Influence of Stakeholder Theory

Question : Write a1 1/2 page memo that summarises how Stakeholder Theory has influenced Possitive Accounting Theory and what implecations that influence has for GPFR. Answer : The stakeholder theory states the values and the moral of an organization ethics. It is the theory of the management of the organization ethics of business operations where business values are follow by the management those called as the stakeholders. Sometimes the competitors also, known as the stakeholder besides employees, consumers, investors, trade unions, government, communities etc. stakeholder theory involves the benefits or the interests of the stakeholders that is always profit of the organization or their personal monetary benefit. This theory follows all their ethics in maintain accounts that helps in taking the fair decisions. Whereas, accounting theory involves the foundation of the accounting practices that follows by the accountants while maintaining the accounts of the company that gives the financial statement of the business and tells the position of it. It is based on certain principles those are defined under the accounting theory The report of the financial sta tement is beneficial and the major concern for the stakeholders. Stakeholder theory involves two theories such as moral (ethical) and managerial (positive).an ethical theory I known as normative theory that describes the happenings inside the organization. All stakeholders work for the benefit for an organization and should manage e all the business activities according to it by considering all the business merits. The stakeholder theory has a great influence on the positive accounting theory. Accounting theory has two aspects. One aspect that predicts the practices of accounting called as positive accounting theory and the second is normative theory that prescribes about the particular practice. The positive theory tries to maintain the good relations with the stakeholders because these are who provide the various resources to an organization. Stakeholders prefers those operational activities those are as per their own interest or beneficial for the organization. so, they follow the ethical practices and influence the accountant to opt such accou nting theory practices those are good for the organization and these are the predictions on the basis of which the stakeholders took decision. GPFR (General purpose financial reporting) helps in removing the gap in between the owners and the managers of the organization. The interest of the GPFR is to provide the financial information to the stakeholders for their own interest by proper allocation of resources given by them .The reconciliation of the stakeholder theory has its huge scope with the investors / financers (stakeholder) as he is the single use for using GPFR information. The priority of this reconciliation is the reliability. The purpose behind this to save the historical cost whatever is predicts by the investor. The main reason behind this influence on the GPFR is the cost that should remain the same, as it is the concern of the stakeholder. Reference: Allen, G., Suggett, D Goodsir, B (1999). Stakeholder Relations in the Public Sector: Innovation in Management. Melbourne, The Allen Consulting Group. Beck, U., Bonss, Wolfgang and Lau, Christoph (2003). "The theory of reflexive modernization." Theory, Culture and Society Vol 20(2): 1-33. Lockie, S. Rockloff, S. (2005). Stakeholder analysis of coastal zone and waterway stakeholders in the Port Curtis and Fitzroy Catchments of Central Queensland. Technical Papers. CRC for Coastal Zone Estuary and Waterway Management.