Essays on Accounting Regulation of Deepwater Horizon Oil Spill Case Study

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The paper 'Accounting Regulation of Deepwater Horizon Oil Spill " is a great example of a finance and accounting case study.   This report uses the interest theory to discuss the role of regulators (politicians) and their motivation as regulators. The report starts by introducing the need for regulation in accounting before looking at regulation as a political process. The report then looks at the role of regulators (politicians) as well as their motivation as regulators. This is done using the BP oil spill as a case study. The report then gives an overview of the BP oil spill stating why regulation is necessary for the industry.

The report does agree on the recommendations of the case study on the need for increased regulation so as to ensure more environmental responsibility by corporates. In conclusion, the report puts more emphasis on the need for accounting regulation and the need for increased regulation in the industry especially as concerns the environment.   Interest theory and what the role of regulators (politicians) is. The motivations of politicians as regulators Introduction For many years, there have been arguments and debates concerning the necessity for accounting regulation with those against it advocating for regulation to be left to market forces to optimize the allocation of resources.

On the other hand, proponents of regulation argue that markets do not always operate at the best interest of the society and hence the need for intervention through regulation. Thus, regulation is seen as important as it guides how financial reporting will be carried out bearing in mind the interests of various stakeholders including the public which may not necessarily be directly involved in the business.

A good example of why regulation may be necessary is when actions by firms lead to the detriment of the society or the environment as was the result of the Deepwater Horizon oil spill. In this case, BP’ s actions had led to environmental consequences that had a detrimental effect on the environment and hence the public. But devoid of regulation, who was to be held responsible for the spill? How were the costs to be accounted for? This case does show that regulation is necessary for a bid to safeguard various interests including that of the public.

The case also does show that the process of regulation is a political one where the various parties involved are consulted on the best way forward. Organizations will obviously lobby the regulators/politicians to ensure their interests are well taken care of. On the other hand, the regulators/politicians will seek to safeguard public interests though at times private and self-interests do a feature. This report seeks to establish the role of regulators/politicians and their motivation as regulators. In so doing, the Deepwater Horizon oil spill is used as a case study. Regulation as a political process Regulation is a political process as it follows the due process as an important ingredient in the regulatory process (Sebastian, 2012).

The due process involves seeking to involve all affected parties in the deliberations and this is seen as important in maintaining the legitimacy of the regulatory process through involving all the affected parties. The development of accounting policies and regulation is thus political owing to its negotiated nature. Regulators (politicians) are thus involved in the due process in a bid to ensure that the interests of the public are well catered for during the development of accounting policies.

References

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Sebastian, B2012, The politics of accounting regulation, London, Rutledge.

Gipper, B, Lombardi, B&, Skinner, D2013, The politics of accounting standard setting: A review of empirical research, Retrieved on 21st January 2016, from;

https://www.business.unsw.edu.au/researchsite/publicationssite/australianjournalofmanag ement-site/2013-australian-journal-of-management-symposium-site/Documents/Skinner- ajms-20130612.pdf

Gaffikin, M2005, Regulation as accounting theory, Retrieved on 21st January 2017, from;

http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1049&context=accfinwp

ifac.org, 2011, Regulation of the accountancy profession, Retrieved on 21st January 2017, from;

https://www.ifac.org/system/files/publications/files/PPP1-Regulation-of-the- Accountancy-Profession.pdf

Johansen, B2016, The politics of regulation of financial statements, New York, Taylor & Francis.

Jared, K2007, Accounting standards, London, Rutledge.

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