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The Sources for Accounting - Research Paper Example

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 This research paper is an attempt to identify the sources, which can use as authentic sources by the researcher for accounting.For this purpose, the researchers use some sources, which are authentic, means the data published in the sources are reliable. …
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The Sources for Accounting
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The Sources for Accounting Contents The Sources for Accounting 1 Contents 1 Introduction 2 Reports of Financial Regulators 2 Sources from Company Websites 3 Sources from Published Journals 3 Sources from Government Websites 4 Conclusion 5 Reference 6 Introduction The world of accounting is subject to change. The accounting professionals used to conduct research to make the process of accounting more robust. The accounting process needs to be a perfect one as all the stakeholders of the company are depending on the financial statements produced by the company accountants. The accountants need to undertake the researches for identifying the area where the change can make and suggest as per the requirement. For this purpose, the researchers use some sources, which are authentic, means the data published in the sources are reliable. This report is an attempt to identify the sources, which can use as authentic sources by the researcher. Reports of Financial Regulators The reports produced by the financial regulatory bodies, used as authentic sources by the researchers. The financial regulatory bodies like International Accounting Standards Board (IASB), International Auditing and Accounting Standards Board (IAASB) used to prepare the regulations, which followed by the companies to prepare the financial statements and follow the process of auditing. They used to prepare the reports, which is suggestive for the development of financial process. The accountants use the reports as a source to identify the current accounting practices. In the year 2008, IAASB has prepared a report for identifying the problems of auditing the fair value estimates. For the financial crisis of 2007-2010, one of the causes identified by the bodies was the wrong process of auditing by the auditors in the area of fair value accounting. IAASB has recommended that the auditors should understand the entity means the assets and the environment of the company to value the assets. The auditor has to find out about the internal control of the company, based on this an estimation can be made about the asset. The auditor should assess the risks associated with that material, also should analyze the expertise of the concerned person who made the estimate about the asset. The auditor should also take the representation of the management in consideration, should assess their plan using the asset (IAASB, pp.1-11). The accounting professionals prefer the report because it has prepared by a professional organization, which is also a regulatory body of the accounting practices. Sources from Company Websites When a researcher wants to analyze the financial condition of a company, then they can find it from various sources. They can find it from many blog sites, where the analysts analyze those statements from their personal viewpoint. If the researchers use the sources then they may not find the reason behind their analysis, the frameworks used by the bloggers etc. In spite of all these, the researchers use the reports published by the company directly. Those reports published by the company management contents the notes related to the financial statements. The notes regarding the statements show all the reasons behind the entries in the financial statements. All the related information about the financial statements is included in the annual report. As an addendum, the researcher also gets the information about the ownership of the organization, the compensation of the executives, the size and operations of the company etc, which is important when the person wants to analyze the company and take the decision about that. When a researcher wants to take a decision about whether to invest or not in Coca-Cola then he can find the information in many websites, or he can take the suggestion from the existing investors. However, the investors’ suggestion may drive the decision of the investor in a wrong way. The financial information about Coca-Cola is available in the websites like Yahoo Finance, Google Finance, and Bloomberg (Yahoo Finance, “Income Statement”); however, in some cases the results has differed. Therefore, the researchers choose to use the data, which is available in the company website (Coca-Cola, “Financial Statements and Supplementary Data”). In the annual report, the financial data of the company is available along with all the related information about the company, which will help the investor to take the decision about his further association with the company. Sources from Published Journals When the analysts undertake a research, then they used to take help of the published articles prepared by a subject matter expert. From the reports, they can take the expert opinion about the topic and can relate the current development with that. Using the current data and the opinion, they can suggest their views. The published articles are the authentic sources. No one can modify or copy these articles. Only the researchers read the article and make their own interpretation, which they can include in their own report. Lev and Sunder have prepared a report about the issues related to financial ratios. Traditionally when the researcher used to analyze two companies from different industry then they do not consider the theoretical part of that, instead do the analysis as like when they are comparing the companies from same industry. However, the fact is the industry average for a certain ratio is different. The benchmark ratios of two industries are different, so a researcher cannot compare two companies without considering certain factors related to the industry. In the report published in the year 1979, Lev and Sunder argued that certain factors should take in consideration like when the researcher analyze the financial performance of a company or compare the performance of two companies whether it is in the same industry or in different industry. The factors are like the size of the firms, the economy of the country, the age of the firm etc (Lev and Sunder, pp. 187-209). This is widely used by the researchers as the two experts of accounting, who have specialized in the area of ratio analysis, prepared the report. Sources from Government Websites The government websites are another authenticated source, which the researchers follow. The accountants also follow the government websites for the needed data if it is available in the website. The authenticity of the website is beyond question. These websites always provide the right data. The laws, which have passed by the government of the country, published in the website of the government. The researchers can also find the law from the other sources, which are not authentic. The researchers can find the law statement from the blogs of the individual persons, where they can also find they can find the interpretation of that law also. However, whether the statements are correct are not that is under question and the expertise of the blogger is not tested. The accountants can find the statement of Sarbanes Oxley act from various sources like the websites like Wikipedia, or some other sites where the authenticity is under question. Despite of various sources, the accountants prefer to use the published articles in the government websites about that law. They can get the statement of Sarbanes Oxley act in the U.S. federal government website. After the Enron scandal Sarbanes Oxley act come into existence in the year 2002 and there was a rule that the listed companies have to follow the accounting principles of that act, which was able to decrease the number of accounting debacle events performed by the companies (FindLaw, p.5). Conclusion From the paper it can concluded that the accounting professionals like to use the sources, which are authentic for the accounting data. They like to use the articles published by the subject matter expert, the publications of government websites. For analyzing a company’s data, they like to use the sources published in the company’s website instead collecting the data from some other websites, which are not copyrighted. The researchers prefer to collect the data, which are authentic, copyrighted rather than collect the data from a source, which has prepared by someone who copied or made some own implications and the expertise of them are not tested. Reference FindLaw. 2002. An Act: To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes. March 12, 2012 from . IAASB. 2008.Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment. March 12, 2012 from < http://www.ifac.org/sites/default/files/downloads/staff_audit_practice_alert.pdf >. Lev, B. and Sunder, S. 1979. Methodological Issues in the Use of Financial Ratios. March 12, 2012 from . Coca-Cola. Financial Statements and Supplementary Data. 2011. Annual Report. March 12, 2012 from < http://www.thecoca-colacompany.com/investors/pdfs/form_10K_2011.pdf >. Yahoo Finance. Income Statement. 2012. Coca-Cola Company. March 12, 2012 from < http://finance.yahoo.com/q/is?s=KO+Income+Statement&annual> Read More
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