How Societal Problems Contributes to the Accounting Problems - Essay Example

How societal problems contributes to the accounting problems Student’s name Institution Introduction Accounting information plays a very critical role to the economy. For any economy to grow there is need for understanding the financial position after a given period of time. This means that, the accounting information must be truthful and delivered on time. This is to make the concerned individuals know exactly how the economy have performed, the financial strengths and weakness and so the areas that require more concentration and argent attention. False accounting information may make people think that the economy is doing where as it is not contributing to poor economic performance (Strathern, 2008). However, accounting is associated with various problems from the society which acts as obstacles of providing high quality accounting information which affects the society and large together with the economic performance. Below are the societal factors that contribute to accounting problems. Corruption Corruption is a major problem in the society. Corruption is almost everywhere. People corrupt so as to secure jobs whereby they give bribes to the job recruiters. People corrupt so as to acquire leadership positions such as prudential among others. Students give bribes to their teachers in schools so as to obtain good results and the corruption list is endless. This problem extends even to the accounting process. for instance, in preparing the national budget where by all the total expenditure and revenue have to be computed and presented to the public, the officials may take an advantage and deliver false information such as allocating false expenses to the budget so as to use the income satisfying their own needs (Solo, 2012). Under such circumstances, the accounting information will not be true leading to the poor planning which contributes to poor economic performance. Poverty Poverty is another problem affecting the society. Accounting is a very sensitive task that requires a lot of professionalism so as to produce quality work. An economy experienced with high poverty levels will not be in a position to employ the high professional accounting employees due to the high wages they demand to be paid. Due to this reason, companies or the accounting departments tend employ less professional accountants who may end up getting confused in performing the work. Unprofessional employees are not able to deliver quality work. They are also not able to finish the work on time (Sager, 2007). For instance, the monthly reports may be delivered fifteen days after the month end which draws back the overall efficiency and hence poor performance. Illiteracy Accounting information comprises of all financial activities, expenses and revenues collecting after a specific period of time. For example, the income statement shows all the expenditure and revenues generated during a certain period of time. Before preparation of the income statement, data needs to be collected concerning the incurred expenditure and the activities that generated revenue. It requires high levels of literacy so as to give accurate information concerning the total expenditure or revenue generated (Ruswinckel, 2008). For instance, an illiterate parent may fail to know how much he or she used in purchasing food during the month. Again he or she may fail to know how much his or her small business generate in a month or a week. This creates a problem on how to calculate the country’s gross domestic product leading to untruthful accounting information. Overpopulation Overpopulation is another major problem in the society. Such problem is caused by the high bath rate in the society. It becomes hard and quite expensive to collect information in the whole country. For instance, it is not easy to investigate of find information concerning how much each individual consumes during a year. Due to the scarify nature of resources, researchers tend to use sampling techniques in collecting information concerning the overall expenditure and income (Rittenhouse, 2001). The results obtained from the samples are then generalized to the whole population and preparation of accounting information continues. Individuals are different and so their consumption behavior and their efforts differ in one way or another. Using the information from the sample in preparing accounting information leads to presenting untruthful information leading to poor economic performance. Political instability Another problem found in the society is political instability. Such is like war and other misunderstandings. Political instability can lead to people flying away from their country to settle in foreign countries. Among the people who migrate to other countries are accounting specialists who go a search for employment in the other countries. At the same time, people from other countries become less attractive to work in a country with political instability leading loss of skilled labor in the country (Majumdar, 2005). The lack of skilled labor in the country leads to unprofessional work in the accounting sector. As a result, the less professional workers or accountants are not able to deliver quality and timely work leading to untruthful information and late delivery. High criminal behavior Criminal behavior is also among the problems in the society that contribute to problems in accounting. Criminal behavior such as theft and insecurity negatively affects deliverance of truthful and timely accounting information. Due to theft, some financial records may be stolen. Loss of some of the financial records inconveniences the accountants in preparations of the financial records. They at times forced to use some assumptions or estimate the figures so as to come up with the financial records. The accountants may overestimate or underestimate the values leading to inaccurate information presented to the public. At the same time, the accountants take too much time thinking on the accurate value to be estimated (James, 2006). One cannot just indicate any figure like they would do when having the correct records. At times, it requires them to review the previous records so as to make reasonable assumptions. As a result, too much time is spent leading to delay of the work making them to deliver the reports late. Inflation As previously stated, financial statements are prepared after certain duration of time usually one year. Money changes value from time to time due to some problems like the inflation. As inflation rises, the value of money reduces. Inflation is another challenge facing the society. Prices increase every now and then due to several economic factors. Inflation may have been high at the beginning of the financial period and low in middle of the period or the end. Accountants never consider the changes in value of the money due to the inflation changes but just prepare the financial statements assuming that the value of money was constant (Cipra, 2009). The information presented is, therefore, not truthful since some figures were highly valued at the time when they were earned while others were less valued when they were earned but they are presented as having the same value. Drug abuse The use of addictive drugs is also among the problems in the society today. The highest percentage of the population is addictive to drugs. Some cannot work without consuming things like alcohol or tobacco. Even though such substances are prohibited in places of work, some still use them in secret places due to the addiction. The users’ claim that drugs such as alcohol helps them to release stress. Accounting work is not an easy task and so accountants are more likely to engage themselves in consumption of the drug substances (Chen, 2006). One cannot work appropriately when he or she is not sober. In fact, when a drunkard person is assigned a particular task, he or she is highly probable of keying in wrong figures or do wrong calculations which contributes to presenting untruthful financial information to the public. Unemployment Problems of unemployment are all over the world. This means that the labor supply is high than the demand. Employers, therefore takes advantage of the high supply of labor and offer low wages since they are sure that workers will have to agree. Employees are the key determinants of the quality of products or services produced. Offering low wages to employees make them feel discouraged to work effectively. Accounting work deals with counting and recording the cash received and what is taken out. Giving those low wages while they are aware of the large amount of cash generated increase their chances of stealing or cheating. For instance, a cashier may record a ghost loan than does not exist so as to pocket the money (Strathern, 2008). Recording a loan that never took place and will not be repaid makes the accounting information to be untruthful. Confusion and ambiguity concerning moral issues due to the electronic media Electronic media is now every where the world. People are able to visit social media pages from anywhere through using devices such as computers, I-Pads, Tablets and smart phones. Employees, therefore waste a lot of time visiting those pages. An accountant may be busy on the computer chatting with friends on social issues through face book during working hours. This fast, makes him or her waste time instead of working leading to him or her fail to finish the work within the specified time. Another thing, chatting with friends concerning issues may lead to him or her getting confused due to stress or overexcitement making him or her fail to deliver accurate information. Foreign companies As some people fly away to other countries, others also migrate to the country. These lead too many foreign companies in the country. It, therefore, becomes a challenge to the accountants to calculate the country’s gross domestic product with many foreign industries in the economy and others located in other countries. As a result, accountants may confuse and include foreign industries revenue in the gross domestic product while forgetting some in the foreign countries (Ruswinckel, 2008). This makes the presented accounting information fail to depict correct or accurate information in that the country may think that the gross domestic product has increased when in the real sense; it might have decreased contributing to poor economic performance. Changing technology Technology changes every now and then. The methods of preparation financial statements also changes with the changes in technology. Accountants, therefore, needs to be train on how to use the new methods. At times, it becomes hard to understand how to use a new method when one was used to the older method. Failing to understand fully the new methods and techniques affects the efficiency of the worker. For instance, an accountant may not understand how to use the Microsoft excel in doing calculation. Microsoft excel makes work easier and so an accountant is expected to work fast when having a computer than when there were no computers (Sager, 2007). Due to this reason, the time allocated to do the task will now is less than when using the manual method. Since this accountant is not yet used to the method, he or she may still prefer to use the old method where he or she will spend too much time and fail to deliver the records within the stated time. Globalization Companies are now globalised with stakeholders from various countries. The value of money in all the various countries may and it is mostly not the same. How then will the accountant merge the value of the total sales in preparation of the profit and loss accountant so as to come up with a correct figure of the profit generated? It is defiantly that the profit figure presented in the company will not reflect the correct value of the profit or loss earned. The country will use this figures from the various industries or companies to calculate the country’s gross domestic product (Rittenhouse, 2001). Not knowing that there are some errors which occurred from the begging, the overall gross domestic product figure will also be incorrect making the accounting information to be untruthful. Hatred and discrimination Due to some circumstances, individuals in the society tend to hate each other. The hatred may be caused by family issues or other things to do with social life. For instance, if the accountants hate the head of a certain departments and he or she wants him or her to be viewed less efficient or productive, he or she may end up intentionally writing incorrect figures instead of the correct figure that shows good performance. Such actions make the financial statements to show less income generated when in the real sense, the economic performance was good (James, 2006). Again the accountant may be coming from another country and he or wants his or her country to be seen well off. In such a situation, the accountant may enter fewer figures in calculation of the gross domestic product so as to let his or her country be at the top leading to presenting accounting information than is not accurate. Conclusion Accounting is meant to show the organization or the region or the country at large its overall performance. This is to identify the areas that needs more attention so as to improve the overall performance and so the level of success. However, various problems are faced in accounting that leads to untruthful and untimely presented information. The problems are a reflection of the problems found in the society and of the society. Some of them are; the increased poverty levels, the high crime rate, inflation, high population, the changes of technology, globalization among many others. All this problems make accountants fail to produce accurate accounting information and within the sated time. There is, therefore, a need to look for ways on how to solve those problems since accounting information is very important for the overall growth of the economy. References Chen, A. (2006). China's rural economy after WTO problems and strategies. Aldershot, England: Ashgate Pub.. Cipra, B. (2009). What's happening in the mathematical sciences. Providence, RI: American Mathematical Society. James, A. (2006). Constructing and reconstructing childhood: contemporary issues in the sociological study of childhood. London: Falmer Press. Majumdar, M. A. (2005). Transition and development in Algeria economic, social and cultural challenges. Bristol: Intellect. Rittenhouse, C. F. (2001). Accounting problems: advanced. New York: McGraw-Hill Book Co.. Ruswinckel, J. W. (2008). Accounting problems. Braintree, Mass.: D.H. Mark Pub. Co.. Sager, J. C. (2007). Terminological problems involved in the process of exchange of new technology between developing and developed countries: study on recent developments in the relationship between science, technology, and society in different economic, social, and cultural. Paris, France: Unesco ;. Solo, R. A. (2012). Economics and the public interest [Essays written in honor of Eugene Ewald Agger].. New Brunswick, N.J: Rutgers University Press. Strathern, M. (2008). The gender of the gift problems with women and problems with society in Melanesia. Berkeley: University of California Press. Read More