Question

A. What argument is proposed by proponents of accounting regulations?

B. What argument is proposed by opponents of accounting regulations?

Hint: Support your answers by one or two theories of regulation!

Answer 1

A. Arguments proposed by Proponents of Accounting regulations

Proponents want accounting regulations to be implemented due to the benefits in its implementation. It helps in preparing financial statements on a standardised and uniform basis. Standardisation refers to the same accounting concepts and principles applied in preparation of financial statements. The standized financial statement helps in comparison of financial statements across periods and entities. Also it helps in comparison of financial statements across the countries which help the investors in taking decisions like capital investments, etc. Accounting regulations have also enhanced the level of disclosures that needs to be reported which has brought a great level of transparency and accountability for reporting to be done by management team

B. Arguments proposed by Opponents of Accounting regulations

Many accounting regulations have over-regulated the Financial accounting reporting and have made the whole reporting function a complex one. Regulations needs to be updated often based on the developments taking place in the economy and business world. Also it is has increased cost of reporting and compliance. This is huge cost to small and medium enterprises since they need to comply with reporting guidelines.