Universal Set of Principles in the Field of Accounting

Introduction

A principle is defined as a rule, or even an idea that forms the basis of deciding what is wrong and what is right in context to our actions. As opposed to principles, we all have our own personal practices and traditions, which determine our behavior in the society. These practices are determined from our culture, society, ancestors, experiences and religion etc. But since we live in a world where every person has their own set of practices and traditions, we cannot expect to live the way we want and this is where rules and principles come in. The very foundations of any principle are built upon its underlying morals, ethics and laws, which are expected to be accepted universally (Chippendale, 2001).

A society may have its own principles, but they will always be seen by the rest of the world as practice, not principles. And this fact highlights the need to have a set of rules and principles, which are unanimously agreed upon and followed by the entire world. Similar concept applies to various disciplinary bodies around the world, which function to establish harmony and coherence in their respective field of operations and differentiate between a bad appeal to practice and a good one.

DR Scott, who was one of the pioneers in promoting the need for a conceptual framework in the field of accounting, said in one of his studies during 1931, “If we are going to be able to look ahead with assurance, we must be able to look back with accuracy”. Following this saying, the essay aims to critically evaluate DR Scott’s claim that “Disputes about the appropriateness of accounting techniques should not be resolved by appeal to practice or tradition”. For our case, I will shed light on the field of accounting and why is it imperat...

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...l, 1993). It was Scott’s idea that unity in accounting can be achieved if external financial statements users are also considered in the equation and the whole idea could gain popularity, little did Scott know that FASB by 1978 would identify the first objective of financial reporting as “Financial reporting is not an end in itself but is intended to provide information that is useful in making business and economic decisions" (FASB, 1978). The second level of Scott’s framework was the pervasive principle of justice, which prescribed unbiased accounting rules that are fair to all users of the financial statements. Scott identified justice as the foremost duty in the financial statements to address the concerns of the public regarding false and misleading financial disclosures (Lawrence et al, 1993). The third level of Scott’s framework was the principle of truth and