The Nature of Professional Research

This text focuses on applied research, known as professional accounting research. Today's practitioner must conduct research effectively and efficiently to arrive at appropriate and timely conclusions regarding the issues at hand. Effectiveness is critical in order to determine the proper recording, classification, and disclosure of economic events; to determine compliance with authoritative pronouncements; or to determine the preferability of alternative procedures. Efficiency is needed to meet deadlines and manage research costs.

Additional examples of issues frequently encountered by the practitioner include such questions as:

• What are the accounting, auditing, or tax implications of a new transaction?
• Does the accounting treatment of the transaction conform with generally accepted accounting principles? Does the tax treatment conform with the law?
• What are the disclosure requirements for the financial statements or tax returns?
• What is the auditor's responsibility when confronted with supplemental information presented in annual reports but not as part of the basic financial statements?
• What responsibilities and potential penalties exist for tax accountants?

Responding to these often complex questions has generally become more difficult and time-consuming as the financial accounting and reporting requirements, auditing standards, and tax authorities increase in number and complexity. The research process often is complicated further when the accountant or auditor researches a practical issue for which no authoritative literature exists, or the authoritative literature does not directly address the question.

As a researcher, the accountant should possess certain characteristics that aid in the research process. These include inquisitiveness, open-mindedness, thoroughness, patience, and perseverance.³ Inquisitiveness is needed while gathering the relevant facts to obtain a clear picture of the research problem. Proper problem definition or issue identification is the most critical component in research. An improperly stated issue usually leads to the wrong conclusion, no matter how carefully the research process was executed. Likewise, the researcher should avoid drawing conclusions before the research process is completed. A preconceived solution can result in biased research in which the researcher merely seeks evidence to support that position, rather than searching for the most appropriate solution. The researcher must carefully examine the facts, obtain and review authoritative literature, evaluate alternatives, and then draw conclusions based upon the evidence collected. The execution of an efficient research project requires thoroughness and patience. This is emphasized in both the planning stage, where all relevant facts are identified, and the research stage, where all extraneous information is controlled. Finally, the researcher must work persistently in order to finish the research on a timely basis.

Perhaps the most important characteristic of the research process is its ability to “add value” to the services provided. A professional auditor not only renders an opinion on a client's financial statements, but also identifies available reporting alternatives that may benefit the client. A professional tax accountant not only prepares the returns but also suggests tax planning for future transactions. The ability of a researcher to provide relevant information grows more important as the competition among accounting firms for clients becomes more intense and the potential significance and enforcement of penalties more common. Researchers who identify reporting alternatives that provide benefits or avoid pitfalls will provide a strong competitive edge for their employers. Providing these tangible benefits to clients through careful and thorough research is essential in today's accounting environment.