ACC320 Contemporary Issues in Accounting Research Proposal

This report, prepared by a student for the ACC320 course, examines contemporary issues in accounting with a specific focus on corporate governance. The introduction defines the issue, highlighting its importance and theoretical basis. The practical motivation section emphasizes the significance of corporate governance in accounting practices, particularly in relation to regulatory compliance. The theoretical motivation section discusses the application of agency theory and king theory in understanding corporate governance. The literature review synthesizes ideas from various authors, emphasizing the role of corporate governance in ensuring the suitability of accounting systems and compliance with regulations. The research explores the negative impact of disregarding corporate governance on a company's financial condition and proposes that corporate governance is essential for mitigating risks faced by shareholders and improving financial outcomes. The research methodology involves collecting data from primary and secondary sources, including interviews and published materials. The report aims to provide insights into the critical contemporary issues within the accounting field.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of the Student
Name of the University
Author’s note

1CONTEMPORARY ISSUES IN ACCOUNTING
Abstract
Contemporary issues in accounting can arise due to contemporary accounting practices which
relates the different forms of accounting activities with the economic environment. One of
these activities could be reporting of financial statements such as balance sheet and cash flow
statement. One of the issues that is prominent in recent days is being unethical in following of
the rules and regulations laid down by the regulatory authorities regarding accounting system.
In this context, corporate governance can be brought into light which provides the regulations
to be followed by the organisations regarding accounting practices. The paper structures in a
way that starts with the introduction of the issue and its importance. It further moves over to
the theoretical and practical motivation of the concept that briefs about its application in
theories as well in practical phenomena. The literature review provides ideas and concepts of
different authors in relation to corporate governance. The last section states a hypothetical
statement about the research and further the methodology of the research is described in
short.

2CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction................................................................................................................................2
Practical Motivation...................................................................................................................2
Theoretical Motivation...............................................................................................................3
Literature Review.......................................................................................................................3
Hypothesis..................................................................................................................................6
Research Method........................................................................................................................7
References..................................................................................................................................8
Appendix..................................................................................................................................10
Table – Annotated Bibliography for Selected Articles............................................................10

3CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
Contemporary accounting practices are related to the understanding of accounting
activities that are required enormously for the development of a business in today’s complex
environment. In the contemporary accounting model, theories are analysed for linking
accounting with the economic environment. In this context, it becomes very important to
outline the issues that arise due to contemporary accounting. The types of issues that occur in
presence of contemporary accounting could be many. The research would be conducted
keeping in focus one of the major contemporary issues, that is corporate governance.
Corporate governance ensures the suitability and applicability of the accounting system in
relation to regulations set by the regulatory authorities. Issues come up for not abiding by the
rules of accounting. Therefore, this topic becomes a very significant topic of research.
Practical Motivation
Corporate governance plays a vital role in the formulation of accounting practices of
an organisation (Tricker and Tricker 2015). Due to failure in corporate governance there is a
disruption in the functioning of accounts and the figures highlighted in the annual report
might show discrepancies. It has been realised by the different accountants that corporate
governance is required for providing a direction to the companies on the basis of accounting
activities rather than controlling them. Importance of corporate governance was completely
made clear when the issues arose due to implementation of a weak corporate governance
(Krechovská and Procházková 2014). There was a series of meltdowns along with fraudulent
activities and other catastrophes which have led to the destruction of the wealth of the
shareholders, loss of jobs of different employees, criminal investigation of executives as well
as a lot of bankruptcy filings (Rahim and Alam 2014). All these problems pave way for the
improvement and reformation of corporate governance at different structural levels such as
business, national as well as international levels.

4CONTEMPORARY ISSUES IN ACCOUNTING
Theoretical Motivation
The research would be based on different theoretical frameworks of corporate
governance such as agency theory and king theory (Pande and Ansari 2014). Agency theory
relates to the difference in opinion between the agents and the shareholders of the
organisation. This agency theory proposes to mitigate the problems that occur due to conflict
of interest between the managers and the shareholders (Shi, Connelly and Hoskisson 2017).
The managers are regarded as the agents while the shareholders are regarded as the principal
of the organisation. Another problem occurs due to the risk sharing appetite of the managers
and the shareholders. Another theory that best explains corporate governance is the king
theory (McDonnell, King, and Soule 2015). This theory has a broad area of interest and
explains various parts of corporate governance such as risk management, compliance of the
accounting practices with the laws, regulations, rules as well as standards and managing
relationship with the stakeholders (Brown, Preiato and Tarca 2014).
Literature Review
The first paper chosen for this research unveils corporate governance as a solution to
the major issues in recent business environment. According to the authors, there should be
proper structure for establishing in the business that would ensure efficient operation of the
accounting system. The structure should be able to guide the accounting system for properly
abiding by the regulations (Alsharari, Dixon and Youssef 2015). It should be one of the
important functions of the organisations to operate in accordance with the surrounding
environment in order to maintain a high quality of accounting functions.
It has been analysed by the authorities and different accountants that an independent
structure of corporate governance can facilitate a healthy organisational environment. This
would also enhance the quality of accounting system and quality of reporting of financial
reports. Other factors that influence the accounting conservatism and quality of reporting

5CONTEMPORARY ISSUES IN ACCOUNTING
could be public ownership, institutional ownership, and sometimes managerial ownership
(Alsharari, Dixon and Youssef 2015). Healthy internal business environment would help in
carrying out smooth internal controls, transparency among the corporate and effective
allocation of resources. One of the examples of corporate governance is incentive
compensation in management. Studies have shown that organisations not adopting this
concept has brought about accounting irregularities and ineffectiveness of the internal
control. Another example can be function of the audit committee which is required for the
proper presentation of the annual reports without numerical discrepancies.
Another paper thoroughly talks about the practical implication of corporate
governance which is presented in the form of a case study of a developing country (Al-
Malkawi, Pillai and Bhatti 2014). According to the different authors, the definition of
corporate governance could be enhancement and fortification of the rules and principles that
are required for providing a direction to the operation of the companies. Studies and surveys
conducted in South Africa have revealed that the term corporate governance is showing its
association progressively only with the listed companies.
Another section of the paper provides a theoretical framework to corporate
governance and the importance of the auditing function. Another corporate governance
method discussed in the paper is the accountability and transparency of the financial
information. In order to provide information without discrepancies, there should be effective
communication between all the levels of the organisation (Al-Malkawi, Pillai and Bhatti
2014). There should be a section provided for disclosure which would consist of different
forms of information in the financial statements like cash flow statement, balance sheet and
others. There should be a system of internal control which would require identification of
objectives and risks along with the measurement of the performance of staff, systems and
processes. Another system would monitor the effectiveness of the identified risk.

6CONTEMPORARY ISSUES IN ACCOUNTING
The third paper focusses on the framework developed for the behavioural perspectives
of corporate governance. One such behavioural aspect could be creation of accountability.
The research on corporate governance has been carried on since 1990s for giving importance
to the protection of stakes of the investors (Elghuweel et al. 2017). Creation of
accountability can be defined as the bridging of the gap between the expected performance of
the board and the actual task performance that is observed. The applicability of corporate
governance can be attributed to the external perspectives of accountability (Elghuweel et al.
2017). One such theory is the agency theory that explains the circumvent behaviour of the
corporate managers to the interests of the shareholders. As a result of incompetent behaviour,
there has been cases of hostile takeovers by other companies existing in the market.
A different section of the theoretical framework describes an alternative trend of
corporate governance where the stakeholders have been given importance greater than that of
managers. This situation is related to the different crises that have occurred such as the Enron
case. The crises exemplified the global consequences of the investors which were negative
(Elghuweel et al. 2017). After such dramatic cases, corporate governance has been
reintroduced in the corporations and the internal people have been made aware of their
corporate and social responsibilities.
Different other studies of paper revealed the relation of accountability and the
mechanisms of accountability with the corporate governance. A general review of the
traditional corporate governance and the research of the accountability would be useful for
acquiring potential opportunities in the business environment. Some studies provide an
analytical framework to this concept. Different research works have overestimated the value
of corporate profitability and shareholders in financial environment and these elements have
been considered superior to corporate governance (Grossi, Papenfuß and Tremblay 2015).
However, a thorough research conducted on the importance of corporate governance has

7CONTEMPORARY ISSUES IN ACCOUNTING
revealed that the different takeover activities of the firms wuch as mergers and acquisitions,
all come under the purview of agency theory related to corporate governance (Gajevszky
2014). Improvement of the role of corporate governance can be carried out through the
performance of institutional investors. These investors can be regarded as the sole element of
corporate management and henceforth, can prove to be worthy of bringing corporate
governance improvement within the organisation.
All the above papers describe the role of corporate governance in one form or the
other. It is evident that the usage of corporate governance is necessary for minimising
problems that are related to the non-compliance of the accounting system with the regulations
set up by the regulatory authorities. Therefore, corporate governance is necessary for
overcoming the critical issues of corporate accounting.
Hypothesis
Null Hypothesis: One of the critical issues of contemporary accounting is
disregarding of corporate governance that has a direct negative impact on the financial
condition of the company. There could be fraudulent cases which would be filed for
disrespecting the corporate governance. Corporate governance should be implemented in
order to cope up with the risks faced by the shareholders and also for the financial betterment
of the company.
Research Method
The research method that would be followed in the process of research would be
collection of data from both the primary as well as secondary sources. The primary sources
could be direct interview or conversation with the employees of the organisation and finding
relevant data related to the implementation of corporate governance. The secondary research
would be done through the secondary data collected from different kinds of articles,

8CONTEMPORARY ISSUES IN ACCOUNTING
newsletters, official websites or any other source of information published by the
organisation in relation to corporate government.

9CONTEMPORARY ISSUES IN ACCOUNTING
References
Al-Malkawi, H.A.N., Pillai, R. and Bhatti, M.I., 2014. Corporate governance practices in
emerging markets: The case of GCC countries. Economic Modelling, 38, pp.133-141.
Alsharari, N.M., Dixon, R. and Youssef, M.A.E.A., 2015. Management accounting change:
critical review and a new contextual framework. Journal of Accounting & Organizational
Change, 11(4), pp.476-502.
Brown, P., Preiato, J. and Tarca, A., 2014. Measuring country differences in enforcement of
accounting standards: An audit and enforcement proxy. Journal of Business Finance &
Accounting, 41(1-2), pp.1-52.
Elghuweel, M.I., Ntim, C.G., Opong, K.K. and Avison, L., 2017. Corporate governance,
Islamic governance and earnings management in Oman: A new empirical insights from a
behavioural theoretical framework. Journal of Accounting in Emerging Economies, 7(2),
pp.190-224.
Gajevszky, A., 2014. Audit quality and corporate governance: evidence from the bucharest
stock exchange. Journal of economic and social developmen, 1(2), pp.0-0.
Grossi, G., Papenfuß, U. and Tremblay, M.S., 2015. Corporate governance and accountability
of state-owned enterprises: relevance for science and society and interdisciplinary research
perspectives. International Journal of Public Sector Management, 28(4/5), pp.274-285.
Krechovská, M. and Procházková, P.T., 2014. Sustainability and its integration into corporate
governance focusing on corporate performance management and reporting. Procedia
Engineering, 69, pp.1144-1151.

10CONTEMPORARY ISSUES IN ACCOUNTING
McDonnell, M.H., King, B.G. and Soule, S.A., 2015. A dynamic process model of private
politics: Activist targeting and corporate receptivity to social challenges. American
Sociological Review, 80(3), pp.654-678.
Pande, S. and Ansari, V.A., 2014. A theoretical framework for corporate governance. Indian
Journal of Corporate Governance, 7(1), pp.56-72.
Rahim, M.M. and Alam, S., 2014. Convergence of corporate social responsibility and
corporate governance in weak economies: The case of Bangladesh. Journal of Business
Ethics, 121(4), pp.607-620.
Shi, W., Connelly, B.L. and Hoskisson, R.E., 2017. External corporate governance and
financial fraud: Cognitive evaluation theory insights on agency theory
prescriptions. Strategic Management Journal, 38(6), pp.1268-1286.
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and
practices. Oxford University Press, USA.

11CONTEMPORARY ISSUES IN ACCOUNTING
Appendix
Table – Annotated Bibliography for Selected Articles
Author Date Title Journal Type of
Paper
(Theoretic
al or
Empirical)
If
empirical
, research
method
and
sample
If
empirical,
dependent
and
independen
t variables
100 word
summary of
contribution
to the
research
question
N.M.
Alsharari
, R.
Dixon
and
M.A.E.A
. Youssef
2015 Manageme
nt
accounting
change:
Critical
review and
a new
contextual
framework
Journal of
Accountin
g &
Organisati
onal
change
Theoretica
l
The important
critical issue
mentioned in
this paper
relates to the
concept of
corporate
governance.
The paper
also
highlights the
function of
audit
committee as
an important
element of
corporate
governance
and helps in
the
maintenance
of internal
control
function. The
paper also
points out
briefly about
the agency
conflict that
arises due to
lack of
improvisation
of corporate
governance.
The
importance of
regulations
set up for the
accounting
functions of
the company
are useful in
providing a