Revisiting the Firm, Reporting Entity, and Going Concern Concepts in Light of Financial Crisis

Abstract

Contemporary accounting conceptual frameworks depict reporting entities as self-evident stand-alone units whose current activities are likely to continue. That representation is revisited in light of Veblen's (1904) sabotage thesis that managers routinely utilize mechanisms that disrupt underlying markets. Credit default swaps played a significant role in the 2008 subprime financial crisis, blurring the boundaries of entities to create entanglements that threatened the global financial infrastructure. The reporting entity and going concern concepts developed in a climate of philosophical pragmatism operating from a flawed premise that a scientific approach assures objective, value-free data. The conventional treatment of reporting entities is contrasted with emerging conversations that paint “the firm” as a legal fiction functioning within a dynamic and potentially unstable matrix. The paper argues that a distorted view on the underlying nature of the firm masks significant public interest issues, making it difficult to address problems inherent in interdependent institutional structures.

Recognizing and Combatting the Ideological Apparatus Implicit in Cost and Management Accounting Pedagogy

“…When classifications are inherently subjective, but users assume the data is objective, this mismatch can sometimes be used to manipulate perceptions of financial reality to such an extent as to sabotage or implode the basic market infrastructure. This was arguably the case in the subprime market crisis of 2008 (Moore 2017c).…”

Going Concern dalam Metafora Ondel-Ondel

“…Prinsip Going concern digunakan dengan asumsi isi laporan keuangan tidak terbukti ada informasi berlawanan (contrary information). Informasi yang dianggap berlawanan secara signifikan dengan asumsi going concern entitas adalah ketika perusahaan tidak membayar utangnya saat ditagih (Moore, 2017;Krishnan & Wang, 2015). Berbagai penelitian sebelumnya membahas konsep going concern, tetapi belum ada yang mengaitkan going concern dengan penelitian budaya khususnya budaya Betawi.…”