The paper "The Global Financial Crisis: Challenge to Accounting Research by Brenner" is a good example of a finance and accounting article. Accounting policies and practices have from the recent past been undergoing crisis and instability in the global market. In the past bankers have been blamed for creating financial crisis a problem associated with the securitization of loans by banks (Brenner 2002). The magnitude also has been rising and this has called for assessment in every area of business, accounting and economics. The current financial crisis deeply implicates accounting practices especially in proposals dealing with the recapitalization of financial institutions and the restoration of the world or global financial system. Review and analysis of the article Objectives The main objective of this research is to understand the accounting changing roles and identify the crisis which is being faced in financial accounting and give a way of solving it.
In trying to identify the crisis, two reason s for academic failures in accounting was determined which include, the unrelenting gap between the world of academic research and the world of accounting in action and the failure to understand the connection between micro accounting and regulatory technologies (Brenner 2002.
The financial reporting requirements for asset valuations and off-balance sheet items should first be understood which will help to reduce the magnitude of the financial crisis. Bridging the break between the accounting in action world with academic research was another objective for this research. According to the done research, accounting practice is highly concerned with the financial crisis (Brenner 2002). Here the main objective was to understand the role of financial reporting on the valuation of assets and off-balance sheet entities.
This research is needed to reduce reliance on the quantitative database and to develop the methodological tools was and relations to practice are required to bridge the gap between academic research and the accounting in action was a major challenge to this objective. The article achieved this objective as some progress in the managerial accounting field was noted which showed a move towards accounting in action within. According to Hopwood (1983), the use of case study and ethnographic research methodologies made organizations to work towards the “ accounting action” . The article also had the objective of understanding the relationship or the link between accounting and macro-political economy.
The research major aim in this objective was to determine whether fair value accounting in the accounting practice has a pro-cyclical impact on the economy and understand whether the pressure exerted in the accounting standard should make financial reporting to include financial stability. The research also aimed to understand the role of financial accounting in the capital markets (Brenner 2002. The paper achieves its objectives as after the research it concludes that accounting is shaped by political powers in that accounting is seen to be merely political.
According to this research, accounting is mainly influenced by political and ruling elites and dominant ideologies which then affect income, power and wealth distribution in the society. This is because the manipulation of the accounting action by political elites leads to a financial crisis.
Brenner, R. (2002). The boom and the bubble: The US in the world economy.
Verso: London, May 23.
Hopwood, A. G. (1983). On trying to study accounting in the contexts in which it operates Accounting Organizations and Society, March 8.