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Water Accounting Conceptual Framework Analysis

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Water Accounting Conceptual Framework Analysis
Nonetheless, to some, the conceptual framework has contributed a lot in the development of business, financial, accounting and auditing fields. For instance, using the conceptual framework of financial reporting, the Water Accounting Standards Board (WASB) in Australia has developed a Water Accounting Conceptual Framework in order to assist in the country’s water reporting and the rights to water (Chalmers et al., 2012). The WASB replicated the financial accounting concepts, principles and practices in developing the general purpose water accounting. This new accounting have led to changes and improvement in water policies and pricing, water management and other decisions surrounding the water industry. The action by the WASB illustrates …show more content…
The standard setter can be regarded as an interest group itself and not a neutral authority. The users of the IFRS including the accountants can be perceived as the group holding limited power that will not be able to protect their own interest effectively. The conceptual framework also been criticised for being less interpretive and having less implementation guidance, and this has resulted to high demand of additional guidance from the users of the framework (Mala & Chand, 2014). Due to its general contents, the users i.e. the accountants have to make their own judgment while applying IFRS in preparing the financial reporting. According to Mala and Chand (2014), a correct and accurate understanding of the IFRS requirement by the accountants is crucial because the financial reporting will be used in various decision making process and any low quality judgment may severely affect the economic condition of the users and the organizations which uses the accounting information. In their study, the result shows that the accountants require additional guidance on the accounting standards in order to assist them in reducing the reasoning process while making accurate judgement in applying the IFRS. This finding indicate that the conceptual framework generality characteristics does not facilitate the judgement of the accountants …show more content…
Among the challenges highlighted are with regards to the conceptual frameworks generality and less interpretive nature are related to interpretation of IFRS. Due to social, organizational and cultural differences, the Japanese accountants may interpret IFRS differently as compared to the Western accountants (Tsunogaya et al., 2015). And this may results to differences in solution chose in solving any accounting issues. In addition, the Japanese representatives also concern on applying this principle-based approach because it will be influenced by human behaviour i.e. the behaviour of managers and accountants who prepare the financial reporting and unnecessary application of judgements in interpreting the
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