The Changing Meaning of Accounting Information: ACCG399 Analysis

This essay reflects on the statement that accounting information is objective, neutral, and value-free, drawing on the student's experiences and perceptions developed through previous accounting units and ACCG399. The student explores the meaning of this statement, its evolution with their learning, and its practical implications. They examine how accounting information projects financial transactions and its role in stakeholders' decision-making, highlighting the importance of regulatory bodies in ensuring prudence and transparency. The essay also discusses instances where the theoretical objectivity of accounting information is challenged by real-world accounting scams, leading to a nuanced understanding of its practical application and the importance of maintaining neutrality to serve the needs of various stakeholders. Ultimately, the student concludes that accounting information is crucial for economic decision-making and emphasizes the need for regulatory oversight to maintain its integrity.

I think, the statement “Accounting information is objective, neutral and value-free” means to
know and understand the nature of accounting information. In my belief, accounting information
projects the financial transactions between entities. These financial transactions are made in
certain pattern. Every financial transaction means transfer of money value from one entity to
other entity. To keep track of these transactions, accounting information is used through some
systematic approach. As accounting information has the nature of some aim or goal to prove its
validity, I think, it is objective to arrive at certain inference. (Accounting, n.d) The nature of
accounting information is neutral as it is based on certain value-based method and cannot favour
any entities. (simplified, n.d) These features of accounting information in endorsed by the
accounting regulators like Australian Accounting Standard Board (AASB), Corporation Act
(2001), International Accounting Standard Board (IASB) etc.
While learning accounting, I have found that the concept of accounting information is getting
changed for some personal vested interests. I have come across different accounting scams like
Enron, which defies the objective, neutral and value free nature of accounting information. So I
believe accounting information is objective theoretically. In its practical approach, I have found
in ACCG399 that different accounting fiascos happened globally to prove them as subjective
rather than objective. This situation also leads to my feeling that neutrality or value-free nature of
accounting information is not always maintained to understand the role of accounting
information, we have to understand what role accounting information plays in the community.
For any business entity, there are different stakeholders. They are divided in to two broad
categories- internal and external. The external stakeholders like creditors, shareholders, etc. do
not get access to the internal matter of the business; but they have access to financial information
of any business, which is drew upon considering the accounting information of that business
entity for a certain period. Their future decision and subsequent course of action is totally
dependent upon those financial statements. Hence, I believe that the changed meaning of the
accounting statement is evident, as the regulatory authorities of accounting and allied fields can
ensure that prudence must be provided through accounting information of any entity to prove its
nature of objectivity, neutrality and value-freeness. (research, 2011) (Palea, 2016)
I think accounting information is useful for decision making of the stakeholders of any business
entity. Accounting information has the ability to project the financial condition of the business
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entity for a certain period of time. If the stakeholders have to take any decision regarding their
economic activity related to the business entity, they have to assess the accounting information
of the company. For this reason, we can find the role of regulatory bodies to implement different
accounting and other necessary standards in order to ensure prudence and transparency for the
stakeholders globally.
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Bibliography
Accounting, P.o., n.d. Objectives And Qualities Of Accounting Information. [Online] Available at:
https://www.principlesofaccounting.com/chapter-15/accounting-information/ [Accessed 14 August
2019].
Palea, V., 2016. Is Accounting Neutral to Economy and Society?. Academic. Torino: Management
International Conference University of Torino, Department of Economics and Statistics, Italy.
research, b., 2011. Why Financial Reports Can Never Really Be Considered Neutral (Free from Bias) or
Objective. academic. bartleyby.
simplified, A., n.d. Neutrality. [Online] Available at: https://accounting-simplified.com/financial-
accounting/accounting-concepts-and-principles/neutrality.html [Accessed 14 August 2019].
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