Positive Accounting Research Financial Statements

Question: Discuss about the Positive Accounting Researchfor Financial Statements. Answer: This paper reviews Watts and Zimmerman approach towards positive accounting research. Positive accounting theory is a wider concept of scientific theory which considers cause and effect relationships of humans. This research has shown challenges faced by the companies in their accounting practices and reporting of financial statements. This research has also discussed about various concepts and methods used by companies for effective accounting. The ontology and epistemology assumptions have been developed for the understanding of importance and deficiencies of positive accounting research. In addition to this, the summary of this article will provide an idea about the facts and arguments disclosed including overall conclusions. After this, questions on research have been prepared to identify major problems of the positive accounting theory and obstacles faced by the individuals in preparing financial statements in the organization. Moreover, behavior of humans and their cause and ef fect relationship with the accounting practice is also discussed here. In addition to this, this report also includes if and buts of all the possible situations which prevents the accounting theory less positive. Lastly, this report concludes with all the suggestions about human behavior towards accounting practice and how they could make them more effective and better as per auditors opinions (Brown, Preiato and Tarca, 2014). Summary of The Article This article provides research on positive approach towards accounting practice and the human behavior towards this approach. It also stated various factors which have significant impact on human behavior. It allows individuals to overcome with the problems that has come in its decision making and developed reciprocal attitude. For making better and effective approach towards accounting practice this article has used intellectual program. After evaluating cause and effect relations of human behavior it consist several arguments on positive accounting research (Waymire, 2014). Many researchers have also argued that positive accounting practice should also be based on personal opinion of humans. This article further stated about auditors judgments on accounting practice of companies and also further stated that when auditors are under pressure they have to work fast and so the chances of errors got doubled in their reporting. In addition to this, another theory discussed in positive ac counting research is free will of humans (Brown, et al. 2014) which means if humans are free to take their own decisions which remains restricted on their own views and would nullify other persons views within the research program. This theory also provides that there are no concepts relating to applicability of human behavior. The ontology and epistemology theories in positive accounting research provide misguidance to public relating to implications of human behavior. The major problem faced by researchers in positive accounting theory was the consideration of positive and quantitative researches to be same. However, auditors opinion on research theory was assessed by researchers to make their research better and effective. Further, for the evaluation of internal and external factors hypothesis testing was done in positive accounting practice (Ahmed, Neel and Wang, 2013). Further, it was observed that understanding of human behavior and their cause and effect relationship in the working environment in organization has a significant contribution by research accounting practice (Everett, Neu, Rahaman and maharaj, 2015). Research Questions What factors are required for the success of positive accounting research? What challenges faced by the researchers in positive accounting practice? How this research differs from rational program? What is meant by ontology and epistemology theories in positive accounting practice? Theoritical Frameworks This program studies about various frameworks for the positive accounting practice. This framework also describes about how the readers could increase the effectiveness of positive accounting research in organization (Engle and Hunton, 2015). There is an article which explains the how the accuracy of accounting can be achieved with the help of auditing by the auditors (Choi et.al, 2009). This framework proposes that there are many tests which could be applied on the auditing of accounts so that it provides the legal system. This also shows that accounting data carried many mistakes, errors which could provide misleading results for readers to take decisions (Fang, et al, 2014). Competency of executives and auditors audit fees are the major factors of positive research program. In addition to this, availability of accounting data will help the accountant in preparing financial statements and also support auditors to understand the auditing functioning so that they can provide their judgement on the accounting data. If the test of control is identified, then it would provide great help in conducting of audit to auditors in positive accounting research. Moreover, there is another concept in theoretical framework is qualitati ve positive research. In this theory, two main concepts were used to measure qualitative positive research that is (1). Collection of data from the public and (2). Measure variances through the regression analysis on the received data in accounting data (Dyckman and Zeff, 2014). Thus, this will help the accountants to prepare financial statements and also help auditors to provide judgements on the accounting data which were provided by the organization and can also detect the errors which were remain in the accounting data of the organization. Further if auditors do not adopt this realistic approach in their auditing methods then it will create the possibility of type 1 errors that is it will lead to mis- specifications in their auditing. According to Deegan (2017) it can be said that these theories will provide clear point of view on human behavior which is helpful in making decisions. In order to determine the human behavior factors in financial statements null hypothesis is imple mented in accounting research practice. As per Slater, et al. (2014), there are many international models which solve mistakes in positive accounting research. Significant of Positive Accounting Research Understanding of human behavior and its implications are the main significance of this positive accounting research. There are also many models which identifies cause and effect relations of human behavior in research program. Further, it was also observed that quantitative approach will help in gathering data from the accountant to measure behavior with financial statements. Thus this research helps in effective analysis of human behavior and their actions. In order to examine the errors and mistakes in accounting transactions, audit procedure is developed. This may not be beneficial to our knowledge of human behavior but provide conclusions to accountants in solving problem. Thus, it can be said that there are various systems which are helpful in assessing human behavior in this approach (Guan, 2014). Limitation of Positive Accounting Research This article has used primary and secondary data for the positive accounting research. It was further examined that auditors may not identify all the errors and mistakes in financial statements based on the available data (Smith, 2014). On the basis of available data there are chances of uncertainties in ontology and epistemology theories. Also based on certain assumptions which varied with time and factors, hypothetical test also provides uncertainty in available data. Parameters are also set based on accountants and auditors viewpoints on financial data (Bertomeu, Darrough and Xue, 2017). Conclusion Various facts and theories have been reported under this research about the effectiveness and limitation of positive accounting practice. In this, various data is required by the auditors for the measurement of accounting concepts of the organization. The main critique in this research was the usage of the qualitative approach towards the collection of hypothetical data of financial transactions. It is also examined that for the auditors judgements there is requirement of financial data of the organization. This would be helpful for the auditors to identify all the possible errors and mistakes in the accounting data recorded by the accountants. The main problem which was noticed that to establish cause and effect relations. Also there are several frameworks and models used in this article which has emphasized on the decision making power of the humans and also on the auditors opinion on the true and view of the financial statements of the organization. Now at the end, it can be summe d up with the argument that if an auditor worked as per the desired requirement then there would be least chances of frauds and errors in the financial statements of the organization. References Ahmed, A.S., Neel, M. and Wang, D., 2013. 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