Universal Set of Principles in the Field of Accounting Essay

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A principle is defined as a rule, or even an idea that forms the basis of deciding what is wrong and what is right in context to our actions. As opposed to principles, we all have our own personal practices and traditions, which determine our behavior in the society. These practices are determined from our culture, society, ancestors, experiences and religion etc. But since we live in a world where every person has their own set of practices and traditions, we cannot expect to live the way we want and this is where rules and principles come in. The very foundations of any principle are built upon its underlying morals, ethics and laws, which are expected to be accepted universally (Chippendale, 2001).
A society may have its …show more content…

The paper then evaluates International Accounting Standards Board’s (IASB) attempts to develop a conceptual framework and the current state. In the final section I will discuss and reflect upon the evidence presented to support the topic of this essay along with a conclusion of facts and ideas presented.

The need for a conceptual framework
As we can understand from above that one person’s principle cannot necessarily be another one’s too; there needs to be an independent body, which can produce universally acceptable principles to resolve matters systematically and uniformly. When we talk about the introduction of a universal set of principles in the field of accounting, it was the famous stock crash of 1929, which wreaked havoc in the financial markets around the globe and created a situation where the need for generally accepted accounting principles was felt the most! (Lawrence et al, 1993). The resulting economic downturn, which lasted until 1939, was one of the gravest depressions ever recorded in the history and a lack of universal accounting standards was blamed to be one of the reasons for over valuation of stocks and overtrading. Although the depression arose in the United States but output losses, deflation and job cuts were observed all over the globe (Romer, 2003). Between these times the accounting profession started to promote the idea of independent audits and

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