- Applying the principles of accruals accounting and fair value valuation makes sense to an accountant, but it may not have been beneficial to society.
Economic interest group theory/ Private interest theory Regulator B D C A I H F G E J E.g. Large companies in regulated industry E.g. Consumer groups E.g. HM Treasury E.g. Trade Unions
E.g. IAS 19 Employee benefits Explanation from the perspective of private interest theory: - The new amended standard provided large companies and other organisations with an excuse to close expensive pension schemes. Thus the standard was useful to these powerful players in society, whose support the IASB relies upon.
6 . The rationale that ‘regulators will only propose and support regulation which leads to favourable outcomes for themselves’ is true for: A. Public interest theory of regulation B. Capture theory of regulation C. Economic interest theories of regulation D. None of the above
So, why do accounting regulators produce particular regulations? It depends on your theoretical perspective: – Are the accounting regulators neutral arbiters? – Have accounting regulators been captured by the accounting industry? – Do private interests in society have significant influence over the accounting regulators?
Next week’s lecture • Conceptual frameworks of accounting Essential reading: • Young, J. (2006). Making up users. Accounting, organizations and society, 31, 579-600. • Hines, R. (1989). Financial accounting knowledge, conceptual framework projects and the social construction of the accounting profession. Accounting, auditing and accountability journal, 2(2), 72-92. Useful additional reading: • Deegan and Unerman, Chapter 6.
- Fall '16
- Ian Thomson