Contemporary Issues in Accounting - Essay Example

CONTEMPORARY ISSUES IN ACCOUNTING Student’s name Code & Course Professor’s name University City Date Contemporary Issues in Accounting Accounting problems are a direct reflection of problems affecting the society as a whole. Therefore, the identification of the accounting problem necessitates for a broad based awareness of the society in addressing such accounting issues. Given the society’s important role in modelling various accounting aspects, it is important to consider social awareness across various operational levels. Knowledge gained by different artist ranging from the natural scientist and social scientist is subject to limited experience and knowledge. Despite the knowledge gained, most questions are left unanswered or presented in full form. As such, the suggested knowledge stands true from a limited standpoint or view; likened to the physics application and parameters that bound its applicability. As such, this retrospect paper seeks to reflect of accounting problems in relation to the society’s orientation to accounting issues. More often than not, accountants perceive themselves as subjective and value-free, expressing situations in an accurate manner. However, accountants represent situation in a limited and one-sided view. Hence, accountants are not only technicians in their profession, but consolidate a broader process of who presents the partial reality of the information sought to be represented. Through an understanding of various accounting processes, accountants have a created a new approach that highlights an interpretive aspect of accounting, as opposed to an objective approach. Principally, this approach is aimed at broadening the accountant’s contribution to the social and economic life. It is important, therefore, to view accounting from an external perspective with respect to the field of organization theory. Morgan (1980) suggests that organization theory rests on a metaphorical approach, given its history in broadening the development of the metaphorical approach. He further contends that preceding organization theory were based on the organization’s operation as machines. Its focus recounts an understanding of efficiency, goal setting and technology. Rather, organization are consolidated parts, whose coordination result to the realization of the intended goal. In this regard, organization presentation is viewed through an oriented perspective questioning the organization’s efficiency, through divergent bureaucratic designs. A number of limitations necessitates for the alignment of the proposed ideologies. In response, organic imagery supplements the mechanistic approach with the intent of focusing on the organization’s flexibility and adaptability across various platforms. Given the organization’s environment, the main task challenging most organizations is maintaining its viability. Just like organisms, organizations have needs that are bound to be satisfied. Consequently, external environments are vital for an organization’s given the social, economic, and technical environment affecting its progress. The contingency theory emphasizes on the importance of an efficient organizational fit., notably, more organic forms are required for the survival of bureaucracies under divergent conditions. Organizations are increasingly viewed as cultures of mini-societies consisting of myth, ideology, ceremony, rituals and divergent forms of symbolism. As such, corporate culture is viewed as instrumental for organizational success. Individuals occupying an organization’s senior levels are advised to develop skills that transform the organization’s core value and beliefs that act as a guiding factor for the organizational practice. Given the divergence in metaphorical representation, a full understanding of the organizational process necessitates for the consolidation of divergent aspects (Morgan, 1986). Organization are enterprises whose collective engagement is aimed at the survival in different economic environments. In this regard, understanding the problematic nature of the epistemology, presents the recognition that human agents fall short in representation of reality given the limitation of imposed knowledge dispensation. Accounting as a metaphorical Enterprise Accounting is likened to the preliminary analysis of organizations given the accounting representation of multi-dimensional realities. In this reverence, the accounting practice suggests the numerical view of reality across various dimensions. Manifestly, early theories showcase the bureaucratic principle representation where organizations functions as machines, likewise, accountants attempt to represent organizational activities in terms of numbers. As such, its metaphorical approach offers a partial representation of reality denoted in the form of numbers. Moreover, this approach is built on quantifiable accounting frameworks (revenues, flows of cost and other values), it however ignores the organizational reality. Thus, it offers a thin and limited approach, because it lacks the inclusion of quality aspects. This approach has been problematic in the accounting profession. Accountants have realized the defects in this approach and have been reluctant to refute the approach, in opposing its objective view. Intrinsically, this approach is focused in favour of the measurable quantities, through particular accounting schemes. Nevertheless, competing views are presented through divergent metaphors that contrast to the accounting theory, reality view and accounting practice (Davis, 1982). Given the multidimensional changes in the accounting profession, the discipline offers a linkage to organization theory. The metaphorical approach of organization theory presents the perspective that the organizations are like machines, instruments, political systems, cybernetic brains and instruments of domination. Notably, accounting theory has been modelled upon the metaphorical representation that facilitate the interpretation from divergent perspective. Some of the metaphors include; Accounting as history: It views accounting as an entity focused in the provision of faithful records. Accounting as economics: Presents the perspective that replicates the present economic realities and offers a reflection of the economic principles. Accounting as a language: It views accounting as an entity that provides frameworks and concepts that models thought, perception, conversation and decision making. Accounting as politics: Presents the perspective that accounting showcases interests that benefit a particular group in the society. Accounting as mythology: It suggests that the societal resource may be incorporated in maintaining rationality myths and justification of the decision that serve a specific individual or society, among others. Such metaphors have been created with the aim of presenting various interpretations relating to the nature and the importance of accountants. Likewise, all ideologies offer an insight on accounting but do not sufficiently capture the nature of accounting as a social aspect. Accounting and Objectivity Throughout history accounting is rooted on objectivity, such that accountants can present the reality in a “true” and subjective manner. This is impossible given the fact that accountants can limit their realities in various related schemes. Evidently, such problems are linked to the impossibility of defending one’s objectivity from an external attack from individuals with adequate knowledge of the accountant’s situation. Accordingly, most individuals understand the accountant’s platform, given their convections and arbitrary nature; an understanding of the accountant’s business in attempting to persuade others on the appropriateness of his/her concept in application. Accountants as Interpretive Art Most practical solution is dependent on the recognition and the acceptance of accounting subjectivity. Secondly the development of a code developing a code of practice will facilitate the increase the knowhow of the complex web of reality construction. More often than not accountant represent an enterprise’s vitality, bound to a limited or one-sided ways. Hence, such representation consolidates a part through which the situation “accounted for” is altered. Tentatively, an accountant’s interpretation of reality assumes the form of capital budget decision, economic vitality and cost over-run report. However, it turns out as resources for reality reconstruction and ongoing reality reconstruction because the accounting reports are indispensable in the shaping imminent decisions. The examples below showcase the role accountants play in the reality circles that shapes and sustains and organization’s reality. Accounting and Corporate Culture Accounting systems are imperative in monitoring and shaping reality. For instance, consider the changes experienced in the introduction of a rigorous financial control that ultimately models the culture and the organization’s orientation. The introduction of systems in a hospital setting aims at making departments profits. Nurses and affiliated staff members are shifted as an extension to the financial systems, where time and resource allocation are rigorously done as opposed to traditional management practice (Davis, 1986). In this regard, the system’s orientation alters the decision-making strategy, in line with the budget allocation; previously dominated by the provisions of healthcare. As such, the process is manifested in the relation to the qualitative aspects of healthcare services. It application was essential in less threatening situations, as opposed to near death experiences. Consequently, such practices promote the focus of work orientation on administrative measures as opposed to addressing the patient’s needs. Financial institutions, therefore, can increase the hospital’s efficiency; at the same time becomes increasingly less humane. Accounting and technological Change In the present global market, organization necessitates the need for a rigorous financial appraisal prior to investing in new and innovative technologies. In this reverence, the decision-making process is focused on “cost consciousness that largely leaves out the wider understanding of the proposed change process. The incorporation of divergent techniques and data for project evaluations in a multidisciplinary approach appears to embolden a diversified decision-making process. Accounting and Economics and Social Policy This rise of coal mine strike in UK is one such example that satisfies economic and social policy. Related costs and affiliated accounting practices resulted to the creation of the National Coal Board calculations in this regard. The board’s calculations rested on the aspects that detailed divergent accounting conventions and assumptions relating to coal pricing, and assumptions regarding the conceptualization of pit closures (Berry, 1985). Evidently, accounting alternatives were available in profitability calculation. In the light of the above context, decisions relating to aspects constituting an economic pit is side-lined by a number of political and social choices, in addition to the economic and accounting principles used in the process. Accounting and Shareholder perspective of Organizations More often than not, accounting practices are directed towards the provision of shareholder’s perception of a given organization. Over the years, an increased importance of shareholder’s view has been witnessed. Organizations are increasingly viewed as a property of the customers, employees and the managers. Contrariwise, the general public plays a significant role in the ensuring that the organization confers to environmental sustainability. Hence, accountants function in accordance to the stakeholder’s interests in mind. Implications and Conclusion The difference scenarios adequately illustrate the perspective offered by the nature of accounting and modelling the decision-making process with respect to the perspective and values side-lining the accounting principles . In this reverence, one of the issues that significantly impacts the accounting profession is the understanding of essential limitations. The juxtaposition of incorporating outdated aspects of objectivity should be changed, rather, accountants should combine subjectivity of their practices and create a means of adapting to such limitation. The inclusion of the adopting such strategies garner an interpretive accounting style and cements the existing accounting principles. In developing such interpretive view of accounting, Morgan (1986) suggests that effective organizations and managers need to acquire skills in the propensity to the understanding situations, in their attempt to manage it. It is significant that managers and analyst have to view and understand the multifaceted organizational dimensions and seek appropriate blending mechanism that offers a vital understanding in various meanings and the possible actions faced by affiliated parties. Proficient managers can significantly develop the capabilities of reading the multifaceted situations, with respect to affiliated scenarios significant in forging strategies appropriate for the situation. Consequently, accountants ought to be sensitized on various reality dimension through which they attempt to “account for”. It is increasingly important for accountants to analyse these dimensions in order to guarantee multiple insights offering a wide understanding to include important actions. As opposed to presenting information in an insufficient manner, through an analysis of one-sided perspective, rather, accountants should focus on developing broad-based structures. Nonetheless, it is important that the managers consolidate sensitive elements that have been previously excluded from the initial strategies. It should be realized, however that the incorporation of schemes that showcase the aspects of organizational reality may blind other aspects from view. Essentially, such an approach necessitates for a reflective and crucial comprehension between the accountant profession and what they “account for”. Tentatively accountant should be capable of realizing concealed or revealed expression of specific accounting approach. It is suggested that accountants must consolidate “double-view accounting”. Simply put, it is crucial that accountants understand the existing tension between the world in the general public and the “world as viewed by the accountants”. The recognition of such tension can be propelled through interaction and dialogues situation in an increasingly open-ended mode, as opposed to the case when producing objective statements. It is evidenced that accountants should aim at developing capabilities of reading and analysing the situations in creating actionable, intelligent insights, as opposed to the rooted statements. In doing so, accountants can create an effective approach to accounting that addresses all issues and tensions experienced between the professions, societies and organizations. Reference List Berry, A.J., Capps, D., Cooper, D., Ferguson, P., Hooper, T & Lowe, E 1985.Management Control in an Area of the NCB: Rationales of Accounting Practices in Public Enterprise, Accounting, Organisation and Society, pp 3-28. Davis, S., Menon, K., & Morgan, G., 1982. The Images that Have Shaped Accounting Theory, Accounting Organisations and Society, pp 307-318. Davis, S., 1986. Accounting for the Hospital as a Product: The changing Reality of Health Care, unpublished working paper, Queen’s University, Canada. Morgan, G., 1980. Paradigms, Metaphors and Puzzle Solving in Organisation Theory, Administrative Science Quarterly, pp. 605-622. Morgan, G., 1986. Images of Organisation. Beverly Hills: Sage Paton, W., & Littleton, A., 1940. An introduction to Corporate Accounting Standards (American Accounting Association). Read More