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Adv. Accounting Theory & Practice - Essay Example

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Adv. Accounting Theory & Practice

It is obvious that corporate social responsibility is a part which is very important for running the businesses successfully. But following the predefined the environmental policies compels businesses to behave in a certain a way, for example using high quality raw material, and atmosphere friendly plants. It brings cost to the business which is certainly not favorable for businesses. So, businesses have started deceiving the regulatory institutions and other stakeholders. They have found their ways in fulfilling the requirements of the regulatory bodies. There are loop holes in the system which companies use for manipulating the data and information shared with the stakeholders (Hooghiemstr, 2010). Businesses always communicate with their stakeholders in written form. So there is a lot of documentary material involves. They are shared with stakeholders periodically. Companies which are always under pressure by their stakeholders seem to be using different tactics for the satisfaction of their stakeholders (Clatworthy and Jones, 2001). For that they give out the company information in a manner that will always highlight the areas with positive performance figures regarding company. They never talk about their weaknesses. This is called impression management. Two types of information are presented in the above mentioned documents of company. One is related to the qualitative data and the other is about calculated accounting figures. The qualitative narratives are highly manipulated. They never give out the exact matter. The quantitative narratives used in financial reporting are obtained from accounting books and financial statements of the company (Jones & Shoemaker, 1994). The usage of rhetorical devices in following accounting standards helps companies to manipulate the opinions of the readers of those reports. Rhetorical devices are related to accounting standards which allows businesses to present their accounting information in a customized format of their choice. The accounting narratives used in accounting reports mostly are out of the consideration of the auditors. The reason is that they do not come under the scope of auditing. This gives room to the companies to manipulate the information they share with their stakeholders. Generally, the external auditors of the company are restricted to check limited amount of information in financial records of the firms. The accounting narratives which are outside the scope of auditing have been given the name of discretionary accounting narratives by Brennan & Merkl-Davies, 2011. Impression management is complicated. Because while following the impression management strategy companies have to look into the interests of all stakeholder, then they decide which of them are at conflict with business, and which of them are conflicting with each other. Then they look at the multiple choices available to them for communicating their financial information. Then they analyze all the choice and choose the best, which aids in attaining the utmost interests of ...Show more

Summary

The firms in different industries have a conflicting nature in terms of their responsibilities towards society.Their scope of responsibilities clearly depends upon the area in which they are doing business…
Author : ernserlenora
Adv. Accounting Theory & Practice essay example
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