ROLE OF ACCOUNTING

Statement Evaluation: Accounting and the financial crisis

Statement Evaluation: Accounting and the financial crisis

Numerous statements and arguments have come forth on account of the extensive research that has been performed in the last few months in order to understand the causes of the recent global recession (Butler 2009, 26). Each has sought to explore and explain the causes of the recession in a unique context. One of these statements is that which highlights the role of accounting in this regard (Choi 2003, 53). The statement asserts that accounting cannot be considered to be one of the root causes of recession; however, accounting can play an integral part in facilitating the global economy in recovering from the implications of this recession (Droms and Wright 2010, 11). The following discussion will attempt to contribute to the pursuit of the causes of the recent global economic recession by evaluating and elaborating on this statement in order to highlight the role of accounting this regard.

In an initial overview, the statement appears to be significantly general in nature; however, the essence of the statement presents a scenario with far-reaching applications and implications (Edwards 1989, 2). As a result, it becomes imperative to delve into the intricacies that form this statement's foundation and rationale.

The statement argues that it would be inappropriate to blame accounting standards for the recent financial crisis; instead, accounting standards and processes should be brought into use to revive the global economy from the implications of the global financial crisis (Harris 1998, 35). However, the statement does not present any notable indications or inclinations towards the manner in which accounting standards can be used to revive and stimulate the global economy (Stickney, Weil. and Schipper 2009, 278).

The statement takes a stance on the involvement of accounting standards in the recent global economic recession by stating that accounting standards cannot be perceived as causal elements in this recession (Henley 1989, 171). An analysis of this approach reveals that accounting standards could not have forecasted the incidence of this recession since they are not designed or meant to perform forecasting functions (Ketz 2003, 242). The statement appears to be advocating the relevance of accounting in a purely book-keeping perspective; relieving accounting standards and practices of all responsibility of the circumstances that led to the financial crisis (Schroeder, Clark and Cathey 2010, 425).

The statement appears to be in support of the perspective that encourages the development ...