Rethinking The Going Concern Assumption As A Pre-Condition For Accounting Measurement

This study compares the principles of the going concern concept against the principles of representational measurement to determine if it is possible to establish foundations of accounting measurement with the going concern concept as a precondition. Representational measurement theory is a theory that establishes measurement in social scientific disciplines such as accounting. The going concern assumption is prescribed as one of the preconditions for measuring the attributes of the elements of the financial statements of an entity that is expected to continue in business for the foreseeable future. Studies in accounting measurement have so far not succeeded in establishing foundations of measurements under going concern. The findings of this study suggest that the going concern assumption is anti-measurement in nature. Consequently, the findings suggest that financial statements be prepared on a basis that distinguishes quantifications produced under conditions that facilitate accounting measurement from those that do not

Towards Formulating An Accounting Theory Of Meaningfulness

This study highlights the need for a theory of meaningfulness for accounting information. A theory of meaningfulness determines the theoretical position that may be taken about the scientific content of information. The need for such a theory in accounting arises from the perspective that users of accounting information have not been able to take a firm theoretical position about the scientific content of accounting information in the financial statements. This has caused users of accounting information to lose confidence in the financial statements. This paper uses the representational measurement concept of meaningfulness to highlight the inadequacies of the current accounting concept of meaningfulness and to suggest possible ways of addressing these inadequacies. The development of a theory of meaningfulness of accounting information would improve the users’ confidence in the financial statements

Towards the conceptualisation of flow in corporate financial reporting theory

Developments in science, technology and sophisticated interconnected social networks increase the speed and volatility of the flow of economic-related energies, such as financial and intellectual capital. These developments require an information theory on corporate financial reporting that is stable at a fundamental level and focused on the disclosure of those systemic attributes that are pivotal to the sustenance of business entities operating in the global economy, or in economies with similar traits. The limited success in attaining stability is caused by, among others, the application of diverse, restricted and even opposing perspectives, resulting in random theoretical development, often unaligned with economic reality. The main aim of the article is to investigate whether the introduction of an underlying concept, principle or theorem, founded on the phenomenon of flow, to general-purpose corporate financial reporting theory could contribute to rendering stable guidance for coherent theoretical development while simultaneously enhancing alignment with the current global economy. As the study was conducted at conceptual level, a qualitative, transdisciplinary theoretical research methodology was applied by taking into account related basic concepts of philosophy, corporate financial reporting theory, economics, management accounting, physics and complexity. The study suggests that the conceptualisation of flow in general-purpose corporate financial reporting theory could contribute to rendering stable guidance for further coherent theoretical development, and improve on the alignment of the theory with the dynamics of the current global economy. This finding creates the opportunity to explore a variety of new reporting approaches from a scientific perspective, which could aid to enhance the disclosure of useful financial information.http://www.td-sa.netam201

Commonality between the preparer and the user of financial information as a prerequisite for conveying meaning

Preparers of financial information encode their message in an accounting language that needs to be decoded by users to enable them to understand and use the information properly. In order to convey meaning successfully, the sender and the receiver of a message need to use the same method to encode and decode the message, that is, there needs to be some commonality of language between the two parties. The research problem focuses on the issue of whether there is room to increase the commonality between the preparer and the user as a prerequisite for conveying meaning in corporate annual reports (CARS). The research problem was investigated mainly through questionnaires aimed at preparers and users of accounting information. It was found that the statutory and contextual sections of CARS are interdependent and could be utilised more in order to enhance the commonality of the accounting language for conveying meaning.http://www.unisa.ac.za/sabusinessrevie

Rethinking the going concern assumption as a pre-condition for accounting measurement

This study compares the principles of the going concern concept against the principles of representational measurement to determine if it is possible to establish foundations of accounting measurement with the going concern concept as a precondition. Representational measurement theory is a theory that establishes measurement in social scientific disciplines such as accounting. The going concern assumption is prescribed as one of the preconditions for measuring the attributes of the elements of the financial statements of an entity that is expected to continue in business for the foreseeable future. Studies in accounting measurement have so far not succeeded in establishing foundations of measurements under going concern. The findings of this study suggest that the going concern assumption is anti-measurement in nature. Consequently, the findings suggest that financial statements be prepared on a basis that distinguishes quantifications produced under conditions that facilitate accounting measurement from those that do not.http://journals.cluteonline.com/index.php/IBERnf201

Rational and behavioural predictors of pre-retirement cash-outs

Given the worldwide concern that individuals are not saving sufficiently for retirement, many governments are taking action to try and rectify this tendency. A key focus area is implementing policies to dissuade individuals from accessing accumulated retirement funds when changing jobs. While traditional economic theories assume that individuals act rationally and make optimal decisions without outside intervention, current policy interventions support behavioural theories of decision-making where sub-optimal choices occur due to limitations in human decision-making. Therefore, interventions are based on the assumption that individuals act irrationally. Despite these interventions, many individuals still access their funds suggesting that current interventions may not be sufficiently aligned with the factors influencing decision making in this environment. The main research objective of this study was to test empirically both rational and behavioural factors that could potentially influence retirement preservation decisions, to determine which factors were the best predictors of whether an individual preserved funds when changing jobs. A research instrument was designed using a combination of existing psychometric measures and customised questions to form an analytical survey. This was used to test the factors that predicted the preservation decisions of a sample of 256 academic and non-academic personnel at a tertiary education institution in South Africa. The study found that behavioural factors play an important role in predicting preservation decisions. In particular, behavioural factors related to bounded rationality, due to the computational complexity of the decision-making environment, emerged as important explanatory variables, indicating that interventions such as decision support and guidance may assist individuals in making optimal decisions.http://www.elsevier.com/ locate/ joephj201

The rationality of retirement preservation decisions : a conceptual model

Low retirement savings rates, coupled with a lack of preservation of retirement funds when individuals move jobs, could have adverse repercussions on a person’s ability to retire with sufficient funds. The traditional response to low preservation levels has been to impose taxes on cash withdrawals and in some cases to mandate preservation. However, without a complete understanding of the factors that drive low levels of preservation, these policy interventions might do more harm than good. This study carries out a critical, interdisciplinary literature review to construct a conceptual model of the factors which potentially lead to low preservation levels and outlines proposed interventions. The resultant model highlights the distinct differences in the drivers of rational and irrational behaviour and therefore, the distinctly different interventions required. Little is known about the rationality or otherwise of the decision making process of individuals in the retirement preservation context, however current interventions only assist if individuals display bounded willpower. It is essential that a better understanding of the decision making process is obtained to determine whether existing solutions address the problem adequately.http://www.ifrnd.orgJournalDetail.aspx?JournalID=

Towards the conceptualisation of flow in corporate financial reporting theory

Developments in science, technology and sophisticated interconnected social networks increase the speed and volatility of the flow of economic-related energies, such as financial and intellectual capital. These developments require an information theory on corporate financial reporting that is stable at a fundamental level and focused on the disclosure of those systemic attributes that are pivotal to the sustenance of business entities operating in the global economy, or in economies with similar traits. The limited success in attaining stability is caused by, among others, the application of diverse, restricted and even opposing perspectives, resulting in random theoretical development, often unaligned with economic reality. The main aim of the article is to investigate whether the introduction of an underlying concept, principle or theorem, founded on the phenomenon of flow, to general-purpose corporate financial reporting theory could contribute to rendering stable guidance for coherent theoretical development while simultaneously enhancing alignment with the current global economy. As the study was conducted at conceptual level, a qualitative, transdisciplinary theoretical research methodology was applied by taking into account related basic concepts of philosophy, corporate financial reporting theory, economics, management accounting, physics and complexity. The study suggests that the conceptualisation of flow in general-purpose corporate financial reporting theory could contribute to rendering stable guidance for further coherent theoretical development, and improve on the alignment of the theory with the dynamics of the current global economy. This finding creates the opportunity to explore a variety of new reporting approaches from a scientific perspective, which could aid to enhance the disclosure of useful financial information.http://www.td-sa.netam201

The process beyond the numbers and ratios

Accounting numbers and ratios represent merely reflections of reality and have limited meaning and significance in and of themselves. They may contain embedded meaning, but extracting it requires creative skills of interpretation. The purpose of this study focuses on the conversion of data into knowledge, observations about the discovered world and the discovering person - the interpreter. An empirically tested reference base or proportional model is offered to assist in the performance of an organised interpretation

Financial accounting and reporting : sustaining relevance in the present time paradigm

Accountants are looking for innovative solutions to challenges and problems that seem to become increasingly numerous and complicated. Researchers debate whether the emergence of these challenges is due to a general dissatisfaction with the existing accounting paradigm. This article therefore presents a transdisciplinary approach aimed at creating a new accounting paradigm. The discipline of accounting is challenged by blending the limitations within the present paradigm with the discoveries in physics and quantum mechanics. This study shifts the attention to those aspects of reality that characterise today's accelerated social change, disorder, instability, diversity, disequilibrium and non-linear relationships - all with a heightened sensitivity to the flow of time. By interpreting financial accounting and reporting from this perspective, new perspectives are offered from a holistic paradigm of transcendence in relation to the arrow of time and information capacity