1979 observations about the development of inflation accounting in the UK and

1979 observations about the development of inflation

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(1979) observations about the development of inflation accounting in the UK and applies these observations to inflation accounting, accounting for research and development, deferred tax, mergers and goodwill. His starting point is an unregulated, non-uniform practice. Change is initiated by two forces:
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40 (i) “a ‘downward force’ which acts against standardisation, and (ii) an ‘upward force’ which promotes standardisation” (Nobes 1991, p. 265). Nobes (1991, p. 266) proposed that the downward force is exerted by managers, motivated mainly by: “their view of the effect of earnings figures on their compensation through any effects on share prices, perceptions on management’s success, vulnerability to takeover, a nd directly on bonuses. […] The opposing upward force is provided by the independent mindedness of individual senior members of the profession, using conventional accounting logic on particular controversies”. The causes of the cyclical behaviour are: (i) “A start point of low standardisation; (ii) Energy introduced by criticism or economic events, international comparison, etc.; (iii) A pro-standardisation force in the form of senior members of the profession supported by government, press and international influence (the standardisation involves insistence on the use of income-reducing practices under some or all circumstances); (iv) An anti-standardisation force in the form of management, supported by some professional firms which serve them; management’s motivation is in all cases to preserve flexibility and in most cases to avoid income-reducing requirements.” Nobes’ model has been criticised on a number of issues. For example, Skerratt and Whittington (1992) question the existence of the cycles, the meaning of patterns in standardisation, and the existence of benchmarks. Other authors have criticised the assumed roles and motivations of actors (2010; Gordon and Morris 1996; Skerratt and Whittington 1992) They suggest that the variety of attitudes and behaviours of stakeholders is wider than assumed by Nobes and that other influences make it difficult to draw parallels between examples. As a result, they conclude that the model lacks sophistication. Sabatier (2007a, p. 7) suggests that cycles make very little sense in examining public policy processes in general, because such a presentation “oversimplifies the usual process of multiple, interacting cycles involving numerous policy proposals and statutes at multiple levels”.
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41 There are additional reasons why this model has limited suitability to investigate accounting agenda setting processes. First, the model does not or only partially considers critical factors in the agenda setting process. This includes institutional factors such as political, institutional, regulatory or economical influences. Second, the role and motivations of the main actors are simplistic and only explained within a for- profit context. As a result, the level of agency of actors and their relationship with existing institutions and structures is not considered. In the light of these criticisms, the
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  • Fall '13
  • Government, The Land, International Financial Reporting Standards, Financial Accounting Standards Board, Australian Accounting Standards Board, Snow

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