Management Accounting Essay Example | Topics and Well Written Essays - 3000 words

Management Accounting - Essay Example Many individual country studies have been done on the national management accounting practices all over the world (Broomwitch and Wang, 1991; Amat et al, 1994 etc). However, the investor confidence has been deteriorating internationally in the accounting process because of the widespread occurrences of creative accounting and scandal. These two common events have created serious concerns among the investors globally. This has changed the image of management accounting as an objective discipline and showed the political nature of accounting. Many individual country case studies have been done to evaluate the existing management accounting practices globally (Broomwitch and Wang, 1991; Amat et al, 1994; Adlegan, 2000). Given this background, this essay critically evaluates the subjectivity of management accounting and the various images and practice that have shaped the subjectivity debate. The organization of the essay is given below. Section 2 discusses the debate regarding convergen ce to IFRS and true and fair value concept. Section 3 discusses the creative accounting in detail. Section 4 concludes the essay. 2. ... It is argued that the convergence of national accounting standards and IFRS has advantages like internationally comparable financial information with high quality. Moreover, it is supposed to obtain other benefits of globalization (Purvis et al, 1991). At the same time, this has created serious concerns in many nations also in spite of the above-mentioned benefits of financial reporting under IFRS. The main reason for this concern is that though it has many advantages, it may sometimes avoid country-specific interests (Barton, 1999). The internationalization can lead to the emergence of many account setting bodies which can have their own specific interests that can be in conflict with the interests of a particular nation. These groups can have the dominating power in such cases and the specific interests of a nation can be ignored. This has been a debatable issue in the recent years. IFRS has many major requirements, among which the main is the need for fair value reporting of their financial matters by the public companies in their financial statements. Based on this approach, the exchange price estimates need to be the basis for the asset and liability measurement in some cases. These prices need to be in a transaction at present and between parties who are not associated with each other and are known (Landsman, 2006; Ryan, 2008). However, this approach has raised many questions among the different scholars later. There have been many concerns regarding the fair value approach. In case of illiquid markets, the fair values can be obtained only by adjusting for illiquidity. Here, the market to market values or market to model values will be the adjustment done for estimation of fair values (Landsman, 2006).