Financial Accounting Theory Craig Deegan

Financial Accounting Theory Craig Deegan
Chapter 2 The financial reporting environment Slides written by Craig Deegan and Michaela Rankin Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Learning objectives In this chapter you will be introduced to
the history of the accounting profession and of regulation some of the arguments for and against the existence of accounting regulation some of the theoretical perspectives used to explain the existence of regulation how and why various groups within society try to influence the standard-setting process Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Learning objectives (cont.)
the view that many accounting decisions are based on professional opinion an awareness of some of the theories that are used to explain what influences the accountant to choose one accounting method arguments advanced to support the view that accountants are powerful members of society Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Financial accounting defined
A process involving the collection and processing of information of a financial nature for the purpose of assisting various decisions to be made by parties external to the organisation Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Users of financial reports
Users have different information needs so it is not possible to generate reports to meet individual needs Users include present and potential investors lenders suppliers employees customers government and other parties performing a review or oversight function media Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Accounting knowledge required or expected by users
Changes to accounting standards or new standards affect the numbers within financial reports (profits, net assets) Users should ideally have sufficient knowledge to assess effect of changes to regulations the International Accounting Standards Board (IASB) Framework states that ‘users are expected to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence’ Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Accounting knowledge required or expected by users (cont.)
General purpose financial reports (GPFRs) designed for users who exercise due diligence and who possess the proficiency necessary to comprehend the significance of contemporary accounting practices Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Use of highlight statements
Many companies provide multi-year summaries profits, return on assets, earnings per share, dividend yield etc. Aid less accounting-literate reader to focus on important issues BUT management selects information so important information may be overlooked Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Management accounting
Provides information for decision making by parties within the organisation Internal not external users Largely unregulated Tends to be forward focused (while financial accounting is historical in nature) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Examples of management accounting information
Cash flow projections Sales budgets Production requirements Inventory requirements Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Development of accounting practice—first documented use
Early systems of double-entry accounting traced back to thirteenth and fourteenth century in Northern Italy Franciscan monk named Pacioli first to document double-entry accounting practice (1494) Included debits and credits and used ledgers and journals Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Formation of professional associations
1854: Society of Accountants (Edinburgh) 1880: Institute of Chartered Accountants in England and Wales (ICAEW) 1887: American Association of Public Accountants Although members required to prepare and audit reports pursuant to company laws and stock exchange requirements, no regulation about content of reports and how numbers compiled existed Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Initial regulation of accounting practice
Regulation did not commence until twentieth century Previously limited separation between ownership and management of business entities Systems of accounting were therefore designed to provide information to the owner/manager Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Initial regulation of accounting practice (cont.)
In the early twentieth century there was limited work to codify accounting principles and rules From 1920s researchers sought to identify and describe commonly accepted accounting conventions e.g. doctrines of conservatism, materiality, consistency; entity assumption; matching principle 1930: United States (US) profession and New York Stock Exchange (NYSE) developed list of broadly used accounting principles Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

History of accounting regulation
1934: US Securities Exchange Act required specific disclosures of financial information by organisations seeking to trade securities administered by Securities Exchange Commission (SEC) 1938: SEC only accepted financial statements prepared in accordance with generally accepted accounting principles of the accounting profession gave great deal of power to accounting profession Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

History of accounting regulation (cont.)
1939: Committee on Accounting Procedure (committee of the US accounting profession) commenced issuing statements on accounting principles released 12 Accounting Research Bulletins during 1939 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Development of mandatory accounting standards
In UK not until 1970 when Accounting Standards Steering Committee established (later Accounting Standards Committee) that mandatory standards developed In US Financial Accounting Standards Board (FASB) formed in 1973 later produced mandatory standards from 1965 departures from principles had to be disclosed in footnotes Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

History of regulation in Australia
1946: Institute of Chartered Accountants in Australia (ICAA) released five Recommendations on Accounting Principles based on documents released by ICAEW 1956: a number of recommendations released by Australian Society of Accountants later years the two bodies issued statements jointly through Australian Accounting Research Foundation (AARF) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

History of regulation in Australia (cont.)
AARF collaborated with Australian Accounting Standards Board (AASB) in developing mandatory standards AARF subsequently removed from the standard setting process and with the adoption of IAS/IFRS much of the standard setting process has now been passed to the IASB Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Accounting knowledge required or expected by users
Changes to accounting standards or new standards affect the numbers within financial reports (profits, net assets) Users should ideally have sufficient knowledge to assess effect of changes to regulations the IASB Framework states that ‘users are expected to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence’ Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Accounting knowledge required or expected by users (cont.)
GPFRs designed for users who exercise due diligence and who possess the proficiency necessary to comprehend the significance of contemporary accounting practices Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Rationale for regulating financial accounting practice
Initially introduced following the Great Depression argued that problems with accounting information led to poor and uninformed investment decisions Competing views as to whether regulation is necessary Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Arguments in favour of regulation
Markets for information not efficient ‘On average’ market efficiency arguments ignore the rights of individuals Those able to demand information can often do so as a result of power over scarce resources, while those with limited power are generally unable to secure information without regulation (even though the organisation may impact their existence) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Arguments in favour of regulation (cont.)
Investors need protection from fraudulent organisations producing misleading information Regulation leads to uniform methods thus enhancing comparability Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Arguments against regulation
People will be prepared to pay for information to the extent that it has use Capital markets act to punish organisations that fail to provide information no news deemed to imply bad news Regulation will lead to oversupply of information as users who do not bear the cost of supply tend to overstate their needs Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Arguments against regulation (cont.)
Regulation restricts the accounting methods able to be used so organisations may be prohibited from using methods which best reflect their particular performance and position Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Theories used to describe benefits of regulation
Public interest theory of regulation regulation introduced to protect the public Capture theory of regulation although regulation introduced to protect the public, regulatory mechanisms often controlled by groups most affected by regulation Private interest theory of regulation government not neutral arbiter and will regulate based on impacts to key voters and campaign finances Discussed further in Chapter 3 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Private versus public sector regulation
Private sector regulation accounting profession best able to develop accounting standards because of expertise and greater likelihood rules will be accepted by business Public sector regulation government has greater enforcement powers, hence rules more likely to be followed, may be less responsive to pressure from business and more likely to consider public interest Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

The role of professional judgement in financial reporting
While the accounting treatment of many transactions and events is regulated, many others are unregulated Accountants expected to be objective and free from bias (although, as we will see, various theories of accounting question whether accountants will allow objectivity to determine the selection of accounting methods) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

The role of professional judgement in financial reporting (cont.)
Information generated should faithfully represent underlying transactions and be neutral and verifiable The consideration of economic and social implications of possible accounting standards implies bias in their development and implementation standard setters face a ‘dilemma which requires a delicate balancing of accounting and non-accounting variables’ (Zeff 1978, p. 62) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Why are particular accounting methods applied?
Efficiency perspective different organisational characteristics explain why different firms adopt different accounting methods—they will adopt the method that best reflects their performance accounting regulations that restrict the set of available accounting techniques will be costly to the organisation as restricting available accounting methods will limit how efficiently an organisation is able to produce information about its financial position and performance does not consider comparability benefits of regulation Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Why are particular accounting methods applied? (cont.)
Opportunistic perspective assumes that selection of an accounting method is driven by self-interest accounting methods which provide the desired results for preparers are selected Refer to Chapter 7 for a discussion of these perspectives Chapter 8 addresses other theoretical perspectives Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

The power of accountants
Output of the accounting process impacts many decisions about wealth transfers so the judgement of accountants affect various parties’ wealth The provision of accounting information leads to power of knowledge for others Accountants can give legitimacy to organisations which may not otherwise be deemed legitimate (e.g. emphasising profits) e.g. profits legitimise Commonwealth Bank (see Accounting Headline 2.1, p. 45) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

The power of accountants (cont.)
Profit measures ignore many social and environmental externalities caused by the reporting entity e.g. major adverse social consequences of a cigarette manufacturer Accounting does not objectively reflect a particular entity—it creates it Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Chapter 3 The regulation of financial accounting Slides written by Craig Deegan and Michaela Rankin Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

some of the various theoretical arguments proposed in favour of reducing the extent of regulation of financial accounting some of the various theoretical arguments for regulating the practice of financial accounting various theoretical perspectives that describe who is likely to gain the greatest advantage from the implementation of accounting regulation Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

the political nature of the accounting standard-setting process which seeks the views of a broad cross-section of account users the relevance of potential economic and social impacts to the accounting standard setting process Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Why examine theories of regulation?
Better placed to understand why some accounting prescriptions become part of legislation while others do not Accounting standard-setting is a very political process while some proposed requirements may be technically sound and logical, they may not be mandated due to political ‘power’ or influence of some affected parties Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

‘Free market’ perspective
Accounting information should be treated like other goods, with demand and supply forces allowed to operate to generate an optimal supply Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Arguments supporting ‘free market’ perspective
Private economic-based incentives ‘Market for managers’ ‘Market for corporate takeovers’ ‘Market for lemons’ Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Private economic-based incentives
Assumed that managers will operate business for own benefit and this is expected by shareholders and debtholders Therefore in interests of management to enter contracts with shareholders and debtholders to constrain managers’ actions Contracts often based on accounting information Organisations not producing information will be penalised by higher costs of capital Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Private economic-based incentives (cont.)
Organisations best placed to determine what information should be produced dependant on parties involved and assets in place Imposing regulation restricting available set of accounting methods decreases efficiency of contracting Also assumed auditing will take place in absence of regulation—reduces risk to external stakeholders Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Problems in presence of many different parties
May be too many parties for contracting to be feasible Prohibitive cost of negotiation if different investors want different information Costly to negotiate single contract with all investors as they need to agree on information provided Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Market for managers argument
Managers’ previous performance impacts on remuneration they can command in future In absence of regulation assumed managers encouraged to adopt strategies to maximise value of firm (provides favourable view of own performance) includes providing optimal amount of accounting information Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Assumptions underlying market for managers argument
Managerial labour market operates efficiently Information about past performance known by prospective employers and will be impounded in future salaries Capital market is efficient Effective managerial strategies reflected in positive share price movements Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Market for corporate takeovers argument
Underperforming organisations will be taken over by another entity with the existing management team subsequently replaced Therefore managers motivated to maximise firm value Information produced to minimise cost of capital thereby increasing firm value assumes managers know marginal cost and marginal benefits of information Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Market for lemons argument
No information viewed in the same light as bad information market may make the assessment that silence implies the organisation has bad news to disclose Therefore managers motivated to disclose both good and bad news Evidence that both good and bad news disclosed voluntarily (Skinner 1994) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Market for lemons argument (cont.)
Assumes the market knows that managers have news to disclose may not always be a realistic assumption If knowledge of non-disclosure becomes available later, market expected to react at that stage Taken together, the various factors just discussed (market for managers, market for corporate takeovers, market for lemons, expectations about self-interest and the resulting use of contracts, and so forth) are considered to provide justification for restricting accounting regulation Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Pro-regulation perspective
Accounting information is a public or ‘free’ good It should not be treated the same as other ‘goods’ In the presence of free-riders, true demand is understated pricing system does not function properly Leads to underproduction of information Regulation necessary to reduce impacts of market failure Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Should supply of ‘free’ goods be regulated?
Some argue free goods often overproduced as a result of regulation Public, knowing they do not have to pay, will overstate their need for the good or service e.g. investment analysts Could lead to accounting standards overload Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Role of Adam Smith’s ‘invisible hand’
‘Invisible hand’ notion used as argument in favour of free market without regulatory involvement, as if by an invisible hand, productive resources will find their way to most productive uses Some went on to argue that leaving activities to the control of market mechanisms will protect market participants Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Role of Adam Smith’s ‘invisible hand’ (cont.)
Free market argument ignores market failures and uneven distribution of power Smith was concerned where monopolistic powers were created by government intervention BUT Smith advocated regulatory intervention in some instances where in the public interest to protect the more vulnerable Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Why was Smith’s work misrepresented?
In the interests of many businesses that regulatory interference be reduced The work of acclaimed economists used as ‘propaganda’ to support their position Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Theories to explain regulation
Public interest theory Capture theory Economic interest group theory (private interest theory) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Public interest theory
Regulation put in place to benefit society as a whole rather than vested interests Regulatory body considered to represent interests of the society in which it operates, rather than private interests of the regulators Assumes that government is a neutral arbiter Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Criticisms of public interest theory
Critics question assumptions that economic markets operate inefficiently if unregulated Question the assumption that regulation is virtually costless Others question assumption of government neutrality argue that government will only legislate and groups will only lobby for regulation if it will increase their own wealth Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Capture theory The regulated seeks to take charge of (capture) the regulator Seek to ensure rules subsequently released are advantageous to the parties subject to regulation Although regulating initially in the public interest, difficult for regulator to remain independent Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Capture of accounting standard-setting
Walker (1987) analysed capture of Australian standard-setting through the ASRB, arguing that the accounting profession lobbied before the board established to ensure no independent research capability, no academic as chair, to receive admin officer not a research director priorities only set after consultation with AARF ASRB fast-tracked AARF submissions but not others majority of board membership were members of the accounting profession Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Criticisms of capture theory
No reason to suggest that regulated industry the only interest group able to influence the regulator No reason why regulated industries only able to capture existing agencies rather than procure the creation of an agency No reason why regulated could not prevent creation of the regulatory agency Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Economic interest group theory
Assumes groups will form to protect particular economic interests Groups are often in conflict with each other and will lobby government to put in place legislation which will benefit them at the expense of others No notion of public interest inherent in the theory Regulators (and all other individuals) deemed to be motivated by self interest Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Economic interest group theory (cont.)
The regulator is not a neutral arbiter but is seen as an interest group itself Regulator motivated to ensure re-election or maintenance of its position of power Regulation serves the private interests of politically effective groups Those groups with insufficient power will not be able to effectively lobby for regulation to protect its own interests Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Examples of application to accounting standard-setting
Industry groups may lobby to accept or reject a particular accounting standard e.g. European Banks in relation to IASB 39 Large politically sensitive firms found to lobby in favour of general price level accounting in US (led to reduced profits) Accounting firms lobbying to protect their own interests Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Accounting regulation as an output of a political process
The view that financial accounting should be objective, neutral and apolitical can be challenged Will inevitably be political as it affects wealth distribution within society Standard-setters encourage affected parties to make submissions on drafts of proposed standards Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Accounting regulation as an output of a political process (cont.)
If standard-setters give consideration to views in submissions, accounting standards and therefore financial reports are the result of various social and environmental considerations tied to the values, norms and expectations of the society in which standards are developed questionable whether financial accounting can claim to be neutral and objective Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Accounting regulation as an output of a political process (cont.)
Compliance with accounting standards usually seen to indicate financial statements are ‘true and fair’ can accounts based on standards determined from various economic and social consequences be deemed to be ‘true’? Users may not be aware that financial reports are the outcome of various political pressures Should regulators consider preparers’ views given that standards are designed to limit what preparers do? Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Chapter 6 Normative theories of accounting—the case of conceptual framework projects Slides written by Craig Deegan and Michaela Rankin Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

the role that conceptual frameworks (CFs) can play in the practice of financial reporting the history of the development of the various existing conceptual framework projects the various building blocks that have been developed within various conceptual framework projects Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

perceived advantages and disadvantages that arise from the establishment and development of conceptual frameworks factors, including political factors, that might help or hinder the development of conceptual framework projects groups within society which are likely to benefit from the establishment and development of conceptual framework projects Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

What is a conceptual framework?
‘A coherent system of interrelated objectives and fundamentals that is expected to lead to consistent standards’ (Statement of Financial Accounting Concepts No. 1: Objectives of Financial Reporting by Business Enterprises 1978) Attempts to provide a structured theory of accounting Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Conceptual frameworks as normative theories
Conceptual frameworks provide prescription so they are considered normative theories of accounting ‘Prescribes the nature, function and limits of financial accounting and reporting’ (Statement of Financial Accounting Concepts No. 1: Objectives of Financial Reporting by Business Enterprises, 1978) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Rationale for conceptual frameworks
To develop the practice of financial reporting logically and consistently we need to address such issues as what we mean by financial reporting and what should be its scope which organisational characteristics indicate that an entity should produce financial reports the objective of financial reporting qualitative characteristics financial information should possess what are the elements of financial reporting what measurement rule should be employed Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Rationale for conceptual frameworks (cont.)
Proponents argue that without agreement on these issues accounting standards will be developed in an ad hoc manner Limited consistency between accounting standards in the absence of a conceptual framework Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

The ‘building blocks’ of the conceptual framework
The framework must be developed in a particular order some issues need to be resolved before moving on to subsequent ‘building blocks’ Refer to Figure 6.1 (p. 179) in the text for an overview of the IASB Framework for the Preparation and Presentation of Financial Statements (which in 2005 replaced the Australian Conceptual Framework) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

History of the development of CFs
CFs were developed in a number of jurisdictions including US, UK, Canada, Australia, New Zealand, International Accounting Standards Committee In recent years many countries have adopted the IASB Framework given that they have decided to adopt the accounting standards released by the IASB No standard-setters had developed a complete CF; measurement issues typically unaddressed Limited or no progress in recent years, although efforts underway to update IASB Framework Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Development of frameworks of accounting in the US
1961 and 1962: Moonitz, and Moonitz and Sprouse prescribed that accounting practice should be based on current values 1965: Grady developed theory based on description of existing practice led to the release of Accounting Principles Board (APB) Statement No. 4 however, accounting profession under criticism for lack of any real framework Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Development of frameworks of accounting in the US (cont.)
Led to formation of Trueblood Committee in 1971 which produced Trueblood Report report outlined 12 objectives of accounting and seven qualitative characteristics which financial information should possess objective 1: focused on information needs of financial statement users objective 2: need to serve users with limited ability to demand financial information Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Development of frameworks of accounting in the US (cont.)
1974: APB replaced by FASB which then embarked on its CF project Six Statements of Financial Accounting Concepts (SFACs) released from 1978 to 1985 Initial SFACs normative in nature, but SFAC No. 5 relating to recognition and measurement largely descriptive of current practice received much criticism since 2005 FASB and IASB have been jointly working towards the development of a revised conceptual framework that would be used by both boards—referred to as the ‘convergence project’ Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Development of a CF in Australia
Degree of progression was slow Only four Statements of Accounting Concepts (SACs) were released SAC 1: Definition of the Reporting Entity SAC 2: Objectives of General Purpose Financial Reporting SAC 3: Qualitative Characteristics of Financial Information SAC 4: Definition and Recognition of the Elements of Financial Statements Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Development of a CF in Australia (cont.)
Fifth SAC relating to measurement was never released Had a number of similarities to the US CF project 2005: Australia adopted the IASB Framework as a result of the decision by the Financial Reporting Council that Australia would adopt IAS/IFRS by 2005 SAC 3 and SAC 4 were abandoned SAC 1 and SAC 2 were retained until such time that a revised IASB Framework was developed Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Development of a CF in the UK
Early moves towards guidance relating to objectives and identification of users provided by The Corporate Report (1976) concerned with addressing the rights of the community in terms of their access to financial information (broader than notion of users adopted in other frameworks) ultimately contents generally not accepted by the accounting profession Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Development of a CF in the UK (cont.)
1991: ASB adopted the IASC’s CF IASC framework was generally consistent with the US and Australian frameworks—subsequently became known as the IASB Framework Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Building blocks of the CF
Building blocks of the various CFs have addressed definition of the reporting entity objectives of general purpose financial reporting (GPFR) perceived users of GPFRs qualitative characteristics that GPFRs should possess elements of financial statements possible approaches to measuring the elements Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Definition of the reporting entity
The Conceptual Framework provides a definition of entities required to produce GPFRs known as reporting entities Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

General purpose financial reports
GPFRs are defined as reports ‘… intended to meet the information needs common to users who are unable to command the preparation of reports tailored so as to satisfy, specifically, all of their information needs’ (SAC 1, para. 6) GPFRs are reports that comply with accounting standards and other generally accepted accounting practices (GAAPs) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Special purpose financial reports
Special purpose reports are provided to meet the information demands of a particular user, or group of users Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Entities required to produce GPFRs
Not all entities are classed as reporting entities SAC 1 states that GPFRs should be prepared when there are users ‘… whose information needs have common elements, and those users cannot command the preparation of information to satisfy their individual information needs’ (para. 8) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Factors indicative of a reporting entity (SAC 1)
Separation of management from those with an economic interest in the entity The economic or political importance/influence of the entity to/on other parties The financial characteristics of the entity Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Objectives of GPFR Traditional objective was to enable outsiders to assess the stewardship of management Recent commonly accepted goal of financial reporting is to assist report users’ economic decision making less emphasis placed on the stewardship function Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Objective embraced within CFs
Objective of GPFRs in SAC 2 is deemed to be to provide information to users that is useful for making and evaluating decisions about the allocation of scarce resources Objective of decision usefulness calls into question usefulness of historical cost information Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Other objectives of GPFRs
Another objective is to enable reporting entities to demonstrate accountability between the entity and those parties to which the entity is deemed accountable Accountability is defined as the duty to provide an account or reckoning of those actions for which one is held responsible accountability is not generally embraced by CFs Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Users of financial reports
SAC 2 identifies three primary user groups for GPFRs resource providers employees, lenders, creditors, suppliers, investors and contributors recipients of goods and services customers and beneficiaries parties performing review or oversight function parliaments, governments, regulatory agencies, analysts, labour unions, employer groups, media and special interest groups Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

International perspectives on users of GPFRs
The IASB Framework identifies GPFRs users as investors, employees, lenders, suppliers, customers, govt. agencies and the public states that information designed to meet the needs of investors will usually meet the needs of the other groups US: SFAC 1 main focus is present and potential investors and other users with either a direct financial interest or related to those with a direct financial interest UK: The Corporate Report all groups impacted by an organisation’s operations have rights to information about the reporting entity, not necessarily related to resource allocation decisions Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Level of expertise expected of financial report readers
Generally accepted that readers are expected to have some proficiency in financial accounting IASB Framework (para. 25) ‘… users are assumed to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence’ Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Qualitative characteristics of financial reports
To ensure financial information is useful for economic decision making, we need to consider the attributes or qualities that financial information should have According to IASB Framework primary qualitative characteristics are understandability, relevance, reliability and comparability related to relevance is materiality IASB Framework appears to give greater prominence to relevance and reliability there are issues associated with the ‘trade-off’ between relevance and reliability Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Reliability Information is considered to be reliable if it ‘faithfully represents’ the entity’s transactions and events Should be free from bias and undue error Reliability is a function of representational faithfulness, verifiability and neutrality Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Reliability—implications for traditional accounting
Traditionally, the doctrine of conservatism and the acceptance of ‘prudence’ has been adopted bias towards understating asset values and overstating liabilities This doctrine is not consistent with notions of reliability or freedom from bias Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Relevance Something is relevant if it influences decisions on the allocation of scarce resources if it is capable of making a difference in a decision For information to be relevant it should have predictive value, and feedback value Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Materiality A limiting factor on the disclosure of relevant and reliable material is the notion of materiality An item is material if (IASB Framework, para. 30) ‘... its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements …. Materiality provides a cut-off rather than being a primary qualitative characteristic which information must have if it is to be useful’ Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Uniformity and consistency
Uniformity and consistency imply advantages in restricting the number of accounting methods that can be used by reporting entities has been argued that firms adopt particular accounting methods because they best reflect their underlying performance restricting available methods imposes costs on reporting entities Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Costs vs benefits Need to consider whether the cost of providing certain information exceeds the benefits to be derived from its provision costs include collection, storage, retrieval, presentation, analysis and interpretation benefits come from sound economic decision making by users Measuring potential costs and benefits involves professional judgement Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Can GPFRs provide unbiased accounts of performance?
The practice of accounting is heavily reliant on professional judgement Prior to accounting standards being released, standard setters attempt to determine the economic consequences of following the standards if consider economic consequences then standards cannot be considered objective or neutral Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Can GPFRs provide unbiased accounts of performance? (cont.)
If we accept the notion that preparers will be driven by self-interest (from Positive Accounting Theory) notions of objectivity or neutrality are unrealistic Political nature of standard setting process also affects neutrality and objectivity In communicating reality accountants construct reality (Hines 1988) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

The elements of financial reporting
The next building block considers the definition and recognition criteria of the elements of financial reporting Definition criteria—what attributes are required before an item can be considered as belonging to a particular class of element Recognition criteria—employed to determine whether the item can be included in the financial reports Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Five elements of financial reporting in the IASB Framework
Assets Liabilities Equity Expenses Income in the IASB Framework, income is further subdivided into revenues and gains ten elements identified in the US by FASB Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Definition of assets ‘… a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity’ (IASB Framework, para. 49(a)) Three key characteristics must be an expected future economic benefit the reporting entity must control the future economic benefit the transaction or other past event giving rise to the reporting entity’s control must have occurred Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Definition of assets (cont.)
The definition refers to the benefit and not its source in the absence of future economic benefits, the object or right will not qualify as an asset The benefits can result from ongoing use, not necessarily a value in exchange Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

The characteristic of control
Control relates to the capacity to benefit from the asset and to deny or regulate others’ access to the benefit Legal enforceability is not a prerequisite for establishing the existence of control control (and not legal ownership) is required, although controlled assets are frequently owned Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Recognition of assets An asset—and all the other elements of accounting—shall be recognised when it is probable that any future economic benefit associated with the item will flow to or from the entity, and the item has a cost or value that can be measured with reliability (IASB Framework, para. 83) Probable is generally considered to mean ‘more likely rather than less likely’ Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Definition of liabilities
Liabilities are defined as ‘… a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits’ (IASB Framework, para. 49(b)) present obligations not only refers to legally enforceable obligations but also those imposed by notions of equity and fairness, or by custom or other business practices Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Recognition of liabilities
Recognition criteria consistent with those of assets and the other elements of accounting A liability shall be recognised when it is probable that the sacrifice of economic benefits will be required, and the amount of the liability can be measured reliably Has implications for disclosure of various provisions Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Approaches to determining profit
Two common approaches to determining profits asset/liability approach links profit to changes in assets and liabilities revenue/expense approach relies on concepts such as the matching principle The definition of expenses and revenues in the CF based on asset/liability perspective Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Definition of expenses
‘… decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants’ (IASB Framework, para. 70(b)) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Recognition of expenses
An expense shall be recognised when it is probable that the consumption or loss of future economic benefits resulting in a reduction in assets and/or an increase in liabilities has occurred, and the consumption or loss of economic benefits can be measured reliably Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Definition of income ‘… increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants’ (SAC 4, para. 70(a)) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Definition of income (cont.)
Income can be recognised from normal trading relations, as well as from non-reciprocal transfers such as grants, donations, bequests or where liabilities are forgiven IASB Framework further subdivides income into revenues and gains revenue arises in the course of the ordinary activities of an entity gains represent other items that meet the definition of income and may, or may not, arise in the ordinary activities of an enterprise not clear why there is a need to break income into two components Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Recognition of income As with the other elements of accounting, income is recognised when it is probable that the inflow or other enhancement or saving in outflows of future economic benefits has occurred, and the inflow or other enhancement or saving in outflows of future economic benefits can be measured reliably Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Definition of equity Equity is defined as ‘the residual interest in the assets of the entity after deducting all of its liabilities’ (IASB Framework, para. 49(c)) As a residual interest it ranks after liabilities in terms of claims against the assets Definition is a direct function of the definitions of assets and liabilities Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Measurement principles
To date very little prescription in relation to measurement provided by CFs FASB statement provides description of various approaches to measuring elements without providing prescription Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Benefits associated with conceptual frameworks
Accounting standards should be more consistent and logical Increased international compatibility of accounting standards Standard-setters should be more accountable for their decisions Communication between standard-setters and their constituents should be enhanced Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Benefits associated with CFs (cont.)
The development of accounting standards should be more economical Where conceptual frameworks cover a particular issue, there might be a reduced need for additional standards Emphasise the ‘decision usefulness’ role of financial reports rather than restricting concern to stewardship Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Disadvantages of conceptual frameworks
Smaller organisations may feel overburdened by reporting requirements Typically economic in focus so ignore transactions that have not involved market transactions or exchange of property rights further reinforces the importance of economic performance relative to social performance Represent a codification of existing practice Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

CFs as a means of legitimising standard-setting bodies
Some (e.g. Hines and Solomons) have suggested that CFs have been used as devices to help ensure the ongoing existence of the accounting profession Increase the ability of the profession to self-regulate, thus counteracting government intervention Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Chapter 9 Extended systems of accounting—the incorporation of social and environmental factors within external reporting Slides written by Craig Deegan and Michaela Rankin Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

various perspectives of the responsibilities of business explanations of the relationship between organisational responsibility and organisational accountability various theoretical perspectives that can explain why organisations might voluntarily elect to provide publicly available information about their social and environmental performance Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

some recent initiatives in social and environmental accounting the concept of sustainable development and how organisations are reporting their progress towards the goal of sustainable development the relationship between sustainability and eco-efficiency and eco-justice issues some of the limitations of traditional financial accounting in enabling users of reports to assess a reporting entity’s social and environmental performance Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Introduction In recent years there has been increasing discussion about sustainable development and triple bottom line (TBL) reporting TBL reporting is reporting that provides information about the economic, environmental and social performance of an entity Represents a departure from sole economic focus that was traditional in external reporting A review of the Global Reporting Initiative’s Sustainability Reporting Guidelines provides insight into the types of social, environmental and economic information that could be disclosed in a sustainability report Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Introduction (cont.) The terms sustainability reporting and TBL reporting are often considered to be synonymous Strictly speaking, however, sustainability reporting would require more than just TBL reporting and it would question three separate ‘bottom lines’ given sustainability would require social, economic and environmental aspects to be considered together Sustainability reporting would also address specifically how current activities are impacting the abilities of future generations to satisfy their own needs. Current TBL reports do not address such issues Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Responsibilities of business
Moves to provide information about social and environmental performance, whether through sustainability or TBL reports, implies management of these organisations consider they have an accountability for social and environmental performance, as well as economic performance not a view held universally Increasing community pressures for organisations to make a commitment to sustainable business practices, and corporate reporting is tending to respond to this pressure Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Responsibilities of business (cont.)
If sustainability becomes part of the expectations held by society, it must—consistent with legitimacy theory—become a business goal Providing information about social and environmental performance will increase the trust a community has in the organisation Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Sustainability Brundtland Report placed sustainability on the business worldwide agenda Sustainable development defined as ‘… development that meets the needs of the present world without compromising the ability of future generations to meet their own needs’ (World Commission on Environment and Development, 1987) Inter-generational and intra-generational equity central to the agenda Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Sustainability (cont.)
Should organisations be responsible for the sustainability of their business practices? Will they embrace this responsibility in the absence of specific legislation? Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

How does an entity determine its responsibilities?
What do its relevant stakeholders consider business responsibilities to be? Based on personal judgement of the management involved as to who are the relevant stakeholders Has implications for the information disclosed Perceived responsibility and accountability go hand in hand Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Accountability The duty to provide an account (not necessarily financial) or reckoning of those actions for which one is held responsible Two responsibilities or duties responsibility to undertake certain actions responsibility to provide an account of those actions Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

To whom is business responsible?
Many organisations making public statements that responsibilities extend beyond shareholders to encompass communities in which they operate and society as a whole If sustainability embraced then responsibility also owed to future generations If an organisation accepts a responsibility for the sustainability of its business practices, then it should produce an account of its responsibilities—it should provide a sustainability report Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Stages of sustainability reporting
Stage 1: Why report? relates to management’s motivations Stage 2: To whom to report—who are the stakeholders? tied to motivations—if motivations are based on managerial reasoning then disclosures could be aimed at powerful stakeholders Stage 3: What to report? involves dialogue with identified stakeholders Stage 4: What format for the disclosures? Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Stage 1: Why report? Different accounting theories will provide alternative explanations about why an entity might decide to report social and environmental information Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Theories to explain ‘why report?’ social and environmental disclosure
Legitimacy Theory and social contract disclosures linked to providing evidence that entity is complying with the expectations of society Stakeholder Theory disclosure depends on expectations of powerful stakeholders if the managerial perspective of stakeholder theory is embraced Accountability Model an acceptance of a responsibility to report Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Theories to explain ‘why report
Theories to explain ‘why report?’ social and environmental disclosure (cont.) Institutional Theory organisations will adopt particular practices because of institutional pressures Positive Accounting Theory disclosure depends on positive wealth implications consider submission of the Business Council of Australia Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

‘Why report?’ and its links to views about the responsibility of business
Consider the views of Milton Friedman—reporting is not about responsibilities; rather, it is about enhancing business profitability A broader view of business responsibilities would accept that regardless of the impacts of profitability, stakeholders have a right to know about the social and environmental implications of an organisation Where do we think corporations sit in terms of the above views? Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Differing views of business responsibility
Friedman rejected the view that corporate managers have any moral obligations responsibility to increase profits as long as stays within the rules this view often held by the media—applauds profitable organisations Alternative view organisations earn their right to operate in the community artificial entities that society chooses to create organisations do not have an inherent right to resources consequently accountable to society for how it operates societal expectations may exceed profitability Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Stage 2: To whom to report?
If managers overwhelmingly motivated by the desire to increase shareholder value then reporting will be aimed primarily at satisfying the expectations of powerful stakeholders If we adopt a broader ethical perspective then disclosures would be aimed at stakeholders impacted by the operations of the entity—but still cannot address all information needs, so some prioritisation will be necessary It is emphasised that the decision to whom to report to is directly related to the previous issue of ‘why report?’ Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Stage 3: What to report? First of all, establish that there is a demand for information Identify information needs through dialogue with stakeholders Negotiate a consensus among competing stakeholder needs and expectations Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Stage 4: How to report? Conventional financial accounting does not appear to provide a foundation for social and environmental disclosures Triple bottom line reporting is an alternative, although it is not the same as sustainability reporting. A true sustainability report would consider such issues as the carrying capacity of the eco-system, impacts on future generations and so forth An attempt can also be made to place a cost on the externalities of business Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

How to report? Limitations of traditional financial accounting
For the following reasons, financial accounting is not seen as a useful vehicle for promoting social and environmental disclosures Financial accounting focuses primarily on the information needs of those involved in resource allocation decisions. By contrast, sustainability concerns all stakeholders The notion of ‘materiality’ tends to preclude the reporting of social and environmental information, given the difficulty in quantifying costs Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

How to report? Limitations of traditional financial accounting (cont.)
Reporting entities frequently discount liabilities to present value, which tends to make future clean-up expenditures appear trivial Financial accounting adopts an entity assumption where the entity is treated as distinct from its owners and other stakeholders transactions not directly impacting the entity are ignored ignores externalities caused by the reporting entity, some relating to social and environmental implications of the entity’s operations sustainability and the ‘entity assumption’ are mutually exclusive Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

How to report? Limitations of traditional financial accounting (cont.)
Expenses are defined to exclude the recognition of any impacts on resources not controlled by the entity Externalities caused by the entity cannot be reliably measured, and so typically are not recognised given the recognition criteria provided in such documents as the IASB Framework Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

How to report? Triple Bottom Line Reporting
Triple bottom line reporting refers to the disclosure of information about the social, economic and environmental performance of an entity But … is the bottom line metaphor appropriate—can social and economic impacts be measured through a ‘bottom line’? Seems to indicate that we must manage all the bottom lines in a similar manner—appropriate? Seems to suggest that social, economic and environmental performance are separate to one another—not really the case in practice Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

How to report? Relevance of measures such as GDP
Performance of governments is related to outputs of systems of national accounts e.g. gross domestic product (GDP) Does not consider issues of resource efficiencies or equities with how resources are distributed Experiments taking place to ‘green’ GDP Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

How to report? The Global Reporting Initiative
Global Reporting Initiative (GRI) established 1997 The GRI Sustainability Reporting Guidelines is the most comprehensive framework for ‘how to report’ that is currently available Third version—G3—released in 2006 Made up of various ‘core’ and ‘additional’ performance indicators Not mandatory and hence many organisations are selective about what information they select for disclosure Apart from the GRI, a number of other organisations have produced reporting guidelines Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Social auditing Purpose of social auditing is for an organisation to assess its performance in relation to society’s requirements and expectations Results form the basis of an entity’s publicly released social accounts, which in themselves are often incorporated into a triple bottom line or sustainability report Consider the Body Shop’s social impact report which is based on their social audit Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Social Auditing Standards
Released in 1998 by the Council on Economic Priorities (US body) SA8000 focuses on issues associated with human rights, health and safety, and equal opportunities In 1999 ISEA launched standard AA1000 concerned with the processes of setting up and operating social and ethical accounting and auditing systems Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Monetising environmental costs and benefits
As we have already discussed, financial accounting typically ignores environmental impacts, therefore experimental approaches to full-cost profit calculation are being developed Market prices do not reflect the scarcity of resources involved or harm resources cause Perception that all costs associated should be reflected in the price of the good Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Monetising environmental costs and benefits (cont.)
If done comprehensively this would involve some life-cycle analysis consideration of the inputs and outputs from raw material acquisition to disposal Often referred to as ‘true prices’ Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Baxter International Approach most conservative of those considered
Ignores any externalities caused by the business, and only includes costs and benefits directly related to cash flows Attempts to demonstrate that by explicitly considering the environment, actual cost savings can be made Still applies the usual ‘entity assumption’ Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

BSO/Origin Place a notional value on the environmental costs imposed on society This value is then deducted from profits (calculated using financial accounting methods) to determine a measure referred to as ‘sustainable operating income’ Although consider many externalities, ignores many eco-justice considerations required to pursue sustainability Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Landcare Ltd Seeks to determine the notional costs that would be incurred if the organisation was to have zero environmental impact Sustainable cost: the amount which must be spent to put the biosphere at the end of the accounting period back into the state it was at the beginning Sustainable cost calculation involves two elements costs required to ensure inputs have no adverse environmental impacts costs required to remedy any environmental impacts that arise Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Watercare services Identifies the additional costs that would need to be incurred if the organisation was to meet the social and environmental standards that it believes are appropriate Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Concluding comments Social and environmental reporting is a rapidly evolving area Only 15 years ago, almost no companies were producing social and/or environmental reports Now many large listed companies are providing such reports As concerns for social justice and environmental protection increase we can expect this form of reporting to continually evolve Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Chapter 10 Reactions of capital markets to financial reporting Slides written by Craig Deegan and Michaela Rankin Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

the role of capital market research (CMR) in assessing the information content of accounting disclosures the assumptions of market efficiency typically adopted in capital market research the difference between capital market research that looks at the information content of accounting disclosures, and capital market research that uses share price data as a benchmark for evaluating accounting disclosures Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

why unexpected accounting earnings and abnormal share price returns are expected to be related the major results of capital market research into financial accounting and disclosure Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Capital market research—introduction
Explores the role of accounting and other financial information in equity markets Involves examining statistical relations between financial information and share prices Reactions of investors evident from capital market transactions No share price change implies no reaction to particular information Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Capital market versus behavioural research
Capital market research assesses the aggregate effect of financial reporting on investors considers only investors Behavioural research analyses individual responses to financial reporting examines decision-making by many groups e.g. bank managers, loan officers, auditors Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Reasons for capital market research
Information about earnings and its components is the primary purpose of financial reporting Earnings are oriented towards the interests of shareholders Earnings is the number most analysed and forecast by security analysts Reliable data on earnings is readily available Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Underlying assumption of CMR—EMH
CMR relies on the assumption that equity markets are efficient in accordance with Efficient Market Hypothesis (EMH) Efficient market defined as a market that adjusts rapidly to fully impound information into share prices when the information is released Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Three forms of market efficiency
Weak form: prices reflect information about past prices and trading volumes Semi-strong form: all publicly available information is rapidly and fully impounded into share prices in an unbiased manner when released most relevant for accounting-based capital market research Strong form: security prices reflect all information (public and private) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Market efficiency—implications for accounting
If markets are efficient they will use information from various sources when predicting future earnings If accounting information does not impact on share prices then it is deemed not to have any information value above that currently available Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Earnings/return relation
Share prices are the sum of expected future cash flows from dividends, discounted to their present value using a rate of return commensurate with the company’s risk Dividends are a function of accounting earnings Unexpected earnings rather than total earnings expected to be associated with a change in share price Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Earnings/return relation—market model
Used to separate out firm-specific share price movements from market-wide movements derived from the Capital Asset Pricing Model Assumes investors are risk averse and have homogeneous expectations Its use allows the researcher to focus on share price movements due to firm-specific news Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Earnings/return relation—market model (cont.)
Total or actual returns can be divided into normal (expected) returns given market-wide movements abnormal (unexpected) returns due to firm-specific share price movements Abnormal returns used as an indicator of information content of announcements Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Results of CMR—Ball and Brown (1968) study
Examined data from 261 US firms Tested whether firms with unexpected increases in accounting earnings had positive abnormal returns, and firms with unexpected decreases had negative abnormal returns Found that information contained in the annual report, prepared using historical cost was useful to investors 85 to 90% of earnings announcement is anticipated by investors much of information is obtained from other sources Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Results of CMR—extent of alternative information sources
Information content varies between countries and companies Compared to US markets, Australian market had slower adjustments during the year with larger adjustments at earnings announcement less alternative sources of information for Australian market Less alternative sources of information for smaller firms than larger firms Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Results of CMR—permanent and temporary changes
Research examined relationship between the magnitude of unexpected changes in earnings (EPS) and magnitude of abnormal returns known as the earnings response coefficient a 1% unexpected change in earnings associated with 0.1 to 0.15% abnormal return depends on whether earnings increases expected to be permanent or temporary Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Results of CMR—relative magnitudes of cash and accruals
Earnings persistence depends on proportion of accruals relative to cash flows firms with large accruals relative to actual cash flows unlikely to have persistently high earnings Share prices found to act as if investors ‘fixate’ on reported earnings without considering relative magnitudes of cash and accrual components Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Results of CMR—information announcements of other firms
Earnings announcements by one firm also results in abnormal returns to other firms in the same industry Related to whether the news reflects a change in conditions for the entire industry, or changes in relative market share within the industry Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Results of CMR—information content of earnings forecasts
Announcements of expected earnings rather than actual earnings are associated with share returns Management and security analysts both make forecasts Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Results of CMR—benefits of voluntary disclosure
Voluntary disclosures include those in annual reports as well as media releases etc. Firms with more disclosure policies have larger analyst following and more accurate analyst earnings forecasts increased investor following reduced information asymmetry reduced costs of equity capital Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Results of CMR—recognition versus footnote disclosure
Recognising an item in the financial statements is perceived differently to disclosure in footnotes Investors place greater reliance on recognised amounts than on disclosed amounts Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Results of CMR—size Relationship between earnings announcements and share price movements is inversely related to the size of the entity Earnings announcements found to have a greater impact on share prices of smaller firms than larger firms More information generally available for larger firms Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Do current prices anticipate future announcements?
As firm size increases, share prices incorporate information from wider number of sources relatively less unexpected information when earnings are announced May be able to argue that share prices anticipate future earnings announcements for larger firms with some accuracy Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Accounting earnings reflecting information
Rather than determining whether earnings announcements provide information, recent research examines whether earnings announcements reflect information that has been already used by investors ‘looking back the other way’ market prices viewed as leading accounting earnings Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Accounting earnings reflecting information (cont.)
Share prices are considered as benchmark measures of firm value Share returns are considered as benchmark measures of firm performance Benchmarks are then used to compare usefulness of alternative accounting and disclosure methods Based on premise that market values and book values are both measures of firm value Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Accounting earnings reflecting information (cont.)
If market value is related to book value, returns should be related to accounting earnings per share, divided by price at the beginning of the accounting period provides an underlying reason why we should expect returns to be related to earnings over time Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Results of CMR—accounting earnings reflecting information
Beaver, Lambert and Morse (1980) found share prices and related returns were related to accounting earnings Because of various information sources, price appeared to anticipate future accounting earnings Supported by Beaver, Lambert and Ryan (1987) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Results of CMR—accounting earnings reflecting information (cont.)
Dechow (1994) found over short intervals earnings are more strongly associated with returns than are realised cash flows the ability of cash flows to measure firm performance increases as the measurement interval increases Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Results of CMR —accounting earnings reflecting information (cont.)
Studies examining which asset value approaches provide accounting figures that best reflect market valuation found fair value estimates of bank’s financial instruments seem to provide a better explanation of bank share prices than historical cost (Barth, Beaver & Landsman 1996) revaluation of assets results in better alignment of market and book values (Easton, Eddy & Harris 1993) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Relaxing assumptions about market efficiency
Recent years have seen a number of researchers questioning some assumptions about market efficiency Market reactions to information often found to be longer than would be anticipated from an ‘efficient market’. Also market found to sometimes ‘under-react’ to particular announcements Created new areas for research—for example what factors influence ‘earnings drift’ So, should we reject research that has embraced the EMH? Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Chapter 12 Critical perspectives of accounting Slides written by Craig Deegan and Michaela Rankin Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

particular perspectives that challenge conventional opinions about the role of accounting within society the basic arguments that suggest that financial accounting tends to support the positions of individuals who hold wealth and social status, while undermining the positions of others the fact that disclosure (or non-disclosure) of information can be construed to be an important strategy to promote and legitimise particular social orders Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Critical perspective defined
Refers to accounting research that goes beyond questioning whether particular methods of accounting should be employed Focuses on the role of accounting in sustaining the privileged positions of those in control of resources (capital) while undermining or restraining the voice of those without capital Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Critical perspective defined (cont.)
Critical accounting theorists seek to highlight, through critical analysis, the key role of accounting in society Challenges the view that accounting can be construed as objective or neutral Accounting seen as a means of constructing or legitimising particular social structures for the benefits of those that currently have wealth Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Philosophical basis of critical accounting research
Much of the critical research is informed by the works of Karl Marx However, some critical research adopts a ‘deep ecologist’ philosophy questions the trade-off between economic performance and ecological damage Other critical accounting research adopts a radical feminist perspective believe that accounting maintains and reinforces masculine traits such as ongoing quests for success, conflict and so forth without any consideration to cooperation, respect, loyalty, caring and so forth Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Criticism of capitalist system
Critical theorists tend to oppose aspects of the capitalist system and accounting Emphasise that systems of accounting are built around the prevailing social order—and support the social order Given the practice of accounting is in the hands of large corporations and accounting regulation in the hands of government, accounting information will never do anything but support the current system Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Origins of critical perspective
Grounded in Political Economy Theory ‘Political economy’ is the social, political and economic framework within which human life takes place (Gray, Owen & Adams 1996) Based on ‘Classical’ branch—challenges the existing nature and structure of society Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Classical political economy perspective
As already indicated, much critical accounting research is related to the works of philosophers such as Marx Explicitly considers structural conflict, inequity and the role of the State at the heart of the analysis Highlights issues which may not otherwise be addressed social welfare Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Disclosure of social responsibility information
Critical theorists argue that disclosure of social responsibility information is wasted unless accompanied by fundamental changes in how society strucutred Acts to legitimise, not challenge, those providing the information Need social reform, and not more ‘accounting’ Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Views on social and environmental accounting
As accounting deemed to sustain particular social structures, introduction of new forms of accounting only help to sustain that social system Considered wasted effort to use accounting to solve problems One is using the very process that caused the problem to try to solve the problem Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Criticism of critical perspective
Critical theorists often marginalised to a greater extent than others Often do not provide solutions to perceived problems inconsistent with normal training of accountants to provide solutions if problems are evident Critical of accountants Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Role of the State The State is seen as a vehicle of support for holders of capital and for the capitalist system as a whole Government will take action to enhance the legitimacy of the (unjust) social system Social disclosures seen as a means of pacifying challenges against the capitalist system where corporations given many rights and powers Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Role of the State (cont.)
Restricting the flow of information, or availability of specific types of information, seen as a means of maintaining particular organisations and social structures Government does not operate in the public interest, but in the interests of ‘well off’ groups Corporations typically lobby against regulation that could increase their accountability to society Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Role of accounting research
‘Mainstream’ accounting researchers are seen as providing research results and perspectives that help to legitimise and maintain certain political ideologies e.g. anti-regulation stance and EMH during the late 1970s and 1980s matched the views of government at the time rise of PAT consistent with political views at the time Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Role of accounting research (cont.)
rise of ‘economic consequences’ research seems to have been motivated by desire of large corporations to counter attempts to change reporting systems and levels of disclosure results supported corporations’ call for reduction in regulation research efforts into inflation accounting were seen as being motivated by a desire to alleviate shifts in real wealth from owners to higher wages, not by rate of inflation Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Role of accounting practice
Critical theorists see conceptual frameworks as legitimising the accounting profession and of financial reports produced by reporting entities Accountants seen as imposing their own views about which performance characteristics are important or not important Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Role of accounting practice (cont.)
Attention is directed to particular measures (e.g. profits) through accounting In communicating reality, accountants simultaneously construct reality Political economy perspective emphasises the role of accounting reports in maintaining social arrangements See corporate social reporting as harmful as it gives the impression of concern and change without any real change occurring Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

Financial Accounting Theory Craig Deegan

Similar presentations

Presentation on theme: "Financial Accounting Theory Craig Deegan"— Presentation transcript:

Similar presentations

About project

Feedback

Log in

Auth with social network:

Financial Accounting Theory Craig Deegan

Similar presentations

Presentation on theme: "Financial Accounting Theory Craig Deegan"— Presentation transcript:

Similar presentations

About project

Feedback