+1-817-968-5551
+61-488-839-671
+44-7480-542904
Requirement
Assignment Question 1 (10 Marks, 1000 Words)
Read the following quotation from Miller and Reading (1986, p. 64). If constituency support is necessary before particular accounting approaches become embodied in accounting standards, does this have implications for the ‘neutrality’ and ‘representational faithfulness’ (qualitative characteristics that exist in various conceptual framework projects around the world) of reports generated in accordance with accounting standards?
“The mere discovery of a problem is not sufficient to assure that the Financial Accounting Standards Board will undertake its solution … There must be a suitably high likelihood that the Board can resolve the issues in a manner that will be acceptable to the constituency—without some prior sense of the likelihood that the Board members will be able to reach a consensus, it is generally not advisable to undertake a formal project”.
Assignment Question 2 (10 Marks, 1000 words)
As Watts and Zimmerman (1986, p. 7) state, Positive Accounting Theory ‘is concerned with explaining [accounting] practice. It is designed to explain and predict which firms will and which firms will not use a particular accounting method … but it says nothing as to which method a firm should use’. Do you think that this represents an ‘abrogation’ of the academics’ duty to serve the community that supports them?
Solution
Assignment Question #1
The support of the constituency and the implication of the same for the ‘neutrality’ and ‘representational faithfulness’, is argumentative. The financial reports call for neutral and representational image. However, the neutral and representational image of the financial reports need that the fundamentals on which the report has been prepared have been constructed on the neutral ground and there are none of the external or internal factors impacting the development of the same. They need to be built keeping in purview the various accounting standards that has neutral background. Moreover, it should be considered that the developed rules and regulations are helping the accounting processes in its development in some way or the other in reference to the qualitative features.
Allassignmenthelp.com is the number one website which had helped many students by providing accounting assignment help at an affordable price. We offer different writing services like accounting dissertation help and management accounting assignment help. So, still, what are you waiting for? Place your order on our website immediately and solve all your assignment tensions and worries.
Most of the countries can witness the development of the accounting rules and regulations based on the various political musings and lengthy processes. The initializations for the new accounting standards generally begin with the preparation of a draft that is forwarded to the various parties who might have some stake in it or have any sorts of interests embedded in such development. These parties after careful considerations and going thoroughly with the report make the final submissions to the national regulatory body who defines various accounting standards. Most of the time, it has been witnessed that some of the existing or operating large companies come forward for such recommendations. They conduct such activities out of their personal necessity. Moreover, they have the enough girth to bring in people who are expert in such activities and have enough experience in handling political, legal, and bureaucratic processes. These people, backed by the funding from the large corporation, submit the recommendations to the concerned authorities. However, it is the duty of the regulation body involved in the process of defining the standard that they thoroughly analyze the complete recommendations and evaluate the merits and demerits of the recommendation. In practical, these bodies involve in fruitful (sometime unfruitful) arguments with the people recommending the changes prior to making any changes. These argumentative meetings are conducted to understand and consider each specific part of the recommended changes.
Most of the time it has been observed that the recommendations coming from any specific constituency brings in the various inputs backed by the differences embedded in the culture, personal orientation towards any specific standards, and more. These differences have the possibility of impacting the recommendations related to accounting standards. The decision making needs to consider all these difference in the perspectives and external and internal impacts of the variety of factors and then come with suitable decisions. It can be stated at this point that the accounting standard defined by one constituency (or a nation) will be different from the accounting standards defined by other constituency (or a nation). The reason, as stated above, is embedded in the cultural differences and various other orientations and expectations. One can sight the difference in the standards that has been developed to address similar issues.
Most of the current efforts related to standardizing the accounting regulations at international level rarely tries to consider that the various accounting standards defined in the different countries are backed by the culturally grounded norms and orientation. Therefore, the imposition of an international standard might not be a neutral and acceptable form for everyone. The influence of the cultural values and understanding should be a must factors to consider in such things.The cultural impact on the accounting decisions can be explained through certain examples. For instance, in Islam most of the accounting decisions and practices are governed by their specified rules and regulations those cannot be found anywhere else. The accounting practices in the Islam are seen with great regard and not a mere method to make financial recordings. It is in their belief that they will be accountable to even a single dollar they earn or spend and they will be asked about these from Allah on the Judgment Day. On the other hand, the orientation of the Christians regarding the accounting is bit different than the Islam. In the earlier phase of middle ages, the Christian community regarded faith and business disciplines together and mos of their financial and accounting standards saw greater implications. However, the end of the middle phase saw disintegration between the faith and the businesses. The accounting saw freedom from the religion and thus seems to be entirely from still religiously dominant Islam methods of accounting. The accounting standards saw more orientation towards rational decisions rather than the emotional and conventional thinking.
One of the key elements that are concerned with the standard setting is the setters who try to look for public support for the decisions or efforts made by them. Their greediness for public support allows them to make decisions that are more politically motivated and less oriented towards standardization. In such scenario, it seems to be challenging for a sound mind to consider that the accounting standards developed will be neutral and representational for all. The objectiveness of the documents seem to loose authentication the moment any political orientation interferes in there development. Therefore, if theabove stated positions are considered to be acceptable, then it can be stated that if the fundamental development of the accounting standards are not based on sound ground then it is doubtful that the financial records or reports will be neutral and representational as per the faith in the same is concerned.
Assignment Question #2
Defining the act of most of the academicians – who does not prescribe any solutions and only pick the option of explanation and prediction of any situation or phenomenon – as turning away from serving the community would not be a preferable decision due to various interesting reasons. Presenting prescription or explaining or predicting any particular phenomenon can be stated as the matter of personal opinion. Researcher such as Howieson (1996) has mostly reflected such tendencies and that seems perfectly acceptable to the academic community. As per Howieson, the academicians just act as a guiding light for the practitioners. Due to the lack of ample time to spend on theoretical ground, the practitioners rarely get opportunity to improve on the previous conducted researches. This is where the duty of academicians falls in place. They conduct the research for the practitioners, understand the underlying phenomenon around the activity a practitioner wants to indulge in or are likely to decide upon and suggest suitable areas those are imperative for the practitioners to consider. The academicians’ duty can be stated as ending where they amply justify what is important for the practitioners to understand to take ahead their practice with further improvements.
The theorist who are into applying Positive Accounting Theories, rarely prescribe anything specific for any certain situation. They seldom use the term ‘should’ while discussing their findings. The reluctance of such theorists towards not presenting their findings with a solid prescription has created much of the hot air around the academic community. Their theories have mostly been criticized due to the same reason.
Positive Accounting Theory deals with the explanation and prediction of accounting practices. Such orientation of Positive Accounting Theory is different from that of the normative accounting theories that generally focus on developing the explanation of certain issues and also makes prescriptions to handle those situations or phenomenon. The emergence of Positive Accounting Theories can be dated back to 1960s when the era saw proliferation in the empirical studies related to accounting. There are various things that are predicted by this theory such as the actions related to accounting policies certain firms will be taking in specific situation or the way firms will be reacting to the change in the accounting standards. The major idea behind this theory is to predict the events and help them get translated into some way of accounting transactions that can help practitioners make informed decisions. The Positive Accounting Theory sees the firms as those who focus on maximizing the profit and, therefore, they act in such an organized manner and with such efficiency. Moreover, Positive Accounting Theory states that as the focus of the firms is on organizing themselves further to make more profit, therefore the firm will try to reduce the costs related to the other kinds of contracts. Some of the types of the contracts considered to be cost oriented are negotiation and renegotiation, and costs related to monitoring. The Positive Accounting Theory also states that the firms generally orient themselves toward more flexibility while they make selection with the accounting policies as the firms face various situations that are constantly changing with change in times.
Positive theory, in general, has the tendency to only describe what is happening and brings out certain metrics that helps the practitioners predict what might be expected from the particular event. However, it never gives prescriptions on using any particular activity for the current or future actions. Watts and Zimmerman – who were central to most of the progress related to Positive Accounting Theory – has stated that the researches those are not influenced by the personal orientation of the researchers and does not consider inclusion of personal values and beliefs of the researchers in the research results are the most appreciable ones. Moreover, they suggest that if the researchers are taking the step to prescribe something out of their research then they are certainly not moving ahead with the research those are value based. Such researches induce people to what they ‘should’ do if a certain situation comes up and rarely allows the practitioners to use their conscience in such situations.
Place Order For A Top Grade Assignment Now
We have some amazing discount offers running for the students
Place Your OrderOne of the interesting things that can be appreciated here is that none of the researches can be stated as of providing no value to the community. In some way or the other they act as contributing pillar to the community and to the practitioners, for instances, if the theorists specializing in Positive Accounting Theory considers the assumption of people being self-interested when the matter wealth maximization creeps in, then it can be stated that these kinds of assumptions are based on certain judgments those provide value in return.The researches conducted by the Positive Accounting Theorists do not generally focus on providing the prescription. However, they mostly focus on the future outcome of certain events and predict the implications of the same. Such definition of certain events and phenomenon provide practitioners enough insight into the areas they should be considering prior to investing their further effort into their activities. It helps the practitioners make sound judgment and take informed decisions. The Positive Accounting Theorists provide enough background and fundamentals over certain problems that practitioners find it easier to develop their personal prescription about the situation they are facing or about to face. Therefore, it can be stated that the Positive Accounting Theories provide appreciable amount of contribution to the society or the community.
References
-
Avelé, D. (2014). Positive accounting theory: theoretical and critical perspectives. IJCA, 6(4), 396. http://dx.doi.org/10.1504/ijca.2014.067244
-
Demski, J. (1988). Positive accounting theory: A review. Accounting, Organizations And Society, 13(6), 623-629. http://dx.doi.org/10.1016/0361-3682(88)90036-0
-
Godfrey, J. (2006). Accounting theory. Milton, Qld.: John Wiley & Sons Australia.
-
Riahi-Belkaoui, A. (2004). Accounting theory. London: International Thomson Business.
-
Richardson, G. & O'Malley, P. (1995).Ethics and positive accounting theory. Waterloo, ON: Centre for Accounting Ethics, School of Accountancy, University of Waterloo.
-
Watts, R. & Zimmerman, J. (1986).Positive accounting theory. Englewood Cliffs, N.J.: Prentice-Hall.
-
Wolk, H. (2009). Accounting Theory. Los Angeles: Sage.
.
Give your grades a boost
Just share your requirements and get customized solutions on time.
-
1,168,768 Orders
-
4.9/5 Overall Rating
-
5,052 Experts
