10 important things accounting theory assignments - DEVI FIRLIYANI ZALIKA 120110160077

Name : Devi Firliyani Zalika
NPM : 120110160077
Lecture : Nanny Dewi Tanzil
Accounting Theory Assignments
10 Important things in Chapter 13.
1. Behavioral accounting research has been defined as:
The study of the behaviour of accountants or the behaviour of non-accountants as they are
influenced by accounting functions and reports.
2. Why Behavior Accounting Research is Important?
a. It discovers how people use and process accounting information
b. It provides valuable insights into the ways different types of decision makers
produce, process and react to particular items of accounting information and
communication methods
c. It provides useful information to accounting regulators
d. It leads to efficiencies in the work practices of accountants and other
professionals
3. Development of behavioural accounting research
a) Human Judgement Theory research began in 1954 Ward Edwards
b) The term Behavior Accounting Research appeared in 1967
c) Last 30 years has seen an explosion in BAR
 especially auditing
 importance of judgement
 the ‘Brunswik lens model’
4. An overview of approaches to understanding information processing
Three major research approaches
 Brunswik lens model
 Process tracing
 Probabilistic judgement
5. The Brunswik lens model
Used as an analytical framework and the basis for most judgement studies involving
 prediction (e.g. bankruptcy)
 evaluation (e.g. internal control)
6. Format and presentation of financial statements
Libby (1976) – 3 options for improved decision making
 Changing the presentation and amount of information
 Educating decision makers
 Replacing decision makers with a model of themselves or with an ideal cueweighting model
a. Little research has been undertaken regarding ideal presentation formats


e.g. graphs versus tables
e.g. colour versus black & white (So & Smith)
b. Mixed results
c. No well developed and tested theory (Wainer & Thiessen)
7. Probabilistic judgement studies – the evidence
a. Three rules of thumb (heuristics)
Representativeness
 When judging the probability that a particular item comes from
a particular population of items, people’s judgement will be
determined by the extent to which the item is representative of
the population
Availability
 The assessment of the probability of an event is based on the ease
with which instances of that event come to mind
Anchoring and adjustment
 An initially given response serves as an anchor, and other
information is used to adjust that response
b. Expert judgement and rules of thumb
8. Accounting and behaviour
a. The techniques adopted and the subsequent interpretation of reported
information are matters of perspective
b. Accounting is a direct function of human behaviour and activity
c. Two-way influence
9. Limitations of BAR
a. Frequent contradictions between the findings of similar studies
b. Human information processing is far more complex than the development of
current research theories and methods
c. Research settings fail to adequately replicate real-world settings
d. Should policy be influenced by research on individual decision makers
e. The major limitation is the lack of a single underlying theory to unify diverse
research questions and findings
f. A single theory is unlikely in the foreseeable future
10. Issues for auditors
The process of auditing is often treated as a ‘black box’
 What are the characteristics of better auditors
 What are the factors that affect auditors’ judgement
 Research challenges in balancing realism and simplicity in research design
11. Bar is important because BAR can specifically examines the decisions making activities
of the prepares, users, and auditors of accounting informations.
12. Bar can provide valuable insights into the ways of different type of decisions makers
produce, process and react to particular items of accounting information and
communication methods. We can use the insights to improve the decisions making in
variety ways