THE REACTION TO CURRENT COST ACCOUNTING PROPOSALS BY GOVERNMENT REGULATORY AUTHORITIES

Abstract

The aim of this paper is to investigate the reaction to recent pronouncements on inflation accounting by two government regulatory authorities who have been major users of accounting data — the Monopolies and Mergers Commission in the United Kingdom and the Prices Justification Tribunal in Australia. The evidence indicates that: the Monopolies Commission reacted quickly to accounting pronouncements and either allowed or requested companies to present accounting data based on current values; and the PJT reacted to the CCA (and other) proposals by stating continually that it would “take into account” the effect of inflation on company returns, but was in a quandary on how to allow for the extr..