Accounting view points
The adoption of a particular viewpoints of accounting is a function of a range of factors
including history and culture, soceital values, the nature of economic activity and the
objectives of those who prepare intrepret and apply accounting information.
The established objective of the accounting is the measurement and reporting of the
economic activity of an entity. Then, there are significant changes to reporting by entities
because of the consideration of the reporting not only the economic transaction and value
of assets and liabilities but it broaden to include the effect of an entitys activities.
SAC 2 states that the objective if general purpose report is to provide the information
useful for making and evaluating decisions about the allocation scare sources.
The boundary assumptions
Dr Ian Ball
The concept of reporting entity as it related to the boundaries of an entity. Balls main
concern was that the main boundaries of identified reporting entities may be defined by
reference to ownership or control, where controls related to the ability to directly deploy
scarce resources.
SAC 1
SAC 1 defines the reporting entity and outline criteria for determining the boundaries. It
defines a reporting entity as “€all entities in respect of which it is reasonable to expect the
existence of users dependent on general purpose financial reports for information which
will useful to them for making and evaluating decisions about the allocation of scarce
resources.
After all those definitions, companies or organizations will often act to redefine these
boundaries in response to organizational or external pressures.
Recently, there is the extension of reporting boundaries to incorporate the information that
