This research critiques the theoretical propositions advanced by Lauren Kelly Newton in Accounting Policy Formula tion: The Role of Corporate Management,1 with respect to the underlying basis of the policy framework within which account ing theory is developed. In considering the basis for account ing policy formulation, Kelly Newton emphasizes the changing demands of the environment within which accounting functions, and the political and social character of the accounting pro cess, while developing a policy making model for the profes sion.2 Underlying the development of a policy framework, how ever, is the proposition advanced by Kelly Newton that the development of accounting policy and theory should be based upon positive philosophical imperatives, as opposed to norma tive philosophical imperatives.3
In this critique, Kelly Newton's propositions are consi dered within the context of normative and positive philosophi cal concepts. Further, the appropriateness is assessed for the
1L. Kelly Newton, Accounting Policy Formulation: The Role of Corporate Management (Reading, Massachusetts: Addison Wesley Publishing Company, 1980), p. v x, 1 163.
2Ibid., pp. v, vii ix, 3 5, 26 31, 106 107, 141 142, 158 160.
1 2 resolution of accounting issues (1) on the basis of accounting policies with a positive, as opposed to a normative character generally, and (2), more specifically, through application of Kelly Newton's proposed policy making model.
THE PURPOSE AND CHARACTER OF ACCOUNTING
Most accounting texts state that the purpose of financial accounting is to provide the financial information necessary for an organization to do its job, and for an organization to be able to accurately report its performance to investors, cre ditors, and governmental agencies.4 Kelly Newton does not challenge this premise. He does, however, contend that the varying demands placed upon corporate managers, and the diver sity of the needs of ...