Account Theory and Contemporary Issues

The financial reporting environment

The factors influencing and shaping management accounting practices, especially at the macro level, include production and information technology, competition, organization structure, organizational processes, inter-organizational relationships, strategy, education, administrative and social controls, legislation, regulation, financial markets, and national and organizational culture. We seem to encounter worldwide convergence in most of these variables. A straightforward proposition derived from this would be a trend of increasing convergence also in management accounting practices, particularly at the macro level.

Issues related to financial accounting (external reporting, auditing, taxation, etc.)--being outside the scope of this paper--are not analyzed here, although the homogenizing pressures are evident in that area as well. The question of management accounting homogenization is much less discussed in earlier studies.

The regulation of financial accounting International Accounting

We hold the view that in the analysis of modern organizations both the economic and institutional pressures have an important role to play. Even though these two types of pressures are conceptually separate categories, they are simultaneously in effect and therefore get easily intertwined in practice. Because they supplement each other, it is not, for instance, necessarily relevant to examine their relative importance. While economic fundamentals are important factors in (particularly for-profit) firms, (Krumwiede, Kip R Pp. 56 they do not always offer a sufficient (complete) explanation for organizational behaviour. Thus, as institutional theory broadens the scope of our investigation, it also increases understanding of the topic of this study and eventually improves the intelligibility and logic of our attempts to explain global convergence in macro-level financial and management accounting practices. The leading (new-) institutional theorists, while saying that the economic (or technical/functional) explanation is not enough--although not explicitly analyzing the relationship between the economic and institutional perspectives further--nevertheless implicitly argue for its existence (Jennis). Accordingly, our analysis ended up with a framework including both the economic and the institutional perspectives.

Normative theories of accounting I : the case for accounting for changing prices.

Normative pressures concern social obligations and appropriate social conduct in human behaviour. They are mediated by values, norms and roles, which people adopt in their various domains of social conduct. The major difference between normative and coercive pressures lies in the fact that the former are formally less compelling by nature than the latter.

Normative pressures are significant as far as the homogenization of management accounting practices is concerned. The recent trends of professionalization of management accountants have included the promotion of the ideas of cost management and non-financial measures, for instance. Professions not only imply similarity between organizations, but they also represent media through which similarity is spread from one organization to another. The United States has the longest history of standard setting. It has the largest standard setting organization which is characterized by high standards of professionalism. But, even the rules of the United States exhibit compromises between different interests of a kind which could have reasonably been decided otherwise. Furthermore, no unanimity exists among U.S. accountants about the merits of the precise details of the compromises that have been ...