ACCOUNTING: THEORY AND EMERGING ISSUES

About this Course

This is the final course in financial accounting and reporting and it builds on the knowledge and skills introduced in earlier financial accounting and reporting courses. It reinforces the fourth stage capabilities and competency-building in IFRS. The course is divided into two parts: the first one focusing on accounting theory and conceptual framework and the second part focuses on creative accounting and emerging issues surrounding the accounting profession. While the first part is akin to ¡°looking back¡±, the second part is akin to ¡°looking forward¡±.

Course Learning Outcomes

1) Explain development of accounting theories and conceptual framework in the accounting profession.
2) Construct a report on creative accounting practices by Malaysian companies.
3) Explain the impacts of emerging issues in accounting on the accounting profession in Malaysia.

Course Syllabus

+ Course Syllabus

1) History and Development of Accounting and Accounting Theory
1.1 Introduction and History of Accounting Theory
1.2 The financial reporting environment in Malaysia

2) Formulation and Verification of Accounting Theory
2.1 Formulation and Verification of Accounting Theory
2.2 Inductive, Deductive, Normative, Pragmatic, Behavioral
2.3 Positive Accounting Theory

3) Regulatory Approach of an Accounting Theory
3.1 The underlying theories - The politics behind the Standard setting process:
The rationale or origin of government intervention into the market for accounting information; The purposes and/or whose interests were served by this intervention.
3.2 The regulatory bodies - Malaysia setting (Accounting regulations (rules and guidelines); International perspective; Malaysian persoective)

4) Discussion on Conceptual Framework
4. 1 Definition
4.2 Brief history
4.3 Scope
• The objectives
• Characteristics of useful financial information
• Financial statements and the reporting entity
• Elements of financial statements
• Recognition and de-recognition
• Measurement presentation and disclosure
• Concepts of capital and capital maintenance

5) Creative Accounting
5.1 The motives behind creative accounting
5.2 Earnings Management
Off-Statement of Financial Position transactions
5.3 Grey areas in accounting
5.4 Engaging in management discretion
5.5 The impacts of creative accounting

6) Emerging Issues in accounting
6.1 Are accountant still relevant?
6.1.1 New technologies:
Data automation
Blockchain
Artificial Intelligence
Cloud computing
Big data
6.1.2 Rapid changes in accountant’s role
Data analyst
Business Advisory
6.1.3 Commoditised Accounting services
6.2 Integrated reporting

Frequently Asked Questions

Q1 : What are the definition of accounting theory?
A1 : Accounting theory is that branch of accounting which consists of the systematic statement of principles and methodology. However, theory cannot be divorced from practice. The theory underlies practices, explains and attempts to predict them. There is not and cannot be any basic contradiction between theory and facts. A theory is an explanation. However, every explanation is not a theory in the scientific meaning of the word. The objective of accounting theory is to explain and predict accounting practice. Explanation provides reasons for observed practice. For example, an accounting theory should explain why certain firms use LIFO method of inventory rather than the FIFO method. Prediction of accounting practices means that the theory can also predict unobserved accounting phenomena. Unobserved phenomena are not necessarily future phenomena; they include phenomena that have occurred but on which systematic evidence has not been collected. It is significant to observe that accounting theory may be based on empirical evidence and practices as well as accounting theory may be formulated using hypothetical and speculative interpretations.

Q2 : What are the usefulness of the accounting theory
A2 : Accounting is the mathematical science of collecting, recording, and compiling financial information into formats that can communicate that information to its end users in an efficient and effective manner. Accounting theories provide both the theoretical basis and the rules based on that theoretical basis used to guide accountants in creating useful financial documents. If accounting methods and practices can be considered the meat of accounting, then accounting theories are the bones that lend them shape and structure. Consider the usefulness of accounting theories in assessing the financial health of your own small business.

Q3 : What are the functions of accounting theory?
A3 : Functions of Accounting are; control of financial policy, and formation of planning, preparation of the budget, cost control, evaluation of employees' performance, Prevention of errors and frauds.

Q4 : What are the elements of accounting theory?
A4 : There are three basic elements to accounting theory: usefulness. relevance, reliability, comparability, and consistency. four points that all preparers of financial statements should know and recognize