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Risk in Accounting
Author(s) -
Sunder Shyam
Publication year - 2015
Publication title -
abacus
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.632
H-Index - 45
eISSN - 1467-6281
pISSN - 0001-3072
DOI - 10.1111/abac.12060
Subject(s) - normative , accounting , divergence (linguistics) , economics , positive economics , constraints accounting , accounting information system , positive accounting , actuarial science , financial accounting , political science , law , linguistics , philosophy
Risk and uncertainty are inherent in the environment and functions of accounting. Accounting reports, systems, norms, and rules help people decide, and also determine how they decide in such an environment. Diverse normative theories and descriptions of coping with risk and uncertainty yield different implications for accounting. Chambers was an articulate, forceful, and celebrated proponent of market values, while Ijiri did the same for historical costs. Elements of accounting theory that diverge in their emphases on historical cost versus market values can be linked to the divergence in the theories of risk and decision making. This largely unrecognized link between the conflicting accounting theories and their respective implicit assumptions about risky decisions may help us reconcile, understand, and progress beyond the accounting debates of the past century.