A KANTIAN ANALYSIS OF FINANCIAL ACCOUNTING

Financial accounting is analysed using Kant’s Critique of Pure Reason (1787). It is assumed that Kant’s analysis of the nature of human cognition is valid, specifically that relating to the existence of a priori synthetic judgements, space and time as a priori forms of intuition and especially that relating to the faculty of the understanding, i.e. its categories of quantity, quality, relation and modality. These Kantian terms are explained and then applied to the statements of financial position and comprehensive income. It is concluded that, at least philosophically, neither the statement of financial position nor that of comprehensive income can be preferred one over the other because each understands the empirical data given by intuition as if presupposing a different but equally necessary category of relation. A philosophical basis is provided on which to challenge recent financial accounting research (AAA FASC, 2010) claiming that the statement of comprehensive income is central in financial accounting. Additionally, it is shown that, again contrary to recent research (McKernan, 2007), financial accounting behaves as if it is based upon philosophical presuppositions. This is the first financial accounting research paper to use Kant’s philosophy in this applied and detailed manner. Its contribution lies in the structured and systematic manner in which the subjectivity of financial accounting is laid bare.