Contemporary Issues In Accounting And Finance Essay

Contemporary Issues In Accounting And Finance - Essay Example 3, citing a 1966 definition). At the same time, accounting is grounded on philosophical assumptions about knowledge and on the â€Å"relationship between theory and practice†. Meanwhile, for Oatley (2001), financial regulation is about regulating banks to protect depositors and shareholders. For Carvajal et al. (2009), financial regulation is something more encompassing because its key objective is to â€Å"ensure that all financial activities that may pose systemic risks are appropriately overseen.† The same perspective is also in Truman (2009). For Carvajal et al. (2009), the scope or perimeter of financial liberation involves three aspects. First, it must provide regulators with the widest view of the status of regulation action. Second, it must enable regulators to monitor and respond to risks. Finally or third, it must provide regulators with early warnings of risks. The subject area of financial regulation is important because we have a highly â€Å"financialized economy† worldwide (Andersson et al. 2010). Accounting is important for managers (Webster 2004). At the same time, accounting financial statements can provide regulators with important tools through which they can monitor the financial system, check on the progress of regulation, and anticipate possible risks so they can be addressed or eliminated (Taylor 2009). Accounting financial statements can also be used to monitor the performance of nongovernmental organisations (Morgan 2010). Financial regulation, however, is not entirely dependent on financial statements because financial regulation can cover all of the economy while financial statements from accounting cover only the economic conditions of firms or group of firms under a conglomerate (Borio and Tsatsaronis 2005; HM Treasury 2010). For example, financial regulators would also be monitoring liquidity, interest rates, capital flows, and other macroeconomic variables, not merely financial statements. Another type of reg ulation also uses financial statements but is different from financial regulation: strengthening corporate governance. Academic research contributed to the sciences or fields of accounting, financial regulation, and corporate governance. In the process, academic research protected and advanced modern living and, thus, it can be said that academic research improved our lives. Although not all journal articles are academic research, I review a few accounting journals to illustrate how academic research has been developing the field of accounting and, relatedly, financial regulation. In doing so, I will attempt to illustrate how academic research contributes to protecting and advancing life (Humphrey and Lee 2004; Sterling 1975). Barth and Landsman (2010) examined how financial reporting contributed to the financial crisis. They concluded that fair value accounting played little or no role in the financial crisis. Unfortunately, however, the lack of transparency in securitization and d erivatives misled investors from assessing properly property values and the risk of bank assets and liabilities (Barth and Landsman 2010). Because of this, they proposed to require banks to â€Å"recognize whatever assets and liabilities they have after the securitization† to reflect better the â€Å"underlying economics† of banks. Further, they recommended â€Å"disclosure of more disaggregated information, disclosure of the sensitivity of derivative fair values to changes in market risk variables,