Financial accounting and accountability

This chapter explores the intersection of accounting, accountability, and decision usefulness with a focus on the shifting paradigms from stewardship-based accounting to an information-usefulness paradigm, particularly in the context of fair value accounting. The chapter highlights the benefits and limitations of fair value accounting, especially in its capacity to provide decision-relevant information, yet simultaneously poses challenges such as susceptibility to manipulation and errors. To illustrate these points, the chapter draws on instances of corporations such as Goldman Sachs, AIG, Carillion, and Tongaat Hulett, whose encounters with fair value accounting resulted in challenges and failures. The chapter underscores how accounting standards play a pivotal role in upholding accountability, while also acknowledging the impact of isomorphic pressures enforced by legal requirements, professional standards, and regulatory bodies.