Business Performance and Value - Assignment Example

Accounting Name Date Course Question 1 Accounting information is considered as any other product in the market. As such, it is subject to demand and supply. Investors require accounting information and on the other hand, the companies through their managers, supply the information (Botzem, 2012). The main problem with the accounting information is that some of the managers may provide misleading information to the investors with an aim of coercing them into investing in their company. This has brought about the aspect of regulation which is aimed at creating a level playing field. Regulation involves the rule that has been put in place to guide the accounting operations including the disclosure of information (Skogstad, 2011). Political aspects in accounting are closely related to regulations. Politicians are responsible for making laws and carrying out oversight. As a result, politics is all about the laws that should be put in place to govern the accounting process. Politicians represent public interest and hence their involvement in accounting to protect the vulnerable. According to the public interest theory, political interference in accounting is aimed at promoting transparency and ensuring that accounting information provided is accurate (Smith, 2014). As a future accountant, politics of regulation is likely to have a lot of impacts on the daily operations. The low levels of transparency in financial reporting have led to increased levels of politics and regulations in accounting (Burlaud & Colasse, 2011). Most of the companies inflate their accounting information in order to attract investors and assure shareholders that the company is performing well. The Wall Street scandal in the United States of America is an example. Regulations are required in order to protect the shareholders and investors from misleading accounting information that may render them vulnerable. Politicians play a key role in regulating the supply of financial information (Rahman, 2013). The politicians are also agents of the public and are required to provide oversight and regulation for public interest. Self interest of the politicians has, however, been highlighted as a factor that may affect the regulation process. The current business environment is quite competitive and this has seen more companies falsify their financial reports in order to attract the investors and promote public image of companies. Globalization has also seen the companies increase their areas of operations to different regions (Bertomeu & Magee, 2011). This increases the likelihood of companies falsifying their financial information in order to attract foreign investors. The introduction of the International Financial Reporting Standards has played a significant role in promoting transparency (Ramanna, 2013). This has affected the politics and regulations that are in place in Australia. International standards have seen most of the regulations developed based on international regulations as opposed to national regulation. It has reduced the political interference on the accounting and hence easing pressure from the politicians. Self interest of the politicians has been reduced through international standards (Ezzamel & Xiao, 2015). As a future accounting student, the regulations will have a lot of effects. High levels of transparency when handling the accounting information will have to be displayed. All the regulations that have been put in place have to be observed and every aspect of the accounting activity will be influenced by the regulations. This may plays an essential role in ensuring that public interest as well as transparency is promoted when carrying out the accounting activities. Although the regulations may make it difficult to carry out some of the accounting activities, it will play a vital role in promoting transparency as well as public interest. The presence of regulations in Australia encourages the accountants to be more careful when carrying out their activities (Weiping, 2013). As a future accountant, the work ahead may be made more complicated by political and regulations but it will be widely for the common good. List of References Botzem, S, 2012, The politics of accounting regulation: Organizing transnational standard setting in financial reporting, Edward Elgar Publishing. Skogstad, G, D, 2011, Policy paradigms, transnationalism, and domestic politics (Vol. 35), University of Toronto Press. Smith, M, 2014, Research methods in accounting, Sage. Burlaud, A, & Colasse, B, 2011, International accounting standardisation: is politics back? Accounting in Europe, 8(1), 23-47. Rahman, A, R, 2013, The Australian Accounting Standards Review Board (RLE Accounting): The Establishment of Its Participative Review Process, Routledge. Bertomeu, J, & Magee, R, P, 2011, From low-quality reporting to financial crises: Politics of disclosure regulation along the economic cycle, Journal of Accounting and Economics, 52(2), 209-227. Ramanna, K, 2013, The international politics of IFRS harmonization, Accounting, Economics and Law, 3(2), 1-46. Ezzamel, M, & Xiao, J, Z, 2015, The development of accounting regulations for foreign invested firms in China: The role of Chinese characteristics, Accounting, Organizations and Society, 44, 60-84. Weiping, H, 2013, Some Thoughts on the Teaching of" Financial Regulations and Accounting Ethics" in Secondary Vocational Schools, The Guide of Science & Education, 6, 053. Question 2 Personal perspectives on accounting have changed as a result of studying ACCG 399. Before undertaking the studies, the personal perspective on accounting was quite different. It was mainly based on the work-related aspects that the accountants are engaged in. Accounting is a lot more complex as perceived by the ordinary people. The accounting profession requires individuals to be more proactive when carrying out their activities (Young & Heffes, 2011). Accounts are not only required to be good in mathematics and theoretical aspects of accounting. A lot of professionalism is required of the accountants when carrying out their activities. High levels of ethics are required of the individual accountants. The accountants play a key role in the organizations. Lack of good ethics by the accountants may have negative impacts on the whole organization (Reeve, et al, 2012). The accountants handle huge amounts of money on behalf of the organization. This requires honesty and integrity in order to avoid the incidences of defrauding the companies that they work for. The career of the accountants who are not ethical and transparent may be short lived (Wild, Shaw & Chiappetta, 2012). It is difficult for any organization to employ an accountant who is known for fraud. Experience and academic qualification may not matter much when an accountant is not ethical and professional. As a result of ACCG 399, a lot of information has been obtained with regards to the accounting practices and policies. Financial reporting is one of the aspects of accounting that greatly influences the work of the accountants (Li, Liu & Luo, 2013). The International Accounting Standards Board is one of the bodies that govern the financial reporting process. This body plays an important role in terms of developing the policies that the accountants have to observe during the reporting process. The board plays an important role in ensuring that the organizations are transparent in terms of the accounting reporting. Transparency in the financial reporting is important to the stakeholders as they relay on the information make decisions (Tawiah & Benjamin, 2015). The regulations that have been developed by the board are as a result of misleading information provided by most companies in their financial reporting. False representation of the companies through their accounting information is a major problem that the board is trying to tackle. The concepts of accounting therefore play an important role in terms of ensuring that the organizations are able to attract investors. Financial reporting is useful to the organizations as it is an indication of how organizations are performing financially (Edwards, 2013). The report highlights whether an organization is making profits or not. The full disclosure of financial information is an important aspect that the accountants have to understand. Full disclosure of financial information enables the investors as well as the shareholders to make decisions with regards to investing at the company (Matherly & Burney, 2013). The accountants therefore play a key role in the organization and their actions may influence the decision of the shareholders and stakeholders. The accountants are responsible for preparing the financial reports of the company. However, some of the accountants are usually influenced by the management during the process (Kimmel & Kieso, 2013). This has negative impacts on the accounting process as it goes against the principles of accounting. ACCG 399 plays an essential role in providing information needed by the accountants and provide solutions to some of the challenges that accountants are likely to face while carrying out their duties. Political issue that affects accounting has been highlighted. The political issues are mainly related to regulations and governance issues (Pashang, Österlund & Johansson, 2014). The field of accounting also has a relationship with the other field. It is therefore important for the accountants to be fully aware of how to relate and work with the other professionals. The duties of the accountants are quite demanding and it requires a close working relationship with the other stakeholders. List of References Young, M, R, & Heffes, E, M, 2011, FEI@ 80-Regulation and Accounting Standards-Regulations and accounting standards, which have helped shape the business and financial environment, continue to change dramatically, Financial Executive-Magazine of Financial Executive Institute, 27(5), 20. Reeve, J, M, et al, 2012, Principles of Accounting, South-Western Cengage Learning. Wild, J, Shaw, K, & Chiappetta, B, 2012, Fundamental accounting principles, Singapore: McGraw-Hill Education. Li, Z, Liu, Q, & Luo, L, 2013, Principles-based versus rules-based accounting standards and earnings quality: evidence from China's mandatory adoption of IFRS, In Wuhan University Working Paper. Tawiah, V, K, & Benjamin, M, 2015, Conservatism Analysis on Indian Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), International Journal of Multidisciplinary Research and Development, 2(5). Edwards, J, D, 2013, Accounting Principles: A Business Perspective, Global Text. Kimmel, P, D, & Kieso, D, E, 2013, Accounting principles, John Wiley & Sons. Matherly, M, & Burney, L, L, 2013, Active learning activities to revitalize managerial accounting principles, Issues in Accounting Education, 28(3), 653-680. Pashang, H, Österlund, U, & Johansson, K, 2014, Cost Accounting, Ethical Accountability, and Accounting Principles, Journal of Modern Accounting and Auditing, 10(1), 20-31. Question 3 The current accounting framework needs some changes in order to support future societies. The current accounting frameworks have some loopholes which impacts negatively on the society. The rogue accountants and companies are able to avoid liability and responsibility as a result of the weaknesses in the current framework (Warren & Young, 2011). The falsification of the accounting information is an indication that the current accounting framework is not effective. As a result of the falsification of the accounting information, the shareholders who in most cases are the members of the society have greatly been affected. In the Wall Street Scandal, the members of the society lost billions of investment which is an indication that the current framework is not effective. The accounting framework requires changes at all levels in order to impact positively on the future societies (Becker & Steinhoff, 2014). The changes in the accounting framework should start with the education and training of the accountants. Accounting framework should clearly highlight how the training of accountants should be carried out. Enhancing the quality of the training will better prepare the accountants to handle the future challenges that they are likely to face. In order to achieve this objective, a thorough research on accounting is required. The research in accounting is required for the purposes of ensuring that the appropriate changes are made. The research in accounting practices can be useful in highlighting some of the challenges that the accountants face (Penman, 2013). The accounting framework has to consider the needs of all the stakeholders in order to ensure that it improves on the future societies. The accounting framework needs to put more emphasis on the needs of the investors and stakeholders (Needles, Powers & Crosson, 2012). Focus should be place on how the reporting framework can be improved in order to achieve transparency in accounting. Transparency in the accounting framework is the major problem that affects the stakeholders. In order for the future societies to benefit from the accounting framework, the accounting information provided by the companies has to accurate and reliable. The International Accounting Standards Board has to put in place measures that promote full disclosure of the accounting information by the companies (Schmidgall & Yu, 2013). This requires a continuous review of the regulations that the board has put in place. The changes to the framework should be aimed at addressing any likely problem that is likely to affect the full disclosure of the accounting information. The international standards need to be fully embraced and supported by the stakeholders in the industry. This will have a positive impact on the accounting practices. Currently most of the companies are yet to comply with the framework that has been put in place by the International Accounting Standards Board (Powers, 2011). Resistance to change is one of the major factors that are affecting the field of accounting with regards to the international framework. The international financial reporting standards is one of the major achievements in the field of accounting. The standards are aimed at ensuring that the society benefits from the accounting framework (Marshall, Valdosta & Varnon, 2012). However, more need to be done as the standards are yet to be fully adopted. Stern action should be proposed in the accounting framework in order to deter organization from engaging in unethical accounting practices. This should include tough penalties and fines incase of any breach. However, the framework may not be successful without the support of the other stakeholders. The government needs to be involved in order to ensure that the penalties imposed are fully implemented (Cheng, 2015). The government is an important stakeholder as its main duty is to protect the interest of the public. The politicians who are responsible for making the laws should also support the framework that has been put in place. This will enhance the protection of the members of the society as well their interest. The main limitation for the implementation of the accounting frameworks may be lack of goodwill from the stakeholders. A lot of training is therefore requires among the accountants and their organizations in order to ensure that the framework is successful and impacts positively on the future societies (Jiang & Penman, 2013). The success of the accounting framework is not only beneficial to the society but also the accountants. List of References Warren, D, L, & Young, M, N, 2011, Integrated accounting principles: A best practices course for introductory accounting, Issues in Accounting Education, 27(1), 247-266. Becker, J, & Steinhoff, M, 2014, Tax accounting principles and corporate risk-taking, Economics Letters, 125(1), 79-81. Penman, S, 2013, Accounting standard setting: Thoughts on developing a conceptual framework, China Journal of Accounting Studies, 1(3-4), 157-167. Needles, B, Powers, M, & Crosson, S, 2012, Principles of accounting, Cengage Learning. Schmidgall, R, S, & Yu, J, H, 2013, Current Accounting Practices of Preopening Costs by Lodging Firms—Do They Violate US Generally Accepted Accounting Principles? The Journal of Hospitality Financial Management, 21(2), 87-94. Powers, M, 2011, Accounting principles, South-Western Cengage Learning. Marshall, L, L, Valdosta, G, & Varnon, A, W, 2012, An empirical investigation of clicker technology in Financial Accounting Principles, Learning in Higher Education, 6. Cheng, J, 2015, Small and Medium Sized Entities Management’s Perspective on Principles-Based Accounting Standards on Lease Accounting, Technology and Investment, 6(01), 71. Jiang, G, & Penman, S, 2013, A fundamentalist perspective on accounting and implications for accounting research, China Journal of Accounting Research, 6(4), 233-245. Question 4 Social context mainly involves the immediate physical and social environment in which something happens or people live. The natural resources play an important role in terms of improving the quality of life in the social context (Post & Preston, 2012). Accounting plays an important role in terms of influencing the members of the society. It is through the use of accounting concepts that the natural resources cam be analysed to determine the benefits that it has on the social context. In the movie Frackman, the social context has been analysed based o the activities of gas companies. The gas companies have the powers to drill gas on private property and there is nothing the owners of the land can do (Frackman, 2015). The gas industry in the Queensland according to the movie is a multibillion dollar industry and the companies are on the rush to exploit the gas resources. The activities of the companies has led to negative impacts on the on the livelihoods of the people. The gas drilling has led to pollution of the water bodies as well as the environment. The residents in the locality have started falling sick as a result of the pollution. Animals are also being affected by the high levels of pollution. This has led to activism and opposition by the members of the society. This has however not stopped the gas companies from proceeding with the gas drilling process since they have government support (Wake up World, 2015). Accounting is quite different from the social context and this has led to conflicts between companies and members of the society (Cho, 2012). The concepts of accounting is mainly concerned which the amount that the company is likely to make when venturing into a certain project. This is applicable to the gas companies as the accounting concepts indicates that the project is viable and can raise millions of dollars. The social contexts is however concerned with the effects that the projects have on the society. The negative effects such as environmental pollution are of major concern to the companies and it affects the relationship with the company. The concepts of accounting are to ensure that the companies are able to control their financial activities and invest in activities that are profitable or re not likely to bring losses to the organizations (Spence & Rinaldi, 2014). It is for this reason that the gas companies in Australia are heavily involved in the drilling activities. The gas industry is quite profitable due to the high demand for gas. The conflicts between the community members and the company are due to the financial aspects versus the social aspects. While the companies are set to benefit financially, the society are set to lose socially. The social lives of the community members will be affected through the pollution of the environment. The social context is quite parallel to accounting which is a major source of conflict (Nobes, 2011). Accounting is not helpful as it puts more emphasis on the financial aspects and profitability. The social context aspects are not considered by the accounting aspects (Silva da Rosa, et al, 2012). This exposes the community members to a high level of exploitation by the companies whose main goals is to make profits. The needs of the community members are not considered in accounting. Accounting only considered the needs of the company and hence creating a disadvantage to the community (Parker, Guthrie & Linacre, 2011). Changes in the accounting framework are therefore required in order to minimize the harm caused to the society. Some of the harm that accounting may cause may be reversible. As indicated in the movie, the high levels of pollution are resulting to negative health effects which may result to deaths. The community members are also losing control of their properties as a result of the activities being carried out by the company (Frackman, 2015). The failure of accounting to consider the social context also puts the community members and the companies on collision course. This may end up affecting the activities of the companies if the community members are not in support of the projects. The inputs of the community members are rarely considered in accounting and hence contributing to the harm. The situation is likely to remain largely the same due to the conflicting interests of the community members and the companies. List of References Post, J, & Preston, L, 2012, Private management and public policy: The principle of public responsibility, Stanford University Press. Cho, C, H, 2012, Do actions speak louder than words? An empirical investigation of corporate environmental reputation, Accounting, Organizations and Society, 37(1), 14-25. Spence, L, J, & Rinaldi, L, 2014, Governmentality in accounting and accountability: A case study of embedding sustainability in a supply chain, Accounting, Organizations and Society, 39(6), 433-452. Nobes, C, 2011, IFRS practices and the persistence of accounting system classification, Abacus, 47(3), 267-283. Silva da Rosa, F, et al, 2012, Environmental disclosure management: a constructivist case, Management Decision, 50(6), 1117-1136. Parker, L, D, Guthrie, J, & Linacre, S, 2011, The relationship between academic accounting research and professional practice, Accounting, Auditing & Accountability Journal, 24(1), 5-14. Frackman, 2015, The movie: Official trailer, Retrieved on 30th October 2015 from, . Wake up World, 2015, 60 minutes Australia- Fracking-The coal seam gas land grab, Retrieved on 30th October 2015 from, . Frackman, 2015, Frackman: Dayne Pratzky takes on Coal seam gas, Retrieved on 30th October 2015 from, . Read More