The Arrangement and Composition of the Accounting Structures in the Country - Essay Example

0 Definition and Purpose of Accounting Accounting is a systematic structure that serves as a presentation of the financial accounts and reports. It is the key component that drives and maintains each and every businesses and institutions where the flow of money is continuous and dynamic. The primary purpose of the establishment of accounting as a profession is to safeguard the people and their transactions once they plan to enter into business through purchasing stocks, lending capitals or financing projects (Chapin 1996). Since its founding, accountants have been keeping track of records and auditing the financial information of a particular business. People claim that this practice is as aged as men who began to trade and that it is and will continuously evolve as time lapses (Poullaos 2009). Performing a thorough examination of the past facets and bringing it juxtapose the present conditions of accounting, one can deduce significant transformation in numerous aspect. In this report, the focuses of the course of discussion are the accustomed application of the complex process of accounting and the distinctness of its practice over the country of Poland. As a conclusion, there will be a culmination of the present predicaments and reality of accounting in the selected region, the road with which has lead to that and the possible expectations of the changes to come. 2.0 Poland’s Accounting System As with all systems, there is a wide variety of definite influences and factors in accounting that serves an important purpose and gives rise to the fulfillment of certain functions. To gain a comprehensive knowledge of these important factors, an individual must first probe into the past of the subject and consider the historical occurrences and circumstances that molded the topic into what it is at the present. According to related literature, accounting had many influences from the country of Poland. The Polish have published various investigative studies and empirical writings about the said profession. It was only in the first decades of the 20th century that Poland was still under the Austro-Hungarian Empire. Therefore, one could notice that there were several influential impacts of the Austro-Hungarian Bank (Mattessich 2008).This was a difficult situation because West Ukraine was also under the dominion of the same administration. The accounting theory that originated from their region gave rise to an argument as to should have been declared as the rightful creator of the significant contribution. This is an argument unsettled until the present day (Mattessich 2008). The country of Poland had no established organizations for accounting until the year of 1907 and will not resume progressive activity until the entry of the year 1930 because of the contemporary World War II (McGee 2008). Nevertheless, positioned in the midst of the absence of autonomy and disposed under the ruling of foreign countries—Russia, Prussia and Austria, the termination of the 19th century and the commencement of the 20th century was the indication of the Polish advancement in the textile, mechanical, chemical, mining as well as craft industry. As a consequence, so too shall accounting advance in their country. 3.0 Influences to Poland’s Accounting System 3.1 History of Poland’s Accounting System One of the superior and significant pillars of the country’s system of development of the accounting profession is Marcel Scheffs who became most popular from the year of 1936 to 1939.He was known for his belief of accounting as a science and not just a mere functional trade or an effective operative strategy widely used in the maintenance of a business and the growth of economy. Scheffs employed and connected various major studies such as the supremacy of philosophical perspectives as well as political principles to improve the accounting system in Poland (Mattessich 2008). As the year of 1950 approached, the people of Poland were to employ the Uniform Chart of Accounts. This was primarily used for its structure which adopted the utilization of balance sheet models and income statements similar to the modern ways (Previts 2010). It was the answer of the Polish organization of accountants to the prerequisite criteria that arose during that time. This chart of accounts continued to undergo transformation through the coming years. In 1951-1953, it was further corrected and improved in quality, then implemented on the country. The changes come to fit its purpose as the economy of the country of Poland also evolved. These reformations were still being influenced by the Soviet Union and the rules they have composed to guide the creation of the accounting system of accounts. As the country was familiarized with the Framework Charts of Accounts by the Soviet Union and the Polish accountants utilized the said system, there were numerous significant developments that could be observed mainly on the values and features of the strict adherence of the structure to the promptness and punctuality of delivering the data such as financial statements and audited works. The evolution of the entirely dynamic Uniform Chart of Accounts was still not at a halt. In the year of 1960, E. Schmalenback brought a partially new means of managing the flow of the accountants work (Previts 2010). This new order that arose in Poland was to be utilized in the society continuously until 1975. The major distinctions of the 1960 Uniform Chart of Accounts are the decimal order of the data, the boundaries for the agreement of the reports set by the law as well as listing the forthright expenses depending on the involved branch. 3.2 The Decree of the Ministry of Finance In the early 1990’s, the Decree of the Ministry of Finance on Accounting was employed which greatly determined the accounting in Poland. The guidelines and principles for bookkeeping were based on this decree (Wittsiepe 2008). These new addition to the country’s system of studying the financial flow in businesses and government branches also brought alterations in the system of taxation and as a result, the accounting structure as well. The Ministry released many acts such as the Income Tax Act of 1992 and the Accounting Act of 1994. The former act was designed for the purpose of an individual tax profit account independent of the financial analysis and audits. On the other hand, the latter act was unique in that it was most fundamental rule to compare the order of the proposition and submission of taxes first before the profits instead of the reverse order of profit before tax and taxable profit (Wittsiepe 2008). The Polish Accounting Law was more systematic and oriented in category and designation than the upheld principles and rules. 3.3 The Influence of the European Union to Poland’s Accounting System As the years passed and the world progresses in many various facets, the way of accounting enforced in Poland has still some observable stains left which are the remaining rubbles of the 20th century war and empire that dawned on the country. However, a huge space of this was replaced by the shift of the Continental European tradition into the country’s way of living and managing businesses and other monetary firms (Wittsiepe 2008). At that time, the Polish accountants followed a system that had many similarities to the communism principles. Then the entry of 1990s again gave rise to the influence of the European Union as the country of Poland was to take its rightful place as the most extensive member having an economy that is transitional in nature. However, though such an accomplished and favorable title was awarded to the country, people claim that Poland was never able to establish its own mark in the composition of accounting which resulted in a poor quality or insufficient elements of the educational aspect of accounting among universities in the region (Wittsiepe 2008). 3.4 Accounting in Modern Day Poland The modern day Poland had undergone drastic transformation since the removal of the power of the Russian government in the year of 1989 (McGee 2008). They were able to pick themselves up and stand back on their feet regaining autonomy and dominance by the year of 1990 (Previts 2010). As a result, the accounting system that was applied in the general industry of the country was also altered. Based on a report by the International Monetary Fund (2003) which is a major organization that has done extensive study of the Polish accounting and its present system, the country had been supporting the Special Data Dissemination Standard since 1996. This entails the crucial compliance of guidelines with data inclusion and accordance to scheduled activities for the distribution of the data (International Monetary Fund 2003). With this, one can conclude that the Polish accounting has evolved to a structure that allots a considerable amount of attention and effort to the strict adherence to schedule. Furthermore, the report reveals the observation of the various scopes and characteristics that the data which will originate from the Polish accountants based on the examination of the organization. They have determined the country’s firm support and conformation to established criterion for the means available to the public to view the records both in print and on the internet as well as the value of rectitude and superiority in characteristic (International Monetary Fund 2003). The latest reformation of the Accountancy Act in the country of Poland involved various elements. The three main characteristics of the 2000 Act were the enforcement of the fundamentals of “Conceptual Framework” from the IAS or International Accounting Standards, utilization of the guidelines of accounting documentation from IAS as well and the clarification of the limitations and coverage of the profession. These brought a more comprehensive understanding to the Polish accountants regarding complex variables that get thrown in the business from time to time. These changes have also given light to the official meanings of the elements in accounting such as assets, liabilities, revenues and expenses which are crucial to a stable foundation of the structure. Lastly, the Act has contributed the further break down of the principles of accounting. The major factor that has brought about these reformations was the influential IAS which conveyed effects not only in Poland but also the members of the European Union. Additional agents that determined the outcome of the accounting system were the advancements in the financial market, the considerable background from the past means of resolving dilemmas which gave them an improvement in assessing defects and the alteration of the 1994 archetypes such as the EU Directives. 4.0 Conclusion: The Contribution of Poland’s Accounting System to the Economy The arrangement and composition of the accounting structures in the country of Poland are critical of immense relative proportion to the economy as a whole. Accounting has a magnitude of influence still unclear and has yet to be explored. On the basis of a prognosis for a monumental economy rooted on an equally influential country, the structure of accounting in the country of the United States of America had brought about an economy with approaching instability (The American Assembly 2003). This was the spontaneous consequence predicted, once the experts have concluded from an analysis of the involved faction, the modification of the established definition of roles and the considerable shift of concurrence among the accountants in society (The American Assembly 2003). If the Polish accountants have also replaced the priority of quality auditing by the quantity of the accomplished work, then it will be likely that the future of accounting will be ominously dismal. There is an intangible and impenetrable link between the economy and the accounting system applied in the society. If the Polish accounting structure would falter, so too shall the country of Poland. References Chapin, DH & Gramling, RW 1996, The accounting profession: Major issues: Progress and concerns, DIANE Publishing, Pennsylvania Mattessich, R 2008, Two hundred years of accounting research, Routledge, New York McGee, RW 2008 Accounting reform in transition and developing economies, Springer Science + Business Media, Florida Wittsiepe, R 2008, IFRS for Small and medium-sized enterprises: Structuring the transition process, Gabler Verlag, Germany International Monetary Fund 2003, Poland: Report on the observance of standards and codes--data module: Response by the authorities and detailed assessments using the data quality assessment framework preparation status report, International Monetary Fund Publication Services, Washington D.C. Previts, GJ, Walton, P, & Wolnizer, P 2010, A global history of accounting, financial reporting and public policy: Europe, Emerald Group Publishing, United Kingdom. The American Assembly 2003, The future of the accounting profession, The American Assembly Columbia University, Virginia. Read More