research adopting different control frameworks.

Keywords: viable system model; balance in control systems; levers of control, performance management system; control frameworks; dimensions of control