Accounting Principles: Competing Views

There are two competing views of accounting principles: one maintaining that accounting principles are based on what is generally done in practice and the other holding that a foundation of fundamental premises ("concepts") necessarily underlies and determines sound practice (Storey, 1998, p. 1).

This research examines the merits of the two competing views of the philosophical basis for accounting principles as delineated in the above quotation. With respect to the above quotation, its author, Reed Storey (1998), a former senior technical advisor at the Financial Accounting Standards Board (FASB), added that the latter view (that accounting principles are based on "a foundation of fundamental premises" that both underlie and determine "sound practice") "has been the source of significant advances in accounting theory for more than 20 years and has affected financial accounting standards and practice through the FASB's conceptual framework" (p. 1). Having made that assessment, however, he went on to state that accounting practice, nevertheless, "has continued to be dominated by the former view" (that accounting principles "are based on what is generally done in practice") in the United States (Storey, 1998, p. 1).

Based on the dichotomy described above, one can understand that the competing views of the philosophical basis for accounting principles create a contentious issue when the di

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he collateral are vested in a special purpose trust. That can be tracked, more or less, but the securities' title itself may even be elusive if the certificates are stored in central depositories" (p. 80). Blount (1995) added that: "In our generation, ownership interests have been spun out and new layers added at spectacular rates, but the driving force remains the central conflict between the borrower's desire for flexibility and the lender's need for analytic consistency. Always trailing in the wake of this race are the accountants, who have once again found the usual definition of an asset to be inadequate. This debate over the nature of an asset has turned accountants into philosophers, as the Financial Accounting Standards Board searches for a suitable paradigm to bring consistency to balance sheets" (p. 80). The controversy between the business community and the FASB in the United States over the philosophical basis for accounting principles has heightened. Picker (1996) stated that: "The long-standing conflict à has finally reached a point of mutual recrimination that may undermine the ability of the main accounting-rule-setting agency to effectively develop generally accepted accounting principles. Financial executi
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Approximate Word count = 3155
Approximate Pages = 13 (250 words per page)

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