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Essay / Research Paper Abstract
This 4 page paper considers whether or not changing the conceptual framework of the accounting environment a result in improvement in the quality of the financial accounts and help the users of those accounts make good financial decisions. The paper argues against the statement, with discussion on change for the sake of change, the difficulties of some of the new regulations increasing volatility of results, potential inconsistencies, the cost of implementation and the inequality for small companies, and the problems off shift away from the principles-based system to a rules-based system. The bibliography cites 5 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TEchnframe.rtf
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Unformatted sample text from the term paper:
that accounting standards should remain under review so that they can be improved and the reliability of the resulting accounts can be improved. Financial accounts are used by a number
of people to make financial decisions, with shareholders deemed to be the primary users. It is with shareholders, and other uses of the financial accounts of many of the recent
changes have taken place. However, changing the conceptual framework of the accounting regulatory environment will not necessary enhance the capacity of users to make sound financial allocation decisions. There are
many reasons why a change in the conceptual framework may not achieve this goal. In recent years there have been a number of
causes for concern, such as Enron and WorldCom in the United States, and Parmalat in Europe have demonstrated some inherent weaknesses of the accounting system which can result in significant
misstatements, to the detriment of the shareholders (Jickling, 2002). These cases appear to indicate the need for increased regulation and the change in the underlying conceptual framework. However, that change
has to be in the right are action, and to many of the current changes may be argued as ineffective if similar scenarios to those mentioned above are to be
avoided and increased clarity is to be achieved. However, it may be argued that many the current changes are changes for the sake of innovation change, rather than targeted at
changes which are really needed. An example of this may be argued as IAS 39, where there has to be an accounting for financial tools, such as hedging, at current
market value. However, the tools are being utilized in order to minimize risk, and current market value is irrelevant unless the company was to vote in liquidate a tacit. Therefore,
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