As a result the application of the accounting cycle model was descriptive and

As a result the application of the accounting cycle

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As a result, the application of the accounting cycle model was descriptive and of limited explanatory ability. The contribution of this study should be seen in the context of standard, rather than agenda setting. Gordon and Morris (1996) adapted Nobes’ framework to explain variations in standardization across six Australian exposure drafts about equity accounting between 1968 and 1995. Their aim was “to exp lain why the Australian accounting profession has deliberated for so long over equity accounting” (p. 154). Gordon and Morris identified the first element of the cycle in the late 1960s when a variety of practices were identified in a survey (Standish 1972). They suggest that energy inputs were triggered “when, during the late 1960s, some holding companies chose not to consolidate their loss-making subsidiaries by selling down their holdings from just above 50 per cent to 50 per cent or less of the issued ordinary shares”. A series of newspaper articles published in 1967 and 1968 were critical of the practice, but a Sydney accounting firm allegedly supported the manipulation of companies’ consolidated accounts (Gordon and Morris 1996, p. 161). Eventually, public pressure caused the standard setters “to issue a pronouncement on de -consolidation of subsidiaries” (Zeff, 1973, p. 38). Gordon and Morris made valuable observations about the interests of different participants in the agenda setting process for equity accounting and the upwards and downwards forces. The study, however, demonstrates the difficulties in classifying the motivations of individual actors as forces. For example, members of the standard setting board could represent both forces, as they had varying backgrounds. In the Gordon and Morris study, contrary to Nobes’ classification, business and management represent upward forces. In addition, the study fails to acknowledge that different forces or actors may have different levels of influence on the accounting cycle. This can
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44 be traced back to the deficiencies of the model. Last, while the study considers the influence of institutions on the agenda setting process, including regulatory (legal impediments), technical (developments in equity accounting overseas) and political (pressure from press) factors, their classification as an upwards or downwards force is simplistic and questionable. The consideration of such elements from an institutional perspective would provide for a more sophisticated discussion that recognises the complexities of the interrelationships of these elements. Burrows and Rowles (2010) compared the standard setting for inflation accounting in Australia and the U.K during 1973 and 1985. They argued that the interest in inflation accounting in the UK would have decreased irrespective of the level of inflation and that “social, economic and political differences, particularly in relation to the role of taxation, caused divergence between inflation-accounting cycles in Australia and the UK (Burrows and Rowles 2010, p. 3). The differences arose because inflation
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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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