From instrumentalism to realism in accounting

Susila Munisamy, Chia Zi Fon () and Edward Wong Sek Khin
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Susila Munisamy: Associate Professor, Faculty of Economic, University of Malaya.
Chia Zi Fon: Faculty of Economic, University of Malaya
Edward Wong Sek Khin: Associate Professor, Faculty of Business and Accountancy, University of Malaya.

Journal of Economic and Financial Studies (JEFS), 2015, vol. 3, issue 4, 68-72

Abstract: How, by their nature, the humans cannot have perfect knowledge, the only absolute thing is relativity, this being present in all their actions. In accounting, given its subject matter, it can talk of the relativity of the values that characterize the events in the life of an organization, this being caused by a wide variety of factors. In a previous article (Enachi, 2012) was identified a particular paradigm with visible effects in accounting practice, more precisely, it was talked about the transition from instrumentalism to realism in accounting. This paper supports the previous assertions and after explaining the accounting implications of the two fundamentally different approaches tries to provide solutions for bringing accounting closer to reality. A literature review is conducted to identify the limits that accounting presents in its attempt to capture the truth and the factors responsible for these limits. The main conclusion is that the quality of the professional judgments exercised in creating and implementing a system for accounting representation of reality, although partially controlled, is essential in increasing the reliability of the information provided by accounting.

Keywords: Accounting practices; economic substance; faithful representation; professional judgment; regulatory framework; relevance. (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:lrc:lareco:v:3:y:2015:i:4:p:68-72

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