Development of a General Accounting Theory – a Scientific Approach?
Development of A General Accounting Theory –
A Scientific Approach?
Accounting Theory Development can be defined as ‘a piecemeal process of trial and error in response to changing social and economic forces’. (Underdown and Taylor, 1985, p2). Therefore, it is clear that a general frame of reference is needed, however not one that would upset the ‘accounting system’. Accounting theory cannot be narrowed to a certain approach, which is the definitive article. In fact, accountancy is one of the few disciplines in which the theory is changed to be coherent with practice:
It seems to me, that your power is a hidden power, because people only think of you as communicating reality, but in communicating reality, you construct reality. (Hines, 1988a, p257).
General accounting theories should as their main objective, guide accountants in providing a summary of the financial activities for the year that is complete as regards information that would influence the users. Due to constraints such as timeliness and cost, the theory must aid by providing ‘general’ guidelines on the presentation of the financial data.
There have been many approaches to accountancy theory development over the years whether it is the classical methods of reasoning such as the deductive, inductive, ethical, sociological and economic approaches; or the more modern positive and normative accounting theories. To say that one of these is the best would be over simplifying the discussion, as there are a variety of prevalent accounting disciplines that have to be taken into account. These include the environment, the regulatory climate, the users of financial statements and their needs.
The two main classical methods of theory construction were the deductive and inductive approaches. The deductive approach developed a theory, then followed with the principles and the techniques used in implementing this theory. The theory was then verified by looking at
A Scientific Approach?
Accounting Theory Development can be defined as ‘a piecemeal process of trial and error in response to changing social and economic forces’. (Underdown and Taylor, 1985, p2). Therefore, it is clear that a general frame of reference is needed, however not one that would upset the ‘accounting system’. Accounting theory cannot be narrowed to a certain approach, which is the definitive article. In fact, accountancy is one of the few disciplines in which the theory is changed to be coherent with practice:
It seems to me, that your power is a hidden power, because people only think of you as communicating reality, but in communicating reality, you construct reality. (Hines, 1988a, p257).
General accounting theories should as their main objective, guide accountants in providing a summary of the financial activities for the year that is complete as regards information that would influence the users. Due to constraints such as timeliness and cost, the theory must aid by providing ‘general’ guidelines on the presentation of the financial data.
There have been many approaches to accountancy theory development over the years whether it is the classical methods of reasoning such as the deductive, inductive, ethical, sociological and economic approaches; or the more modern positive and normative accounting theories. To say that one of these is the best would be over simplifying the discussion, as there are a variety of prevalent accounting disciplines that have to be taken into account. These include the environment, the regulatory climate, the users of financial statements and their needs.
The two main classical methods of theory construction were the deductive and inductive approaches. The deductive approach developed a theory, then followed with the principles and the techniques used in implementing this theory. The theory was then verified by looking at
References: - Accounting Standards Board, “Introduction To The Statement of Principles for Financial Reporting”, 1999. Quotations: 1985, London: Heinemann - Perera ,MHB, Matthews MR; Accounting Theory & Development, 1991, London : Nelson - Glautier, Mw and Underdown, B; Accounting Theory & Practice, Quotations: 1994, London: Pitman - American Accounting Association; Statement of Accounting Theory & Theory Acceptance, 1977, Committee on Concepts - Belkaoui, Ahmed; Behavioral Accounting: The Research and Practical Issues, 1989, New York: Quorum Books