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Theory Construction and Professionalism and Ethics in Accounting - Research Proposal Example

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The paper “Theory Construction and Professionalism and Ethics in Accounting” is a cogent example of a finance & accounting assignment. Teleology is defined as the study of nature in philosophy, where things are described regarding the way they appear or the end goal of the existence of this matter…
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Student Name: xxxxxx Professor: xxxxxxx Title: Accounting Theory 20 March 2016 Question 1 (a) Teleology is defined as the study of nature in philosophy, where things are described regarding the way they appear or the end goal of the existence of this matters. In teleology, the definition of morality is in line with duty or activity which is carried out so that what is right or desirable can be achieved as the end product (Muraca, 2014). This means that the primary line of a given duty is to achieve what is right or desirable. The concept of teleology is believed to have been first observed from the writings of Plato and Aristotle. However Aristotle appears to be a critic since he does not agree with being an intelligence being, that is God being the creator of natural causes. The purposes or goal can either be intrinsic if it is human oriented and extrinsic if naturally oriented for instance the growth of an oak tree to full maturity. Deontology is defined as normative ethic’s position which concluded that the morality under which an action is carried, is determined by the rules that govern the action (Boyce, 2014). It is not based on the outcome of the action, which is whether the result is evil or good. It is an obligation based kind of morality of ethics, where one is bound by the rules under which an action is undertaken. The doer of the action is judged by what the rules state (Bentham, 1983). Immanuel Kant, one of the proposers to this ethic, says that morality is dependent on whether a man is in the line of duty or not. (b) From an egoistic perspective, Jimmy should take heed of what the managing director says even though it conflicts with the rule of the law. It is because, at the end of the day, selling the company with a good rapport will ensure that returns are good, and the company can get buyers readily. This is right according to teleological ethics since the end results are good. Even though the director is using crooked means to achieve the end results, Jimmy should look at the many employees who will retain the job. The managing director also promises Jimmy a good salary increase if he does accepts to continue keeping the flow of the stock unwritten for the time until money is pumped by the potential buyer. This is all good for the sake of Jimmy, who will now be able to live a better life. Jimmy’s moral action is based on this right or desired end results. Further, the use of director’s position to influence Jimmy’s decision is for intrinsic purposes. (c) Had Jimmy utilized the utilitarian theory which states that the behavior of a person is mainly determined by what will bring good (Bentham, 1983). So whatever decision one takes, whether it is teleological or deontological a hard decision for Jimmy since either way it is for the good of the company. However by evaluating the pleasure or the good feeling accrued in comparison with the pain or suffering others may get after such the action which he chooses, Jimmy would be compelled to go with what the managing director says. There are some issues that come up for the director. By holding the stock, the company will be able to attract large stock values to the favor of the shareholder. This will also attract the buyer who will pump in money into the business and thus cause it to thrive. The employees of the company will not have to be retrenched since there will be enough resources to keep them. Therefore, though deontology demands the rules to be followed, the end goal, in this case, is what is beneficial or good. Thus, if Jimmy decides to use utilitarianism, he will most probably go for teleology. Also, since Utilitarianism asserts that the end results of an action are what will determine whether the action was wrong or right; the results of Jimmy’s action will be the judge. If Jimmy is caught and thus he is sacked together with the managing director, then his actions are immoral. (d) Jimmy should take the matters to the higher authority in charge such as the board of directors, or since he is dealing with the managing director, he could simply refuse to cooperate with what the director, since he is going against the deontology theory. The end or goal of the course of action is only to benefit the director of the company and to lie that the company had many returns, but this has been occasioned by hoarding. Jimmy as a person who must act with integrity should face the boss who is also acting against the law or rules of the company. Here, the slow moving stock which is large in number shows a breach of the rules which states that the stock should be cleared in time. The end results which the boss tries to explain that the result or goal which is to have the register company stocks that went out at an inflated price. There are some rules which Peter wants to breach, where this is against the deontological normative ethics: a) He asks Jimmy not to include the stock at the end of year stocks report. b) He wants the balance sheet to carry inflated stock values so that the prospective investors may pump money into the business c) He is risking Jimmy’s position and that of all other employers and the future of the company. What he promises may remain to be a dream especially if the buyer suspects there is something fishy taking place. Regardless of what good may come as a result of the coalition between Jimmy and the director, whether right or evil, deontology says that if it breaches the rules, then the deal should be refused. Jimmy must be accountable to the laws that govern the workplace no matter how good the deal looks. Question 2. Accounting theory can get defined as the logical application of a broad range of principles and framework that aid in the creation and improvement of efficient guidelines in accounting upon which-which accounting practice is based (Baxter, 2014). The theories developed also provides a frame of reference that aid in the development of substantial practices in accounting (Hendrickson, 1992.) A Theory is a hypothesis assumed because of an argument or investigation or scientifically acceptable general principle or principles offered to explain phenomena, events or things (Merriam-Webster) dictionary. A theory would constitute; Proposition, which is a statement that is concerned with the relationship among the concepts whereby concept would be the generalized idea or expression in words about the events or phenomena observed in the real world. The theory is meant to offer an explanation as well as a prediction which helps us in creating a more understanding of the phenomena or event that exist in reality. About the above, it becomes very crucial for any accounting theory to be evaluated more so scientific ones. Reasons as to why to assess any accounting theory would vary and go beyond the strategy or why or how distinction to provide a more logic and informed decision. This not only helps us make sound judgments or decisions on what kind of methods to be used but also helps define under what circumstances and towards what forms of evaluation influence do the method has when applied. However, when evaluating a theory one would be seeking to either prove that something is working or improving the practice of a project (Rogers and Smith 2006). Why we need to determine is out of our accountability to regulating boards and standards and also for the people we are working with within the accounting discipline. On improving this comes as a result for us to have better-working theories that help to strengthen accounting practice. We look to evaluation as a way to help strengthen our practice, organizations, and programs (Deegan, 2012). There are various criteria in which an accounting theory can be identified and justified. Any scientific or accounting theory should be; Substantiated – a theory ought to be comprehensive or detailed. This, therefore, implies that it cannot be independent of prior work and evidence (Bonin, 2013). It needs to have some justification for it, a proven record of its workability in the accounting field or its related field. Therefore, this means there needs to be enough study of the case studies, data collected which is the evidence on which the theory will be developed and an extensive and critical evaluation of the data gathered upon which the theory is hypothesized from. Explanatory – theories should be able to explain the science is in and be able to cover causalities. It should be able to describe or give explanations of any disconfirming evidence that negates the theory. In light of such occurrences the theory should offer practical solutions and if not, provide avenues to revise the theory or do we just ignore the occurrences. As part of the explanatory, it should be able to solve real-world problems and not just be on paper; it needs to be practical have an applied value to it. Predictive and testable- precision and testability demand a good theory to consist of constructs that are tightly interrelated, readily available to reliable, clearly defined and valid measurement through negating or falsifiable hypotheses (Popper, 1963). Theory needs to make predictions that can be tested so that the theory in itself can in principle be rejected. Comparing the two theories, i.e., normative and positive accounting theories; Positive accounting theory does not provide avenues for future predictions, and hence normative theory would be more appropriate where a company needs to do any future projections (Scott, 2014). Focusing on positive accounting theory which is more descriptive rather than being prescriptive and it fails to predict future events that the current accounting may not cover. Matthews & Perera (1996) recognizes that for future circumstances and practices to be considered there is a lack of anticipation in current accounting standards. It is clear that this theory would fail in a case where future predictions are needed, and it’s more appropriate when conflict arises as it clarifies the situation. PAT theory can also be substantiated in that it has been around for the last five decades proving its existences and workability. Development of PAT began during the 1960s and began as a tool used to analyze guidelines of normative accounting assumptions and was to be later popularized after Watts and Zimmerman used it. The first set of theories (which included the normative theory) analyzed the relationship between accounting profit and stock prices. Results from this later showed that the amount of benefit reflects the criteria for the valuation of assets (such as cash flow and risk). This turn of events according to Watts and Zimmerman (1986) claims, weakened the claim about normative accounting literature as accounting earnings are meaningless because the amount is calculated using the multiple valuations. More studies increased doubts about the experimental descriptions of underlying normative guidelines of the assumptions during the 1960s as follows. There is only one source of information about the company, The amount of profit is meaningless because it has not been prepared in agreement with a base unit, and There is a possibility that the stock market may be misleading due to the manipulation of the value of profits through accounting choices. The content-based analysis of information indicated that it is unlikely that these particular assumptions are based on real world, and hence, a more practical theory (Positive Accounting Theory) needed to be developed to deal with an immediate crisis within a company. Reference: Scott, W. R. (2014). Financial accounting theory. Pearson Education Canada. Bentham, J. (1983). Deontology; together with a table of the springs of action; and the article on utilitarianism. Rosenblueth, A., Wiener, N., & Bigelow, J. (1943). Behavior, purpose and teleology. Philosophy of science, 10(1), 18-24. Sheng, C. L. (2012). A new approach to utilitarianism: A unified utilitarian theory and its application to distributive justice (Vol. 5). Springer Science & Business Media. Bonin, H. (2013). Generational accounting: theory and application. Springer Science & Business Media. Deegan, C. (2012). Australian financial accounting. McGraw-Hill Education Australia. Baxter, W. T. (2014). Accounting theory. Routledge. Muraca, B. (2014). Teleology and the Life Sciences: Between Limit Concept and Ontological Necessity. Life and Process: Towards a New Biophilosophy, 26, 37. Bampton, R., & Cowton, C. J. (2013). Taking stock of accounting ethics scholarship: A review of the journal literature. Journal of business ethics, 114(3), 549-563. Boyce, G. (2014). Accounting, ethics and human existence: Lightly unbearable, heavily kitsch. Critical Perspectives on Accounting, 25(3), 197-209. Read More
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