Is the use of financial accounting fit for purpose? An exploration of the theoretical foundations, framework and practicalities
ISSN: 1030-9616
Article publication date: 10 June 2021
Issue publication date: 23 August 2021
Abstract
Purpose
The purpose of this paper is to explore issues related to the use of financial accounting and reporting by discussing three interrelated areas: the theoretical foundations, the framework and practicalities. The paper also discusses participatory and pluralistic approaches to accounting and corporate governance as alternatives to address some of these issues.
Design/methodology/approach
This is a narrative research based on deductive thematic analysis of secondary data. This study provides a general overview of the existing literature of the limits of the use of financial accounting and its impact on business and society.
Findings
In terms of the theoretical foundations, this paper contrasts financial accounting explained by agency theory and a dialogic accounting approach. The findings of this study emphasise the need to establish an accounting framework for the interests of the many (not the few) in conjunction and simultaneously with a participatory and pluralistic approach to corporate governance. Finally, this paper explores accounting for carbon emissions and recent financial accounting scandals to analyse the impact of the inappropriate use of financial accounting and reporting in business and society.
Originality/value
This paper provides an overview of the limits of the use of financial accounting by exploring its theoretical background, framework and practicalities. The paper also discusses the need for new accounting and corporate governance frameworks that allow a pluralistic and participatory approach to the decision-making of companies.
Keywords
Acknowledgements
The author would like to thank my husband and son for their patience and support when she had to spend the holidays and weekends writing and revising this paper. The author is also grateful for the motivation she received from Prof Jan Bebbington to pursue this publication.
Citation
de Aguiar, T.R.S. (2021), "Is the use of financial accounting fit for purpose? An exploration of the theoretical foundations, framework and practicalities", Accounting Research Journal, Vol. 34 No. 4, pp. 412-428. https://doi.org/10.1108/ARJ-05-2020-0119
Publisher
:Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited