HI6025 Accounting Theory and Current Issues Group Report Analysis

This report presents an analysis of two articles related to accounting theory and current issues. The first article examines the negative impact of accounting standards, specifically FASB 106, on employee welfare, highlighting how management's focus on economic considerations can affect employee ...Read More

Accounting Theory and
Current Issues
Date: 26th Sep, 2018

Article 1
 The first article that has been selected is “The negative effect of an accounting
standard on employee welfare: the case of McDonnell Douglas Corporation and FASB
106” . This study explains in detail the negative repercussions on the employees when
employee well-being decisions are taken by the respective employers purely
considering the economic considerations. The management invariably tends to focus
solely on the paying off the employee benefits under the statutes and the compliance
framework which effects the overall quantum of benefits paid to the employees
(Richard & Stephan, 1995).

Article 2
 The second article that has been selected is ““Attaining legitimacy by employee
information in annual reports”. The article is documented and presented by two
people, Pamela and Tamara. One of the main areas of focus of this article is to lay
focus on the disclosure by the company of all information that relates to the benefits
paid to the employees in the audit report of the company. The image of the company
takes a boost in the society if there remains a transparency in the acknowledging the
remuneration the company pays to towards its human capital (Pamela & Tamara,
2013).

Reason for selection of the articles
 Highlights the importance of the employee benefits and also how companies should
present the same in their annual reports.
 Present the different methods in which different companies value their employee
benefits related transactions and provide adequate rewards to them (Jefferson, 2017).

Similarities between the two article
 The major similarity between the two articles is that it highlights the need and
importance of employee benefits and also spread awareness among the members of
the society on how they can deal with this and maintain that they get the best rewards
possible (Belton, 2017).

Dissimilarities between the two
 The first article talks about the importance of employee benefits disclosure in the
annual reports of the company and the second article talks about the different
methods by which companies can calculate their employee related benefits (Werner,
2017).

Implication for the Stakeholders.
 It helps the management in ascertaining that there overall principles and rules that
they are following are correct and there is no loophole in that with relation to the
disclosures policy.
 It helps the employees also in understanding there overall position in the financial
position of the company.
 It also helps the shareholders in understanding how the company is managing the
interests of all its stakeholders(Trieu, 2017).

References
 Belton, P., 2017. Competitive Strategy: Creating and Sustaining Superior Performance. London: Macat
International ltd.
 Jefferson, M., 2017. Energy, Complexity and Wealth Maximization, R. Ayres. Springer, Switzerland.
Technological Forecasting and Social Change, pp. 353-354.
 Pamela, K. & Tamara, Z., 2013. Attaining legitimacy by employee information in annual reports.
Accounting, Auditing & Accountability Journal, 26(7), pp. 1072-1106.
 Richard, B. & Stephan, H., 1995. The negative effect of an accounting standard on employee welfare:
the case of McDonnell Douglas Corporation and FASB 106. Accounting, Auditing & Accountability
Journal, 8(3), p. 12.
 Trieu, V., 2017. Getting value from Business Intelligence systems: A review and research agenda.
Decision Support Systems, 93, pp. 111-124.
 Werner, M., 2017. Financial process mining - Accounting data structure dependent control flow
inference. International Journal of Accounting Information Systems, 25, pp. 57-80.