ACCOUNTING AND ACCOUNTABILITY

Issues in Accounting and Accountability

Issues in Accounting and Accountability

Introduction

'If the results of behavioural research indicate that a particular accounting related information item (cue) is not used by individuals when making decisions, should this be grounds for the accounting profession to conclude that non-financial information (e.g., intangible assets) should be used and therefore does warrant the related development of mandatory disclosure requirements.'

The statement holds true that in the modern era, numerous decisions are being made in which non financial data are being used as its basis. It is considered that the economic growth in many economies is due to non financial or the intangible factors (Lev and Gu, 2005, p.2). There are various pieces of information that are overlooked in a financial report and decision primarily based on financial data could not be as effective as it was meant to be. The accounting professionals have noticed the importance of nonfinancial information, such as intangible assets, and now are incorporating these items in their decision making process.

Since all of this data is important with the perspective of decision making process, the question arises with regards to the disclosure of such information. It is now mandatory that all information from the environment, whether financial and non financial, are to be disclosed to all the stakeholders (Lee and Hutchison, 2005, p. 83). The basis for the decision should be known to everyone; this avoids any chances of discrepancies in the future. This statement can be explained through the analysis of Throughput Model for process thinking and the discussion will involve the three higher level pathways and which would be best suited for this situation. These three high level pathways in question here are the revisionist pathway (I - P - D), the value driven pathway (P - I - J - D) and the global perspective pathway (I - P - J - D).

Throughput Model (Process Thinking)

The process thinking is a pathway that almost everyone on this planet uses to make decisions in their lives. The pathway that is selected determines the outcome or the result of the decision. In this throughput model, there are six different pathways to choose from. It is critical that an individual selects the correct pathway as choosing the wrong path could lead to disastrous outcomes such as bankruptcy, poor performance, high failure rate, pain and sorrow. On the contrary, selecting the correct pathway could result in substantial gains, long term performance, and happiness. There are various different variables that need to be taken into account when making decisions. The formation of the problem is necessary for the preliminary stage and using the correct information at the correct time is the key for a successful outcome of a decision (Rodgers, 2006, pp. 1).

The throughput model is helpful in making sound and informative decisions. Throughout our lives we encounter bits of information that are inadequate and difficult to comprehend, they are often shaped by our perceptions and misunderstandings, and results in our inability to ...