Accounting theory in Australia Essay Example | Topics and Well Written Essays - 1750 words

Accounting theory in Australia - Essay Example One such standard that has been much debated is the fair value accounting measure. Fair value accounting has gained popularity in the recent years as the standard for measuring assets and liabilities by firms. Although, fair value accounting has been accepted and adopted by firms across the world, it is still considered to be inefficient in its utility. Perhaps it is because of the discrepancy in the financial systems and conceptual frameworks which have given rise to the chaos that is evident in todays corporate environment. In the following discussion the researcher shall discuss the impact of fair value accounting and disclosures based on current accounting standards, conceptual frameworks and theoretical assumptions with the view to enumerate on its viability, utility and efficiency. International accounting standards are broadly divided into the United States’ independent regulators’ approach and the European public ownership approach. The European approach had been based on the theoretical framework that since corporations are usually serve their own profit interest, it is up to the government to curb private monopolies and monitor their activities. On the other hand the US independent commissions for monitoring and enforcing regulation had been developed with the view to give the market economic independency on the premise of laissez faire. Ironically, as Gaffikin (2005) points out, both the systems fail to achieve its objective of regulation as a result of market inefficiency and economic regulation consideration. This led to the development of a regulation system based on interest theory - that is serving both the private and public interests (Gaffikin 2005). Today, accounting standards across the world is based on the US Financial Accounting Standard Board and the International Accounting Standard Board. Australia follows similar measurement