Question

Question 7 Critically discuss both traditional and economic arguments for and against the regulation of accounting.

Answer 1

Firstly we need to know about what is Regulation:

The theory suggest that the regulation is developed by an industry and objective of creation is to create an advantage to the industry concerned.

Arguments against the regulations:

Issues such as overloaded and adverse allocative effect from the basis for the arguments against regulations.

Traditional arguments for and against the regulations of acconting:

Government are more involved,greater enforcement powers. hence more rules likely to be followed and more likely to be consisdered as public interested and less responsive to preasure.

No regulation would leave too much risk to investors yet excussive standereds would have adverse effect on the company.

Public interest theory is good in theory but wheater it will work practiable is questionable beause it is based on the assumption is netural party when in reality,it is not very likely.

Economic arguments for and against the regulation of accounting:

Some regulations didnot keep pace with chang in the economic and business environmental which then make it contraversial when accounting for some times affected.

Some regulation do over regulate the issues that makes accounting difficult and unnessary.

Some times financial instruments like Crypto currencies and similar economic monies may not have complete rules to govern and accounting them.