NATURE OF

ACCOUNTANCY
RESEARCH
 TOPIC OUTLINE
Meaning of Accountancy Research

Accountancy Research as a System

Landscape of Contemporary

Accountancy Research

Motivations for Accountancy Research

OBJECTIVES
Explain the meaning of accountancy research
and its properties as a system
Differentiate the functional and sectoral
classifications of accountancy research
Illustrate the different perspective in research
and how they become applicable to accountancy
research
OBJECTIVES
Appraise the current state and attributes of
accountancy research, both in the international
and local settings
Assess the motivational factors in the conduct of
research in the profession
Identify the initiatives undertaken by the different
professional organizations and academic
institutions
Evaluate the contributions of the various initiatives
undertaken for the advancement of research
MEANING OF ACCOUNTANCY RESEARCH

Accountancy is defined by the Oxford English

Dictionary as the profession or business of an
accountant. It refers to the discipline or the
branch of study dealing with the duties of an
accountant. Said duties include, accounting,
auditing and tax services. Recently, the work of
accountants has expanded to include the whole
gamut of assurance services and certain finance-
related areas of management consultancy.
MEANING OF ACCOUNTANCY RESEARCH

Accountancy research therefore covers

accounting, auditing and assurance,
taxation, and management services
performed by the professional
accountant.
MEANING OF ACCOUNTANCY RESEARCH

Oler, et al. (2009) indicated in the paper

Characterizing Accounting Research that
accounting research intersects with a number
of neighboring disciplines primarily in finance,
economics, psychology, and management.
They also categorized accounting papers into
six: (1) financial accounting, (2) managerial
accounting (3) auditing (4) tax (5) governance
and (6).other topics
MEANING OF ACCOUNTANCY RESEARCH

Following the definition of research by Leedy and

Ormrod (2010) and Saunders, et al. (2010),
accountancy research is the systematic process of
collecting and analyzing information in order to
increase ones understanding of the functions of a
professional accountant and contribute to the solution
of problems besetting the practice of the profession.
ACCOUNTANCY RESEARCH
CLASSIFICATION

functional-areas include accounting, auditing

and assurance, tax, and other functional areas
Sectoral-based on the sectors of professional
accountancy practice which are: education or
academe, commerce and industry, public
practice and government
FINANCIAL ACCOUNTING RESEARCH

-concerned primarily with studying the

collection, recording and reporting of
financial information about a business entity
or other forms or organizations. It looks into
the effect of economic events on the
process of summarizing, analyzing, verifying
and reporting standardized financial
information, and on the effects of reported
information on economic events.
FINANCIAL ACCOUNTING RESEARCH

It examines the essential characteristics

of accounting, specifically the
identification and measurement of
financial information about economic
entities and the communication of the
information to interested parties.
MANAGEMENT ACCOUNTING RESEARCH

Systematic inquiry on the provision and use of

accounting information to managers within
organization. It delves into how managers are
provided with the basis to make informed
business decisions and how they are better
equipped in their management and control
functions.
MANAGEMENT ACCOUNTING RESEARCH

It examines the role of financial information in

determining the changes an organization implements
and the decisions it makes. This type of research could
look at the impact of organizational change on
accounting practices or the interaction between
management accounting techniques and functional
strategies, such as total quality management and lean
inventory production.
AUDITING RESEARCH
It examines the systematic process performed by
auditors to objectively gather and evaluate
evidence related to certain assertions about
economic actions and events. It investigates the
manner by which auditors establish the degree of
correspondence between the clients assertions
and the established criteria
AUDITING RESEARCH

It looks into the means by which auditors

communicate the audit results to users of the
reports. Overall, it looks at the quality of audit
services and the value-adding functions of audit.
This type of research can be expanded to
include assurance and attestation services.
TAX RESEARCH
It has a broad scope and can be at the macro or
micro level. At the macro level, the research can
be an objective, sound an clear analysis of
assessing taxation proposals; evaluating fiscal
policy issues based on the principles of equity,
efficiency, and adequacy; and other revenue-
raising powers of the government.
TAX RESEARCH
At the micro or organizational level, the research can
be about the income tax expense reported for financial
accounting corporate tax avoidance; tax-related
decisions on investment, capital, structure, and
organizational form and taxes and asset pricing. The
tax code is a complicated menagerie of rules and
regulations that researchers must navigate periodically.
OTHER FUNCTIONAL AREAS

The other functional areas of accountancy relate

to specific functions such as fraud prevention
and investigation, corporate governance,
internal auditing, risk management, sustainability
reporting and the like.
OTHER FUNCTIONAL AREAS

The functional classification of accountancy

research is not mutually exclusive. Researches
that are dominant in one function are intertwined
with other functions.
SECTORAL CLASSIFICATION
The sectoral classification of accountancy
research into education or academe, commerce
and industry, public practice, and government
serves either as the subject of research or the
context wherein research findings and
recommendations will be useful.
SECTORAL CLASSIFICATION

Improving governance practices and compliance to

financial reporting standards are research agenda
for most entities in the commerce and industry.
Quality assurance and ethical compliance are also
current concerns of individuals in public
accountancy. The government sector is bent in
improving accountability and control systems.
BASIC ACCOUNTANCY
RESEARCH
Basic accountancy researches are geared
toward generation of professional associations,
and academic societies or academies. They are
usually conducted by educators and scholars
with the results presented in technical or
professional journals
APPLIED ACCOUNTANCY RESEARCH

Applied accountancy researches are intended to

solve problems, clarify issues or gray areas, and
provide inputs to policy development and
decision-making. These are primarily conducted
by public accountancy firms as dictated by the
needs encountered in the delivery of professional
services.
APPLIED ACCOUNTANCY RESEARCH

Applied accountancy researches can also be

initiated by authoritative bodies and international
funding institutions primarily to provide inputs to
regulation and legislation. Usually, these are
macro in scope and have far-reaching effects in
terms of persons and institutions affected by the
research outputs.
ACCOUNTANCY RESEARCH AS A SYSTEM

Accountancy research , as a disciplinary activity, is also

a system. This point of view is parallel with the systems
thinking that originated in the general systems theory in
the natural sciences. A system is defined as a set of
interacting elements or assemblage of interdependent
objects that form a unified or organized whole and
function to achieve predetermined goals
ACCOUNTANCY RESEARCH AS A SYSTEM

The significant properties of a system, which

accountancy research also has, include:

Hierarchy

Environment

Boundary

Relevance
HIERARCHY

The hierarchy of a system refers to the

arrangement of its parts as determined by the
order of their importance to a particular purpose or
goal. The concept of hierarchy allows for the
leveling of the components in a system. In other
words, while accountancy research is the focal
system, it has both suprasystems and subsystems.
HIERARCHY
The suprasystem is the next higher level where
the focal system operates while the subsystem
consists of the component parts which the focal
system can directly influence. Accountancy
research (focal system) is basically within the
umbrella of social science research
(suprasystem).
HIERARCHY
To a large extent, the trends and directions in social

sciences influence the success of systematic change

effort or track in accountancy research. The subsystem

consists of the functional areas of accountancy

research: financial accounting, management

accounting, auditing, tax and other functional areas.

 SOCIAL SCIENCE RESEARCH
(Supra-system)

OTHER TYPES OF
ACCOUNTANCY RESEARCH
SOCIAL SCIENCE
(Focal system) RESEARCH

ACCOUNTANCY RESEARCH
(Focal system)

FINANCIAL ACCOUNTING MANAGEMENT ACCOUNTING

RESEARCH RESEARCH

AUDITING RESEARCH TAX RESEARCH

OTHER ACCOUNTANCY OTHER ACCOUNTANCY

RESEARCHES RESEARCHES

HIERARCHY OF ACCOUNTANCY RESEARCH

ENVIRONMENT

The environment of a system refers to

entities (individuals, groups, and
organizations) and other systems
(events, situations, artifacts)
surrounding the focal system which
regularly or occasionally interact with
the focal system by way of exchange
of activities or other types of linkages.
ENVIRONMENT
Generally, the environment is also regarded
as the publics of the systems. The
environment of accountancy research
consists of the enabling, functional,
normative, and diffuse environments .
ENVIRONMENT
In accountancy research, this environment
consists of the regulatory bodies and
standard-setting organizations. Their
corresponding processes of legislation,
regulation, standard-setting, and policy-
making provide both rationale and
opportunities for the accountancy research
to thrive.
ENVIRONMENT
The functional environment refers to entities
and systems that perform complementary
functions and services, supply the inputs,
and use the outputs of the focal system.
These include educational institutions,
public accountancy firms, business entities,
and government agencies. Educational
institutions are supposed to do a trilogy of
functions: instruction, research, and
extension.
BOUNDARIES
The boundaries make the system distinct from
other systems and from its environment. The
boundaries of a system are defined in terms of
its scope of functions and extent of coverage of
activities. The functional areas of accountancy
research are clearly defined to include financial
accounting, management accounting, auditing
and assurance, taxation, and management
consulting.
BOUNDARIES

On the other hand, the activities cover the

four sectors of the profession: education or
academe, commerce and industry, public
practice, and government. These two
criteria provide boundaries with respect to
the conduct of accountancy research.
RELEVANCE

Relevance is the ability of the system to

produce outputs that are needed as
inputs by other systems. Accountancy
research will lose relevance if it fails to
listen and respond to feedback from its
environment. Accountancy research,
should be of value to individuals, groups,
organization and the society at large.
RELEVANCE
To achieve relevance, the person or entities engaged in
accountancy research should be sensitive and alert to
environmental signals and should treat these signals as
important inputs to improve quality of service delivery.
Feedbacks from the environment of a system should also be
used to make the necessary internal adjustments in
accountancy research and to build up specific outputs that
are useful and necessary.
Landscape of Contemporary Accountancy
Research

Normative
Seeks to develop and implement specific
accounting practices that the proponents
argue to be superior to existing practices
Positive
focuses on the impact of accounting specially
on capital makers
Normative vs. Positive

Normative Positive
unscientific Purely Scientific
It is more of art Empirical
Normative vs. Positive

Normative Positive

How should leases be Why do most firms

treated on the continue to allocate
financial position? overhead charges to
performance
Should replacement centers
or liquidation values Why do firms
be used in financial change accounting
reporting techniques?
Normative vs. Positive

Normative Positive
How should changing Why do firms
price levels be change auditors?
accounted for?
How should changes How have court
in foreign exchange
regulation and
rates be accounted
for by firms with
rulings influenced
foreign interests? accounting
practice?
Normative vs. Positive

Normative Positive
How should Why do firms
inventories be continue to use
valued? historical cost
depreciation
What should be Why are public
reported in the annual accountancy firms
financial statements? organized as
partnerships?
Normative vs. Positive
Normative
Should interim financial
statements be audited?
How should minority
interests in subsidiaries
be treated in
consolidated
statements?
Positive
Why is fund accounting
different from corporate
accounting?
What impact has the
CPA certification
procedure had on the
practice on accounting
and on the research in
accounting?
Trends in Accountancy
Research
Contemporary accountancy research is
strongly interdisciplinary in orientation.
Researches on capital markets with an
accountancy orientation often emerge at the
interface of finance, economics, and statistics.
Studies on cost behaviors and organizational
performance with accountancy orientation are
conducted in tandem with insights and
approaches from social psychology and
organization studies.
Functional characterization
of AR
Accounting is part of a wider whole; it is an
integral component of an information market
on business enterprise and economy in which
it operates.
To understand accounting, one needs to
understand the wider whole and its
implications for information requirements.
Functional characterization
of AR
In management accounting, the new direction is
towards practice-oriented research.
Selto and Widener (2002) disclosed that motivation
among researchers toward this trend include the
desire to:
1. Gain increased understanding of why
organzations use certain techniques and practices
2. Gain increased understanding of how and which
techniques are used in practice impact
organizational performance
Functional characterization
of AR
3. Inform practitioners
4. Increase the applicability of accounting
textbooks, coursework, and programs
5. Satisfy personal taste
6. Increase consulting opportunities
MAJOR TOPICS AS INDICATIVE OF THE NEW
DIRECTION IN MANAGEMENT ACCOUNTING
RESEARCH

Accounting software Effects of information

Budgeting technology on internal
systems
Business process
Improving profits
improvement
Internal control
Cash management
Management accounting
Compensation plans
practices
Cost accounting Outsourcing
Cost management Performance measurement
Effects of financial Research methods
reporting on internal Shareholder value
systems
TYPOLOGY OF RESEARCH THEMES

Audit engagement Corporate governance

Audit education Earnings quality
Audit markets Information processing
Audit procedures Internal auditing
Audit report and going- International regulation
concern opinion Liability fraud and
Audit review litigation
Audit sampling Profession and
Auditor behavior regulation
Auditors judgment Tax audit