The Role of Accounting Professionals in the Application of Accounting Standards - Essay Example

Reflective Journal ID number: ial Contents Summary 3 Introduction 4 Discussion 4 Question1 4 Question 2 6 Question 3 7 Conclusion 9 References 10 Summary The accounting professional is required to consider various factors in developing the financial position of the particular organization. From the portfolio work I have learnt that the integrated reporting plays an important role in assisting the accountants all over the world. The accounting professionals are expected to keep themselves updated according to the changes in the principles and standards with due course of time. The financial crisis and the subprime crisis increased the demand of the accounting professionals. International Financial Reporting Standard is developed with the purpose of harmonizing the application of accounting principles across the world. The accounting research is compared with cancer since the research and development of both these aspects requires cost and time. But increasing research and development in both of these areas contributes significantly towards the improvement in the respective areas. The development of the accounting standard will help me in pursuing the course of accounting. The increasing demand signifies that there is a wide scope for accounting profession in all organization across the world. Since the job of an accounting professional is challenging. Therefore I have to focus on both accounting and technical skill in order to adapt with the changes in the accounting standards with the due course of time. There are various firms which provide internship to the future accounting professionals therefore I can pursue training from such firms for increasing my accounting expertise. I can apply these accounting standards in all fields. Introduction The paper emphasizes on the role of accounting professionals in the application of accounting standards. The accounting standards play an important role in minimizing the limitations of the accounting practices adopted by different countries across the world. The International Financial Reporting Standard is considered as the base of accounting which is required to be implemented by the accountant across the world. It is considered as the accounting language for the business so that the company accounts are comparable and understandable across the international boundaries. Discussion Question1 The accounting professionals play an important and crucial role in improving the social, financial and environmental performance of the organization. The accounting professional is required to discharge its duties by considering the social, economic, political, environmental and technological factors. The Australian Securities and Investment Commission are engaged with regulating the financial services of the company. It is assigned with the responsibility of protecting the interest of the investors, creditors and consumers. The main areas of responsibility of the concerned commission are financial services, corporate governance, consumer protection, securities and derivatives, financial literacy and insurance. It exerts political and regulatory influence on accounting. The International Financial Reporting Standard began with the purpose of harmonizing the practice of accounting across the European Union. This value of harmonization made the concept more attractive and reliable. The accounting professionals are emphasizing on the adoption IFRS for maintaining standard accounting practices across the world. The implementation of IFRS will assist in reducing the gap between the principles of IFRS and US GAAP. It will restrict the lobbers from taking applying the accounting principles for their own benefit rather than considering the public interest. The accounting standards should be ethical, objective and neutral and it must fulfil the expectations of its stakeholders. The importance and the need of the accounting profession in the present world can be analysed from the result of the financial crisis or the subprime crisis which increased the debt burden of the government, the financial institutions and the banks were at risk, since the banks were engaged in providing loans and borrowings without investigating the financial stability of the borrower and many un-stabilized and unsecured derivatives were sold in the market as a result the economy faced severe crisis. The accounting professionals were paid by the firms to advertise the unstable derivatives. The banks were engaged in applying the accounting principles for fulfilling their own needs and requirements by selling high risk derivatives for generating huge amount of profit which led to the emergence of the global financial crisis. All major economic and financial crises indicated that the government should take initiative in developing more accounting professionals for restricting the lobbying activities practiced by the firms, banks and other financial institutions. The big accounting firms such as Deloitte, PWC, Ernst & Young and KPMG are engaged in providing internship to the accounting professionals. The Integrated international Reporting Framework is developed with the aim of fulfilling the needs and requirements of the organization. The integrated reporting is adopted by many organizations such as Coca Cola, HSBC etc. The integrated reporting takes into consideration both financial and non-financial capital in its operation. The accounting professional is required to possess sufficient skill and knowledge in implementing the accounting principles and standards effectively and efficiently. Therefore the accounting professionals are expected to keep themselves updated according to changes in the environment for adopting new standards in accounting practices. Question 2 The conceptual framework is responsible for developing standards required for the purpose of introducing the Global Accounting Standards that is adopted by the organizations across the world. The need of this conceptual framework can be evaluated from the fact that in the absences of such standard the accounting practices would become unstable. The International Accounting Standard Board is responsible for developing the conceptual framework. The conceptual framework facilitates large number of stakeholders which includes the banks, investors and the chief executive officer of the company. The CEO of the organization can assess the financial performance of the organization by analysing the financial statement of the organization. The potential investors of the entity can evaluate and determine whether to make investment in particular organization or not and it assist the banks in determining whether to extend credit to the borrowers and also in determining the financial position of the company. The Accounting professionals are required to consider the environmental, social and economic factors. The accountant has to ensure towards maintaining environmental sustainability, taking into account the impact of the accounting standard on the people within and outside the business and performing various economic responsibility which includes increasing the accountability and stakeholder’s value. The accounting is required to adopt fair practice and comply with the accounting standard while preparing the financial statement analysis of the company since it is distributed to the various stakeholders of the organization. Accounting standards also performs the role of rewarding the employees for their performance. This assist the accountant in considering the revenue, cost, profit, return on investment and shareholder value. The employees are provided reward by comparing the performance with the target; the target is fixed on the basis of return on investment. Therefore it can be analysed that accounting standards plays an important role in all perspective starting from assessing the financial as well as non-financial performance of the organization (Bragg, 2010). The accountants are required to comply with the accounting standard for implementing accounting practices. The accountants dedicate most of their time in the organization for adopting standard accounting practices because of the globalization in the accounting standards. Question 3 The statement whether accounting is helpful or harmful can be explained from the fact that it is both harmful as well as useful in nature. The accounting practice can be termed as harmful if standard accounting practices are not adopted and implemented on the other hand it can be termed as beneficial if it provides fair value and fulfils the need and requirements of its stakeholders. The accounting practices can be compared with cancer. Since both treatment of cancer and adoption of accounting practices requires huge amount of cost and time. The research and development for treatment of cancer contributes towards the improvement of health of the people, similarly the improvement and development in the accounting standards promotes towards introducing standards for accounting practices (Walton, 2011). Accounting is considered as useful since it assist the users of the financial statement to make adequate financial decisions. But we cannot ignore the limitations of financial reporting and accounting required for taking important decision. The accounting framework such as IFRS facilitates the preparers of the financial statement to use accounting policies. The main problem or limitation of applying this accounting framework in the real world is that the use of different accounting standard which includes IFRS, US GAAP presents different problem when applied by the organization in different geographic areas. The accountants are required to make estimates which are mainly based on assumption; therefore the financial statement prepared on the basis of such estimates may provide unreliable and inaccurate results. The manipulative financial statement may affect severely the stakeholders of the company or the organization. The stakeholders include the suppliers, creditors, employees, stockholders, investors, government and the owners of the company. The accountants mostly prepare the reports on the basis of historical cost which does not reflect the change in the price level of the asset over a period of time (Ball, 2006) In spite of the limitations of accounting, the advantages or the benefits of application of accounting in the present world can be experienced from the fact that it is considered as the gateway into the areas of our interest which might be sports industry, finance industry , fashion industry etc. Accounting is regarded as the only one profession that is beneficial and remains always in demand across various companies, industries and countries. In order to eliminate the limitations of accounting, global accounting standards are introduced for improving the transparency and comparability of the financial statement and reducing the cost incurred in preparation of the financial statements (International Accounting Standards Board, 2007). The most advantage of learning accounting is it provides number of opportunities for enhancing our career. The problem associated with this profession is one has to keep himself or herself updated according to the changes in the business environment. The stakeholders of the company are interested on the financial statement of the company in order to identify the financial position of the company therefore the accountant is expected to prepare the financial statement in accordance with the conceptual framework. Conclusion The accounting professional plays an important role in analysing the financial performance of the organization. The increasing need and demand of the accounting professional indicates the increase in development of the accounting professional across the world. The accounting professionals are required to abide by the standard framework .Accounting research involves huge cost in developing the accounting standards. References Ball, R. 2006. International Financial Reporting Standards (IFRS): pros and cons for investors. Accounting and Business Research, 14(2), pp. 956-960. Bragg, S. M., 2010. IFRS made easy. Canada: John Wiley & Sons. International Accounting Standards Board. 2007. International Financial Reporting Standards. Georgia: LexisNexis. Walton, P. 2011. An Executive Guide to IFRS: Content, Costs and Benefits to Business. London: Wiley Read More