NATURE OF ACCOUNTANCY

RESEARCH
COVERAGE

1. Meaning of Accountancy Research

2. Accountancy Research as a System
3. Landscape of Contemporary Accountancy
Research
4. Motivations for Accountancy Research
MEANING

Accountancy Research
- systematic process of collecting & analyzing
information in order to increase one’s
understanding of a professional accountant’s
functions & contribute to the solution of problems
besetting the practice of the profession
- Can be categorized into:
1. Functional classification
2. Sectoral classification
MEANING

Functional Classification
- Accountancy research is classified by functional
area:
1. Financial accounting
2. Management accounting
3. Auditing and assurance
4. Tax
5. Other functional areas
MEANING

Financial Accounting Research

- Primarily studies collection, recording & reporting
of financial info about an entity
- Looks into effect of economic events on process of
summarizing, analyzing, verifying, & reporting
standardized financial info, & on effects of reported
info on economic events
MEANING

Management Accounting Research

- systematic inquiry on the provision & use of acctg.
info to mgrs.
- could look at impact of org. change on acctg.
practices, or interaction between mgt. acctg.
techniques & functional strategies (e.g., TQM)
MEANING

Auditing Research
- Examines auditors’ process of gathering &
evaluating evidence on assertions about economic
actions & events
- Looks into means of communicating audit results,
quality of audit services & value-adding functions of
audit
- Expandable to include assurance & attestation
services
MEANING
Tax Research
- Has a broad scope; can be at macro or micro level
- Macro level: can be an analysis involving:
- Assessment of taxation proposals
- Evaluation of fiscal policy issues
- Other revenue-raising powers of gov’t.
- Micro or organizational level: can be on:
- income tax expense reported for financial acctg.
- Corporate tax avoidance
- Tax-related decisions on investment, capital structure,
org. form
- Taxes & asset pricing
MEANING

Other Functional Areas of Accountancy

- Relate to specific functions, e.g,:
- Fraud prevention & investigation
- Corporate governance
- Internal auditing
- Risk management
- Sustainability reporting
MEANING

Sectoral Classification
- refers to either the subject of the research, or the
context wherein research findings &
recommendations will be useful
- includes:
1. Education/academe
2. Commerce & industry
3. Public practice
4. Government
MEANING
Researches in Other Disciplines
- may cut across accountancy profession:
Research Type Description Link to Accountancy

Social Research Answers questions re society, May deal w/ capital markets,

its structure & processes social enterprises w/ links to
financial reporting & controls

Social auditing: blend of

social science & auditing
Business Process of conducting inquiry May require financial info
Research on a mgt. dilemma
Marketing Processing of info to improve May require costing & pricing
Research decision making & solve
problems in mktg.
MEANING

Basic & Applied Accountancy Research

• Basic accountancy research:
• geared towards knowledge generation
• usually conducted by educators & scholars
• research reports are published in journals
MEANING

• Applied accountancy research:

• Intended to solve problems, clarify issues/gray areas, &
provide inputs to policy development & decision-making
• Primarily conducted by public accountancy firms (for
internal or client’s needs)
• Can be initiated by authoritative bodies & funding
institutions for regulation & legislation purposes
• Examples: feasibility studies; program/project evaluation;
documentation of best practices, etc.
LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
• Accountancy research: falls under category of social
sciences
• Landscape characterized by:
1. Research perspectives
2. Trends
3. Functional thrusts & directions
LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
Perspectives in Accountancy Research
- Accountancy research started out using the
normative approach: it seeks to develop &
implement specific acctg. practices deemed
superior to existing ones
- Subsequently, there was a shift towards positive
approach: it’s analytical & its focus is on impact of
acctg.
 LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
Sample Normative & Positive Research Questions
Normative Questions Positive Questions

1. How should leases be treated on the 1. Why do most firms continue to allocate
statement of financial position? overhead charges to performance
centers?

2. Should replacement or liquidation 2. How have court regulation & rulings

values be used in financial reporting? influenced accounting practice?

3. What should be reported in the annual 3. Why are public accountancy firms
financial statements? organized as partnerships?
 LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
• Other postpositive perspectives applicable to
accountancy research:
1. Interpretive
2. Criticalist
3. Postmodernist
 LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
Interpretive Accountancy Research
- Seeks to understand social nature of accountancy
practice
- Seeks to explain actions/behaviors of individuals &
groups & human interactions in line w/ functioning of
different regulatory & policy directions in the profession
- Considers how accountancy practice could be modified
to take into account social & environmental aspects of
org’s undertakings
- Possible subjects of research:
- - Lobbying of audit firms on standard-setting
- - Functioning of mgt. acctg. & control systems amidst
financial scandals
 LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
Critical Accountancy Research
- Provides a position on the status quo
- Focuses on role of accountancy in sustaining privileged
position of individuals controlling certain resources while
stifling access & voice of those w/o capital
- Aims to stimulate progressive change
- Centers on broader level of society
- Possible subjects of research:
- Functioning of audit & its role in financial failures
- Move to fair value accounting
 LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
Interpretive vs. Critical Approach
INTERPRETIVE
Similarity Subjective value of social world
Differences Focuses more on how
accountancy is socially
constructed & how
perceptions preserve the
status quo
Takes a neutral stand
CRITICAL
Focuses on explaining w/c
ideological pressure is
influential & w/c group
interest is met by
accountancy regulations
Takes a particular position
on research nature &
purpose & its
political/societal
implications
 LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
Postmodern Accountancy Research
- Argues that everyone constructs his/her own reality & it’s not
possible to compare various realities due to absence of independent
criteria for comparison purposes
- Believes that problems can only be addressed through discourse &
communication
- Encourages debunking of old systems & theories, & creates new
ones
- Suggests that accountancy techniques be reexamined & assessed
over time
- Possible subjects of research:
- Triple-entry bookkeeping
- Suitability of public disclosure of internal control deficiencies of publicly-listed
companies
 LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
Trends in Accountancy Research
• Interdisciplinary orientation
• Evolving, dynamic
• Studies consequences & modes of financial acctg’s
functioning in wider institutional setting/wider
whole (not only financial acctg. itself)
• In mgt.acctg.: direction is practice-oriented research
 LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
• Major topics indicative of new directions in mgt.
acctg. research:
• Acctg. software
• Budgeting
• Business process improvement
• Cash management
• Compensation plans
• Cost accounting
• Cost management
• Effects of financial reporting on internal systems
 LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
• Effects of information technology on internal systems
• Improving profits
• Internal control
• Management acctg. practices
• Outsourcing
• Performance measurement
• Research methods
• Shareholder value
 LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
• Both financial & mgt. acctg. have to cope w/ a more
complex commercial & institutional environment
• Profound changes in profession: diminishing scope
of service over time
 LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
•Research themes in auditing:
• Audit engagement
• Audit education
• Audit markets
• Audit procedures
• Audit report & going-concern opinion
• Audit review
• Audit sampling
• Auditor behavior
 LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
• Auditor’s judgment
• Corporate governance
• Earnings quality
• Information processing
• Internal auditing
• International regulation
• Liability fraud and litigation
• Profession and regulation
• Tax audit
 LANDSCAPE OF CONTEMPORARY
ACCOUNTANCY RESEARCH
• Contemporary accountancy research:
• Descriptive
• Explanatory
• Prescriptive
• Alternative accountancy research methods:
1. Analytical modeling: tools of economics, mathematics, & statistics
considered in examining issues

2. Behavioral experimentation: can be used in areas related to

judgments & decisions, specifically in auditing

3. Evaluation research: may focus on assumptions used, incentives

offered & extent of restrictions imposed in different functional areas
of accountancy
MOTIVATIONS FOR ACCOUNTANCY RESEARCH
• Not much progress in the Philippines (unlike in the US and
many European countries): still in its infancy stage
• Not much attention is given by academic institutions &
practitioners
• CHED: mandated to enhance research functions of HEIs
• In accountancy education: requirement for research
embodied in CHED MO #3, 2007 series, w/c requires
accountancy schools to:
• Have competent & qualified research staff
• Undertake research
• Support faculty & students in the conduct of research
• Revised policies in said MO intend to adopt locally the
International Accounting Education Standards, to keep
Phil.graduates competitive in the global workplace