Discuss about the Positive Accounting Theory for Methods of the Hypothesis.
The emergence and use of positive accounting research are highly debated and this is one of the major why this article is evaluated. The main aim of the paper is to shed light on the traits of human that is concerned with the usage of statistical and methods of the hypothesis (Dunmore, 2009). The theory of knowledge in regard to the application is highlighted and the pitfalls of the system of statistics such as development of models on a casual basis, improper reproduction to instil confidence in the findings because of low level of interest in the numerical parameters, etc (Fogarty & Markarian, 2007). The main goal of the paper is to stress on the points that leads to deficiencies and they to vouch for alternative methods or enhancements that will lead to a strong positive accounting research.
The initiation of the paper begins with the evaluation of human being. The different shades of a human being in the different scenario are observed. Further, various other concepts are even discussed that plays a leading role in influencing the reason making capacity. It is seen that the acts, as well as practices are guided by a variety of factors. Hence, from the article, it is seen that the behavior of a human being is different in two different situations. This is the major point of research in positive accounting. It is correctly remarked that a man is guided by a rational point of view and the response of a person depends on according to the different scenario. Such behavior can be witnessed in more than 70% of the case.
It is a well-known fact that accounting, as well as operations are tending to be technical in the scenario and hence, there is a sharp fall in the interaction of human beings. Moreover, with the due passage of time, everything is controlled with the help of system. Therefore, the dependency is more on the system and it has become really difficult to ascertain the rational objective of the human. Human behavior is guided by various aspects and hence difficult to adjudge. The assumption that has been taken into consideration debars the positive accounting research to make a strong contribution to the society.
The results, as well as expectations, are important. The paper strives to enhance the effectiveness of the research by looking into the operation of the positive research and then providing some suggestions. Various examples have been posted by selecting research models. The statistical, as well as hypothesis tool, are needed to evaluate various situations and the manner in which the auditor reacts which is linked to the assumption of rationality (Francis, 2006). The end result of the hypothesis is in tune with the samples that are selected however, and hence the objective fails to be achieved. From the article, it comes to the forefront that the relationship cannot be ascertained with the help of two variables and requires more. The major requirement will be to evaluate the theories that compete with each other instead assessing a theory for the hypothesis. It is important to assess different theories as it becomes vital in ascertaining the status and shed light on the current practice.
The paper aims to strive for an enhanced model that is serious in nature and specified on a higher level. Further, the methods need to be strong so that testing can be rigorous in nature. Moreover, testing should be free from any error and this can be possible when model is strong. Links of reliable nature needs to be prepared with proxies that will lead to a projection of strong linear link and development of measurement ideas. This projects a clear fact that research paper not only stresses on the concept of hypothesis alone. Further, it will create a better scenario for parameters forecast. Hence, it is imperative that new concepts should be developed that will ensure a refined research activity (Hopwood, 2007). The research will lead to better result if an extensive replica that confirms the effectiveness of the measurement and leads to the probe of the research limitations.
The assessment of positive accounting research is the research question and whether any ideas or opinions is present through which the accountants, as well as an auditor can act. However, it is subjected to immense critics (Frankel et. al, 2002). The testing of the hypothesis is done by taking samples of chargeable audit fees against the audit complexity and the firm size. It is a form of quantitative research and tests the manner in which the fees of the audit has been charged, the plans are presented and utilization of the techniques of regression that plays a major part in the case of the hypothesis (Ashton et. al, 2004). This model is present to trace the Type I error. It needs to be noted that the analysis of critical evaluation ensures that the hypothesis, as well as testing, cannot be completely accurate. The goal of the hypothesis is to state that the null hypothesis is not correct because the results are linked to the sample. Hence, it is a clear-cut notion that testing of hypothesis provides a weak proof when it comes to the hypothesis of alternative nature. Thereby, the hypothesis value is of not a big concern when it comes to the positive accounting research.
From the total grasp of the material and the research, it can be commented that the main stress of the paper is on the positive accounting research. Moreover, the literature review attempts to find that whether the research is designed in a manner that will attempt to attain the aims and goals. Further, the research depends on a number of factors and models.
There are rules and regulations to be followed in the practice of accountancy and auditing. These set of rules are called accounting standards, taxation and statutory requirements and adherence to these is essential for compliance. These are mandatory to be practiced and are put in place to create a uniform framework of workings and no significant things are left out. In spite of such clearly laid down rules and methods, auditors deviate from the requirements and these are formed as a basis of study to understand the reasons for such differences (Ashton et. al, 2004).
There are various factors determining these differences in expected action – human factors – which lends it the rationality and independence of thought of each acting person. Errors and biases creep in as the marks of independence create a pattern and work with prejudices, even if hidden. Such tendencies can alter the planned course of action (Antle et. al, 2006).
Such behaviors are a course material worth for the basis of this paper. Such behavior and human tendencies can be studied and investigated to so as not to impact the framework. We work with a hypothesis and take a sample size with the assumption that it represents the population. For this approach to work successfully, all diverse kinds of possibilities have to be listed down and after taking one item as a sample from each kind, the misinterpretation of the results can be ruled out one by one. Thus, this will avoid checking each and every variety and will give an overall cross-check between the different kinds of scenarios. In short, the cross-checks will be easier and less cumbersome.
However still, using one method does not guarantee a perfect result as each statistical method is laden with its own limitation and qualitative testing is usually not carried out. Also, a hypothesis will consider usually one condition whereas an audit will have more than variables to be tested. An audit looks simple but consists of many variables that play an important role (Dunmore, 2009). Hence, occur a point of an issue because hypothesis considers only a single variable. Therefore, the research gets distorted.
The article has opened up the topics of discussion pertaining to the felt and experienced loopholes in the system at present. The current system, though not effective has invited further discussion and moved further discussion in this direction (Dunmore, 2009). Such research is a necessity to pave the way for further improvements in the system. As the research was done by (Humphrey, 2008), the results shows that human behavior is usually rational and tries to maximize the benefits of a situation. The scientific mind come through with the actions of humans being rational laced with rationality and scientific judgment before a significant decision.
As with everything, this paper has its limitations. Firstly, the paper has mostly focused on the critical part of the thesis and would do better to provide more suggestions along with examples to give more credibility to the research. The article innocently takes the existing theories to be true and applies these theories though in reality these theories have evolved over a period of time and have not been tested since then. Such advancements are a proof that development has been happening in this field. Moreover, advancement is the need of the hour because if the limitations need to be removed it can be done so by enhancing the level of research and study (Lapsley, 2012).
Different statistics measures will present different results and accounting being subjects with a number of variables and limitations, the measurement errors should be kept in mind. Picking up a good representation of samples is important as it should present a wholesome picture as much as possible of the entire population. Still, judging an entire population from a sample presents its own limitations and the pitfalls should be taken cognizance of before analyzing the results (Carol et. al, 2016). This is one of the major pitfalls that need to be considered because sample might not reveal the true nature of the populations and the information.
Conclusion
We have understood from this study that the pace of current accounting research is not enough and has not yet been achieving the aim of conducting it. A more robust and systematic method with methodical approach needs to be undertaken. Vulnerable models and analytical modeling is the way forward with more stringent testing and re-testing that can achieve by replication and can provide various positive results for accounting research.
The limitations and constraints of this field can be utilized for the benefit of the field and the opportunities arising from the research can be used for creating a more robust and theoretically sound framework. Over a period of time, such new techniques increase the credibility and validity of the research to be able to adapt more freely to new situations. Thus this phenomenon of positive accounting research will have to keep moving forward.
References
Antle, R., Gordon, E., Narayanamoorthy, G., Zhou, L 2006, ‘The joint de-termination of audit fees, non-audit fees, and abnormal accruals’, Review of Quantitative Finance & Accounting vol. 27, no. 3, pp. 235-266.
Ashton, D., Dunmore, P., Tippett, M 2004, ‘Double-entry bookkeeping and the distributional properties of a financial ratio’, Journal of Business Finance and Accounting vol. 31, no. 6, pp. 583-606.
Carol, A.A, Brad, P , Prakash J. S, & Jodi Y 2016, ‘Exploring the implications of integrated reporting for social investment (disclosures)’, The British Accounting Review, vol. 48, no. 3, pp. 283–296
Dunmore, P.V 2009, Half a Defence of Positive Accounting Research, Massey University, Wellington, New Zealand
Fogarty, T. J & Markarian, G 2007, ‘An empirical assessment of the rise and fall of accounting as an academic discipline’, Issues in Accounting Education vol. 22, no. 2, pp. 137- 161.
Francis, J. R 2006, ‘Are auditors compromised by audit services? Assessing the evidence’, Contemporary Accounting Research vol. 23, no. 3, pp. 747- 760.
Frankel, R. M., Johnson, M. F., Nelson, K. K 2002, ‘The relation between auditors’ fees for non audit services and earnings management’, Accounting Review vol. 77, no. 4, pp. 71.
Hill/Irwin, University Press.
Hopwood, A.G 2007, ‘Whither Accounting Research?’, The Accounting Review, vol. 82, no. 5, pp. 1365– 1374
Lapsley, I. 2012, ‘Commentary: Financial Accountability & Management’, Qualitative Research in Accounting & Management, vol. 9, no. 3, pp. 291-292.
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