Introduction to Accounting Theory

Running head: INTRODUCTION TO ACCOUNTING THEORY
Introduction to Accounting Theory
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1INTRODUCTION TO ACCOUNTING THEORY
Introduction
The main aim of this essay is to explore and assess the issues and problems that largely
contributed towards the reform of today’s contemporary accounting practices. The accounting
profession is considered as a key part of the society and this profession has witnessed major
changes in it over the years. Accounting is the collection of extreme complex activities in the
presence of substantial ethical considerations and this has changed over the years. In today’s
business world, firms have to deal with enhanced challenging situations in order to comprehend
their impact on the environment and society. The occurrence of financial crisis along with the
collapse of large business organizations all over the world has put the business organizations
under more scrutiny and inspection. As an outcome of these aspects, there have been major
changes in the regulatory requirements in the areas like responsibilities of the auditors, disclosure
requirements of the directors and others. This essay discusses about three key issues and
problems that had large contribution towards shaping the contemporary accounting practices.
Issues and Problems Contribute towards Shaping Contemporary Accounting Practice
Development of the economy as well as businesses is largely dependent of the
contemporary accounting profession and practice. The shaping of development of the
contemporary accounting practice has to be explained through referring the economic
environment related changes. During the last quarter of the century, there have been major
changes or developments in the contemporary accounting practices; and the social and contextual
outcomes are being developed by the purely technical aspects of the profession. Now, the
contemporary professional accountants are required to take into consideration the aspects like
recognition of corporate social responsibility while facing internal pressure from corporate

2INTRODUCTION TO ACCOUNTING THEORY
governance framework and codes of professional conduct. This essay identifies three crucial
issues and problems that have largely contributed to the shape of today’s accounting practice;
they ate Ethical issues, Governance issues and Corporate and social responsibility related issues.
Ethical Issues and Problems
In the accounting profession of most of the countries all over the world, there was the
introduction of certain ethical codes and principles for the accounting professionals and there
were two specific motives behind the introduction of these codes. The first motive was to ensure
self-regulation and engagement of the accounting professionals; and the second motive was to
ensure restoring reputation of the accounting profession which is to take into consideration the
demands of the general public. Introduction of these ethical codes has shaped the contemporary
accounting profession through delivering a self-regulation framework of the profession that puts
the obligation on the professional accountants in acting in the best of the public interest that
reflects large responsibility to the community instead of focusing on the needs of the
shareholders (Fiolleau and Kaplan 2017). Now, it needs to be considered that what could be the
reasons or issues or challenges that contributed to the introduction of these ethical codes and
principles. In this context, it requires to be mentioned that a series of accounting scandal all over
the world contributing to the collapse of large business organizations called for the introduction
of these ethical codes and principles. More specifically, different types of deliberate accounting
frauds caused the collapse of large corporations such as WorldCom, Enron, HIH Insurance,
Arthur Anderson, ABC Learning, OneTel, Satyam Computer and others; and these companies
were situated different countries all over the world (Betta 2016).
In addition to these large bankruptcies of these well-known corporations, professional
accountants of many companies were involved in several other accounting fraudulent cases. For