SUMMARY ACCOUNTING THEORY

Zahrina
1206213826
Adinda Dewi Putri
1206228733
Fanisya Putri
1206214034
Erika Selvanela Nariza
1206266870
B. Objectives of Conceptual Framework
IASB and FASB states that the objective of financial statements is to communicate financial information
to the user information. This objective can be achieved if the information: useful for taking economic
decisions and useful in assessing cash flow prospects. And , IASB states that the framework should:
Defining the purpose of financial statements , identify the qualitative characteristics that make information
in financial statements useful, defines the basic elements of financial statements and the concepts for
recognizing and measuring their financial statements
D. A Critique of Conceptual Framework
Two broad areas in our analysis:
1. Scientific critisms
The inability of the conceptual framework in giving instructions and ways in accounting practices
that can produce useful information in decision making. It also not detail and vague definitions of
the elements of accounting.
2. Descriptive and non-operational
Ontological and Epistomological Assumptions
ONTOLOGIST Focus: provide information to users of financial statements
without bias and with detachment. Solomons: accounting is a 'financial mapmaking;
how accounting could represent the truth so that people can then react as they wish.
EPISTOMOLOGIST Affected by hypothetico-deductive approach.
Circularity of Reasoning
In some countries, the conceptual framework is represented by the internal circulation.
Framework from FASB tried to solve it by referring to the notion from accounting informant
who has enough knowledge to decide and interpret financial statements.
An Unscientific Discipline
Stamp:accounting is an approach to the law / rules rather than physical science. Accounting
face market imperfections and related to subjective basics, human process in making a
decision. Elements of theoretical and empirical: defined and applied in accounting, and not
enough for a definition of the scientific paradigm. Theoretical presentation: the application of
ontological, epistemological, and methodological rules relating to the scope of learning.
Positive Research
The opinion that the basic focus from conceptual framework reject empirical findings from
positive accounting research. The existence of a conflict between the positive accounting
research with conceptual framework is the evidence that the market is not always efficient. If
the conceptual framework can ensure each individual or group can obtain useful information
then this will present a useful purpose.
The Conceptual Framework as a Policy Document
The separation between theory and policy is very important. FASB defines the conceptual
framework as a constitution. Facts about FASB conceptual framework in several agencies
illustrates the prevailing political process in building a framework.
Professional Values and Self-Preservation
Self-preservation implies personal interests, while suggesting the ideals of professional
values and the interests of others.
E. Conceptual Framework for Auditing Standards

SUMMARY ACCOUNTING THEORY

Zahrina
1206213826
Adinda Dewi Putri
1206228733
Fanisya Putri
1206214034
Erika Selvanela Nariza
1206266870
Reduction of pressure on the client system testing can reduce the time spent on the audit & lowering the
sample used, known as business risk auditing. Business risk auditing: an audit form that considers the risk
of the client as part of the audit evidence collection process. Clients with effective internal control over
lower risk of errors can reduce the resources, and the cost of the audit of the client.