Main Theories That Explain the Politic Process of Accounting Standard Setting and Regulatory Process Essay

Choose one of the 3 main theories that explain the politic process of method of accounting standard setting and regulatory process in Australia. Explain critically the main elements of this theory and gild with examples. How does this theory operates in the real world. domain invade theory holds that economy is supplied in response to the demand of the earth as a gist of inefficient or unfair market practices. Initially it is assumed to acquire society as a whole rather than particular vested vexs. The regulatory body is considered to represent the bet of the society in which it operates rather than the snobbish interests of the regulators and that the government is a neutral arbiter. Economic markets argon imperfect, this is due to the deprivation of competition, barriers to entry, information gaps between buyers and sellers, as well as public good.This leads to a need for intervention to protect the general public and consumers. Regulations takes interest of the publi c through legislative actions by passing laws and make sure everyone complies. Public interest theories of regulation is aware that its purpose of achieving certain publicly desire results would non be obtained, if left to the market. At the same time, regulation is provided in response to the demand from the public for what is happening in the inefficient and inequitable markets. As a result, regulation is pursued for public, as opposed to private, interest related objectives.This was the dominant view of regulation and still retains many adherents. It is broadly speaking felt that determining what is the public interest is a normative hesitation and advocates of positive theorizing. It would, therefore object this approach on the bottom that it is not possible to determine objective aims for regulation there is no basis for objectively identifying the public interest. There are other charges that was issued regarding public interest approach. These include attention being dir ected to the regulators, questions is raise, such as if the regulators are sufficiently competent and if it is possible for them to continuously act in a disinterested manner?Critics suggest that there may be questions regarding the come back (whether if it is sufficient), career and training structures for these regulators. On top of these, it is often argued that the public interest approach, admit not been unaware of the need to view regulation in a broader framework over the years there is no improvement made relating to the approach. Some, while recognising thepolitical implications in the process of regulation have argued that political considerations be excluded and that accounting remain notwithstanding concerned with measurement the facts. In light of the above discussion, if taken at face value, it would look unduly naive. However, over the years it have been the point of much accounting debate that is, the false belief that accounting is value neutral and only conce rned with reporting the economic facts. For most of the period, the accounting profession want to maintain a regime of self regulation.The professional bodies have act to develop generally accepted accounting principles (GAAP) and after which, followed by a conceptual framework that would serve as the basis of an accounting theory. The seem for GAAP and a theoretical framework have been a struggle due to different viewpoints on the necessity and form of regulation resulting in considerable tensions. The involvement of accounting and professional accountants in spectacular railway line collapses and major cases of business fraud has ensured the need for accounting regulation. Thus, there has been a public interest concern that resulted in the need of regulation pressure level from various segments of society has demanded regulation.