Reflective Essay on Accounting Theory and Practice.

Topics: International Accounting Standards Board, Costs, International Financial Reporting Standards Pages: 9 (3359 words) Published: October 27, 2012
Learning Log
Week -2
In this lecture I had the understanding, why accounting bodies are so heavily regulated by the government. After the corporate collapse, accounting body lost the trust of public. Our work was not transparent and therefore, was no longer reliable. Regulator body such as ASIC, AASB, FRC and ASX are formed after the corporate collapse. ASIC is the corporate ‘watch dog’ who monitors FRC, AASB and office of AASB. Why we need regulation? Because it is human nature to find loop-hole to go around the regulation and make extra profit. Tutorial:

We have done poster presentation in the class and had to relate the picture with a specific accounting theory. I related my poster with accounting in “reliability” area. Moreover, after discussing with my group I got to know how everyone view “accounting” differently. Week-3

In this lecture I got to learn in more depth about conceptual framework. Based on my understanding, it’s about decision usefulness in preparing financial report. Moreover, we got to learn about the history of development of conceptual work and how it moved from one stage to another, induction, Normative, Positve and system-based theories. Lecturer mention about CoCoA as a very fine idea, but, it would be to narrow, because owner has to find a buyer. CoCoA is about the organization capacity to adapt the changing environment of the business. Organization should shift to new area of business as early as possible if they cannot compete in the existing business market. I totally agree with the book, if CoCoA was implemented it would have involved in fundamental and major shift in accounting recording process, which itself could lead to many unacceptable social and economic consequences. I am still a bit confused with CoCoA. Under CoCoA approach, when a company sell its business, transaction gets recorded in balance sheet but in income statement. Is it not a income for the owner? Tutorial:

This week tutorial was based over accounting regulation and standard. I learn interesting few things like according to free market advocate we should not have any regulation regarding accounting practice and let market decide it. According to them everyone will work on their self-interest and make the market equilibrium. I don’t total agree with them, market needs some kind of intervention or otherwise it is high likely that the market can crash. Another important thing I got to learn is that we can’t have global accounting standard because due to different legal system, different cultural background, in developing countries government heavy regulates companies due to excessive corruption, where else in developed countries government don’t usually interrupts. Week-4

This week’s lecture talks about historical cost and some measurement basis which we have learned before briefly. In the lecture it was also discussed that whether sustainability report is useful at the organizational level. According to my opinion sustainability reporting is useful because it is also a companies responsibility to look after its community and only government. Big companies like Body shop supports sustainable report because it gives them major comparative advantage in terms of showing society that they are ‘green’ and supports community. Tutorial:

In this week tutorial we mostly talked about normative and positive theory. Normative theory: It sought to prescribe particular accounting practice. It is not driven by existing practice, and hence not typically inductive in nature( that is not based on observation). Example of normative theory are Continuously contemporary accounting (CoCoA) and conceptual framework. Should not be evaluated whether they reflect actual accounting practice. Positive Theory: It seeks to predict and explain particular phenomena rather than prescribe particular practices. If predictions are sufficient accurate when tested against observations of reality, they are regarded as...
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