The Triple Bottom Line (TBL) accounting concept and framework was first created by John Elkington in the mid 1990’s, and has since changed the way for-profit, non-profit and government agencies measure the sustainability of their initiatives and company. The TBL framework is flexible and can be adopted and molded based on the specific needs of an organization. The framework is comprised of three parts, which are: social (People), environmental (Planet), and financial (Profit), commonly referred to as 3Ps. This framework does spark debate regarding the ethical problems behind measuring, quantifying and accounting for social and environmental variables, which is often not supported by many
SFAC No. 8 addresses the cost constraint on useful financial reporting, “Cost is a pervasive constraint that standard setters, as well as providers and users of financial information, should keep in mind when considering the benefits of a financial reporting requirement.” (SFAC No. 8 BC 3.47) However, the ability to place a dollar value and fully enumerate a cost or benefit is almost an impossible task for standard-setters. Additionally, there is no way to successfully identify and measure all of the economic consequences associated with a new standard. The FASB should be applauded though for advancing uniformity in accounting standards, however; uniform financial reporting suggests a one size fits all approach. “Smaller, non-publicly listed firms (and their auditors) argue that accounting standards are formulated mainly for larger, publicly traded firms” and that “compliance costs are disproportionately higher and the
Upon reviewing your post, the insights I gain are the importance of companies following the rules and regulations enforced by The Securities and Exchange commission (SEC). In addition to the (SEC) financial accounting are also monitor by the Financial Accounting Standards Board (FASB) regulate the financial statements issued to shareholders. Zimmerman, J. L. (2014). I also realized the importance of companies making certain that the financial information posted, is accurate. By doing so, they help others such as stockholders and investors to make decisions that will be most beneficial to them.
The purpose of accounting is to record the financial information, such as transactions and performance, related to a business. The accounting profession has been in existence for as long as business transactions have occurred. It wasn’t until 1494, however, when Luca Pacioli, a Venetian merchant, wrote Summa de Arithmetica, Geometrio, Proportioni et Proportionalita. His writings described a two-entry system of debits and credits, which became the basis for modern accounting systems. Three centuries later, with the emergence of the Industrial Revolution and the development of corporations, the profession of being an accountant became a necessity to keep track of the rising costs and cash flows. As a result, the American Association of Public
My recommendation would be to sample years that are passed 2002 and on to get a more accurate result for the study. I felt like there was so much going on with testing before and after the events took into effect. Even though it was a good size of sample and enough quarters from where to gather information from the time frame plays an important role. The Regulation Fair Disclosure that took place in October 23, 2000 made a great impact towards the way information was not allowed to be disclosed. I feel that it took an effect on the results since the information was gathered that year and was dealing with information asymmetry. In Li, Ha and Nabar (2014) they conclude that there is a difference that exists between pre and post regulation fair disclosure. The authors mention how the stock prices after the fact were more precise in relation to stock splits than before regulation fair disclosure took place. Also, with Sarbanes Oxley Act taking effect in 2002 could also have more managers disclosing information more voluntarily than before it took effect. In Aftermath (2015) he states that SOX arose because of the number of scandals that had taken place. So, with this said it shows how the disclosing of information is important and now that it is implemented will help in lowering the risk of having unreliable information. On another note as for the equations that were used throughout the paper I find them quite interesting and understandable. As well as the variables that were used in the tables are clearly defined and the tables do provide evidence to sustain their
The field of accounting is constantly evolving. This is true not only for the theory of accounting itself but also the entities that govern its theory and practice. Presently, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are faced with some of the biggest challenges to date. To understand the significance of these two boards, it is necessary to understand their histories, relations between the boards, and the standards that they set. Also how the knowledge of these boards and the field they lead, gained through the masters of science in accountancy
The second section of this report looks at the first recommendation which suggests firms to report different set of accounting information for its different users. Professional investors are very critical of the two approaches put forward as they do not want exclusion on financial information. The third section of the report looks at the second recommendations on how auditors can play a significant role in encouraging firms to omit immaterial disclosures. Profession investor can rely on auditor’s notes on materiality of financial disclosures when making financial judgments however there are still questions on what is thought to be material. The final part of the report
Why do we study comparative accounting? Countries around the world have different aspects such as taxation, legal systems, culture and colonial influence that differ the way accounting is reported. Ultimately the need for fair presentation is the final objective to comparative accounting. Thousands of years ago when accounting was first practiced, each country practiced financial reporting according to the power and strengths in their country, regardless of how accounting was reported in neighboring countries. Nowadays, because the world is becoming more globalized and harmonized, standard-setters feel the need to report their accounting in a uniform way. The International Accounting Standards Board [IASB] was formed as a non-for-profit
Gray identified four widely recognised accounting values that can be used to understand a nation’s accounting practices, which are professionalism, uniformity, conservatism and secrecy (Doupnik & Perera, 2015, p. 37). Professionalism verses statutory control is understood to be the difference between a nation’s preference for either individual professional judgement and self-regulation
As the complexity of our financial economy develops it is important that our accounting standards progress in accordance. Accounting is very important to the development of the global and local economies. Accounting is basically the gathering, summarizing and presenting of financial information of an entity to interested internal, external and possible investors. This information should be presented in a non-bias way so that other people are able understand.
To be ethic, to be responsible to the society should be the new role of accounting in society. That’s the reason critical perspective accounting have been put forward. It is a theory that questions prevailing social order and how accounting practices actually contribute to inequities. One breach of it is to provide a sustainability report or tribe bottom line that report the social, environment and economic.
Baruch Lev and Feng Gu authors of “The End of Accounting and The Path Forward for Investors and Managers” indicate that over the past 110 years, the structure and content of financial reports has not changed, and that the role that these reports play in influencing the decisions of investors has greatly diminished. Lev and Gu make a case that non-transaction events that are not captured by the financial reports such as those disclosed through 8-k filings with the Securities and Exchange Commission (“SEC”) have a greater impact on stock prices, and thus more useful to investors. In addition, they suggest that one of reasons for the decline in usefulness of financial reports stems from the increase of estimates that has made its way into these reports (Lev and Gu 2016).
Accounting is the language of business. It is a profession that is being guided by principles, concepts, conventions, laws, etc. All these fundamental building blocks serve as common and general compasses to all practitioners of the profession. In some cases, they are nation-wide tailored, while in other cases, they are universally tailored. Accounting as a living, practical, dynamic and realistic profession covers so many areas of social, economic (business), and governmental activities. Surely, any endeavour that involves monetary and material activities create a room for the services of Accounting. Many of the human endeavours for which the accounting profession plays significant (some times inevitable) roles include; Banking, Insurance, Manufacturing, Farming Contracting, Oil and Gas, Mining, Transportation (Air, Land and Sea), Educational Institutions, Churches, Ministries, ICT, Hire Purchase, Local Government Authorities, Estate Businesses, Export and Import Businesses, Bill of Exchange Transactions, Royalties Transactions, Consignment Transactions, Stock Market Transactions, Sports, Entertainment, Hospitals and Hospitality Industry, etc.
The Burns and Scapens framework for analyzing managerial accounting change was built on the study of old institutional economics, which sees "economics as a process of social provision, subject to multiple and cumulative causation." This view culminates in a model that argues that the managerial accounting practices at institutions are subject to a process of constant change, influenced by routines and rules. The institutions contribute to these routines and rules, but so do actions on the part of managers within the institutions. By combining multiple influences over time, we arrive at modern managerial accounting practice. In other words, Burns and Scapens tells us that managerial accounting practice changes over time, influenced by a number of factors including rules, routines and actions.
There are four preconditions of financial accounting reporting. Firstly, there are debates that upheld and against the regulation of financial accounting. The supporters of the ‘free-market’ technique dispute that there are proprietary economic incentives for organizations to report accounting information proactively, and forcing accounting regulation is costly inefficient (Deegan & Unerman, 2011). By comparison, the supporters of the ‘pro-regulation’ viewpoint dispute that regulation is requisite as financial information is a ‘public good’, and users of accounting information are ‘free riders’, so organizations will report a lower quantity of information than socially optimal (Deegan & Unerman, 2011).