The Political Nature of Accounting Standard Setting in Australia The Political Nature of Accounting Standard Setting in Australia Introduction
There been conflict in most western countries between private sector bodies and the governmental bodies concerning the process of establishing regulatory arrangements required for setting accounting standards (Hopwood et.al 2005). The recent changes by the Australian Federal Government regarding the structure of setting the accounting standards show a huge shift in power to the government from the professional bodies. Majority of the users of financial reports often try to influence the accounting standard with the aim of protecting their own interests. Standard setters in Australia are having diminished roles in international standard setting as the government which involves politics has taken over the setting and regulation of accounting standards as noted by Jorissen et.al (2007). This means that politics highly influences accounting regulations development.
How politics influence the creation of accounting standards
The accountancy profession in setting international accounting standards has been under pressure from political parties. This has led to an increasing concern by ACCA on the political interference in the accounting standard setting process. The political view in setting of accounting standard argues that the best solution varies from group to group and from person to person (Jorissen et.al 2007). Under this view, policy decisions always bring out choices between two conflicting interests and can be better served by use of different practices.
This then makes the method of setting accounting standards a political activity. This can be termed to as a one dimensional view of power because it focuses on the behavior in decision making on issues which have notable conflict of interest as revealed by political participation (Hopwood et.al 2005). This activity has a high consequence which involves...
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