Critical Analysis of Accounting

Question: Discuss about the Critical Analysis of Accounting ? Answer : Introduction This paper presents a critical analysis of the article titled as, Half a Defense of Positive Accounting Research and written by Dunmore (2009)[1]. The primary aim of this critical analysis is to find out the usefulness of the article in achieving the objectives sought to be achieved. The article is aimed at exploring crucial facts about the use of positive approach towards research in the field of accountancy. The article discusses theoretical frameworks with the support of practical data to explore facts about the positive accounting approach. Thus, both the qualitative and quantitative approaches have been used by the researcher in the research work. The aim of this paper is to test appropriateness of the approaches used and theories applied in the research work. Summary of Article The introduction section of the article presents that understanding and incorporating the human behavior in the process of setting principles of accounting is crucial. Modeling the system of accounting based on theories, which lack in their practical application, does not help in establishing cause and effect relationship. However, in order to construct an adequate system of accounting it is considered necessary to set principles of accounting based on cause and effect relationship. In this regard, positive accounting approach for research in the field of accounting is considered necessary. Research based on positive accounting approach seeks to find out actual accounting practices which are likely to be followed in the practical world. The article extends discussion on the application of positive research approach in the field of accounting. Further, the author has extended the discussion to the areas where application of positive research approach has been successful alongside the areas where it has failed. Further, the author also discusses the deficiencies in the application of positive research approach in the field of accounting along with suggestions for improvements. The discussion starts with explaining an example of application of the positive research approach in the field of accounting. Positive research in accounting field is one which stresses on establishing cause and effect relationship, though the causes may relate to the non rationale aspect of the human behavior[2]. The positive accounting theory states that accounting practices adopted by the professionals in the field of accounting are affected by self interest. It is quite commonly observed that the accounting manager may manipulate the accounting policies and procedures for their personal gains. This aspect of accounting is not covered in the researches which are based on the normative research approach as opposed to the positive research approach. Thus, there is a room for positive research in the field of accounting which is apparent from the arguments of the positive accounting theory. After citing an example of application of positive research in the accounting domain, the researcher linked it with scientific ontology and epistemology. The discussion resulted in an inference that the concepts of ontology and epistemology may not be hundred percent fit to be applied in the field of accounting, but they are not illogical too. Further, the author extended its work to hypothesis testing. At the first place, the author found that a theory that can not be falsified by disapproving observations can not be said to be scientific. Further, the theories which are built not based on the results of empirical data are difficult to be falsified. The positive accounting theory is built based on mere observations of human behavior rather than the results of empirical data analysis. Thus, the positive accounting theory can not be falsified and therefore it can not be said to be scientific. After that the author carried out wider discussion on how the theories could be falsified or tested when no data work is involved setting those theories. Further, the author brings into discussion the arguments of the qualitative positive research[3]. The author sates in this regard that its a misconception that for being a research to be called positive, it is needed to be based on empirical data work. The qualitative researches which do not involve data work can also be regarded as positive. Further, the author explains in his work about the logic behind statistical hypothesis testing and its weaknesses. In this regard, the author states that research in the field of accounting would involve some sort of data work which necessitates the use of statistics. However, while using statistics in the research work it should be kept in mind that it is used only to make estimations rather testing hypothesis to the final conclusion. Based on these findings, the author came up with the inference that the scope of application of statistics is very low in the field of positive and qualitative researches. After that the author moved its discussion further by exploring the alternatives to carry out positive researches successfully. In this regard, the author states that each theory has to be measured in precise detail and the models should be framed taking into account the practical world situations. Further, the author claims that the research should focus on measurement rather than testing. The concept of measurement is wider in sense than testing, thus, it is considered more appropriate. Based on this overall discussion, the author concluded the article by stipulating crucial articulations and inferences. At the first instance, the author concluded that the theoretical models are not appropriate to support positive research in the field on accounting. Thus, there is a great need to develop the theoretical models which can be applied in positive research. The lack of appropriateness in the theoretical accounting models appears to be due to increased use of adhoc quantitative models. At the end, the author concluded that contributions made by the positive accounting research are considerable and thus, there should be built up an environment that suits its adaptability. Research Question How the positive research approach is applied in the field of accounting and what are the difficulties encountered in its application? The research question is directed towards exploration of the use of positive research approach in accounting profession. This question arose from the fact that the accounting practices are highly affected by the human behavior. Thus, it becomes necessary to carry out the researches in the field of accounting based on the approach that focus more on practical aspect rather than theoretical frameworks. Theoretical Framework The views taken from the scientific concepts of ontology and epistemology gave a push to this research. In the past, the researches in the field of accounting have been seen to be based on the normative approach. Normative accounting approach follows theoretical framework disregarding the practical world situations. In contrast to this positive accounting research approach takes into consideration the practical world situations. Thus, it is more likely that the positive accounting research approach would bring out the actual accounting practices which are being followed by the accounting professionals. The accounting practices and the application of the accounting principles could be different when it is applied practically. Therefore, it is crucial to base the researches in the field of accounting on positive research approach. The Significance and Limitations of the Article The article is about exploration of the use of positive research approach in the field of accounting. This research holds importance due to the reason that most of the researches in the field of accounting carried out in the past are based on the normative research approach, which does not incorporate the considerations of practical application of the accounting policies and principles. Further, the previous researches also do not provide much evidence of the possibility of use of positive approach in the field of accounting, which is handled through this research. However the use of positive approach in the researches in the accounting field is quite beneficial, but it has certain limitations. One of the prominent limitations is the lack of strong theoretical framework to judge the human behavior. The applicability of the positive theory relies on the human behavior which is subject change. Further, this research claims to focus more on the measurement rather than testing hypothesis . It puts a limitation on the research that the hypothesis measured may not as reliable as it would have been if it had gone through testing process[4]. Conclusion The article aims to explore that whether the use of positive research approach in the field of accounting is possible. Further, it stresses on the usefulness of the positive accounting. The article explains the things comprehensively in a great detail but it could have been better if things were arranged in a sophisticated manner. Further, the language of the article also lacks in achieving the proficient level. Further, the headings kept in the article also appear to be not suitable. The headings should be framed in such a manner that is gives an overall idea to the reader of the content given under that heading. However, the presentation in the article as regards hypothesis is consistent and the conclusion section is also presented neatly. The author has clearly articulated results of discussion in respect of each hypothesis. The article has contributed significantly in the field of accounting research and it is considered to be beneficial for the researchers looking for future res earches in accounting field. References Dunmore, P.V. (2009). Half a Defence of Positive Accounting Research. Massey University, Wellington, New Zealand. Ghanbari, M., Manesh, M.Z., Khorasani, H., Nejad, M.H. (2016). PAT (Positive Accounting Theory) and Natural Science. International Research Journal of Applied and Basic Sciences, 10(2), pp. 177-182. Kabir, H. (2011). Positive Accounting Theory and Science. Journal of Centrum Cathedra, pp.136-149. [1] Dunmore, P.V. (2009). Half a Defence of Positive Accounting Research. Massey University, Wellington, New Zealand. [2] Kabir, H. (2011). Positive Accounting Theory and Science. Journal of Centrum Cathedra, pp.136-149. [3]Dunmore, P.V. (2009). Half a Defence of Positive Accounting Research. Massey University, Wellington, New Zealand [4]Ghanbari, M., Manesh, M.Z., Khorasani, H., Nejad, M.H. (2016). PAT (Positive Accounting Theory) and Natural Science. International Research Journal of Applied and Basic Sciences, 10(2), pp. 177-182.