Accounting in Complementary Currencies

​One of the pitfalls of the Complementary Currency (CC) field of study is the lack of research in the institutionalisation and governance models. CC tend to be informal responses to social and economic tensions and rarely have engaged in a formal and structured process of institutionalisation. However, if governments want to adopt or even design CC that strengthen their communities and aim for a sustainable future, it becomes important to study how can they be managed and controlled while allowing the individuality embedded in GI. Management accounting, has already approached the governance challenge in organisations, and might be useful for the study of CC. Malmi and Brown (2008) define management controls as “all the devices and systems managers use to ensure that the behaviours and decisions (…) are consistent with the organisation’s objectives and strategies”. The authors identified five types of management controls: cultural, planning, cybernetic, reward and compensation, and administrative controls.

In CC literature the main focus has been in the practical aspects of governance (e.g. rules for participating in the CC; exchange fees; community trust-building activities) however, little has been said in regard of the management of CC as organisations. There might be a space for development in CC field of study since accountancy theory has already researched how organisations, in  different context though, can be managed through control mechanisms. However, research has identified that the current management control systems “(…) can even create dysfunctional trade-offs between social, environmental, and economic objectives instead of seizing their synergies” (Lueg and Radlach, 2015, pg. 159). This presents a difficulty if the sustainable practices that the Agenda 2030 advocates for are to be embedded in CC governance models.

Lueg and Radlach (2015) studied how sustainable development has been integrated in different organisation’s control systems. The authors observed a tendency for controlling sustainable development, mainly through cybernetic and administrative controls, and suggested that this might occur due to “the fact that organisations had already employed them (cybernetic and administrative controls) to measure financial performance (…) (and) they extended them to sustainable development without considering other forms of control” (Lueg and Radlach, 2015, pg. 161). However, this p r a c t i c e o f i n s e r t i n g s u s t a i n a b l e development in controls originally designed for financial performance, creates tensions between the social, economical, and environmental values that future governance practices should consider. Thanks to technological developments, a common practice in CC is their development as digital currencies and now is possible to extract real time data, for analysing and accountancy. For example, in Kenya, Grassroots Economics Foundation has develop a blockchain based cryptocurrency that is able to record how the currency are being used in a transparent and technologically secure way, allowing communities to register data that could be used for the development of cybernetic controls that embed accountancy values that are aligned with the 2030 Agenda.

In order to better understand the importance of terminology and notions that define the values embedded in the governance mechanisms for CC, financial accountancy theory might be of use. As Zhang and Andrew (2011) argue in their study of neoliberalisation of control frameworks, accounting frameworks provide coherence and legitimacy for the practices that want to be reinforced. In the process of framing accountancy practices, Zhang and Andrew (2011) point out the importance in defining the identity of the users and the purpose of the reporting. The authors argue, that these users have a considerable influence in the conceptual and technical components of the accounting information. In this process, the choice of language and terminology becomes of great importance since “(…) the recognition of this has the capacity to empower users to engage critically with the reporting process and to consider the kinds of assumptions that underlie a report” (ibid, pg. 22). Moreover, Sandell & Svensson (2014, pg. 9) suggest that financial reports ”partake in the symbolic production and reproduction of reality”.

​Language has an important role in the way organisations account to their stakeholders. Sandell & Svensson (2014) explain how through textualization and contextualisation, financial reports “explicates, explains, justifies, and makes sense of the financial measure in the financial reports” (ibid, p.6). Moreover, they describe how organisation use verbal accounts as discursive responses to evaluations and questionings, and in consequence frame the preferences and organisational processes that favour certain decisions and legitimise the interests of particular stakeholders (ibid). This framing practice can be seen in CC in many aspects. For instance, CC are usually named based on the values they want to promote, for example in Kenya the ECO-Pesa was named due to their environmental objective. In other cases they are named based on the community’s cultural identity. An example of this can be found in Spain, where a CC called “Turuta” makes reference to a dance originated in Catalunya, region known for its independence interest. CC are mainly developed for localised contexts each with unique values, interests, and problems. In consequence, even though the concepts brought from accountancy theory might be applicable to CC, it is important to study the discourses language and communication practices that are relevant for the CC. Thus, in order to use accountancy theory it is worth asking how can CC be understood as organisations embed sustainability values, motivations, and local? I believe that communicative theory of the firm will allows to approach this question.