Role of Accounting in Society - Essay Example

Role of Accounting in Society Name Date Course Role of Accounting in Society Introduction Accounting plays an essential role in the society as most of the activities in the society depend on accounting. Accountants usually view the profession in a different angle with some taking the view that it is objective while others are of the view that it is subjective. On the other hand, accounting is usually seen as a profession that appraises reality. Accounting plays a major role in decision making in the society (Grafton, et al, 2010). All the organizations including the government usually make decisions based on accounting information. The decisions made usually ends up affecting the lives of the people in the society. The accounting decisions have led to job cuts in many societies. However, the accounting information has also been used for creating employment. The nature of the accounting data is thus important to the society as it has a direct impact on the livelihoods of the community members. Enron Corporation is one of the companies that had accounting problems and it was a clear reflection of the problems in the society. The problems in accounting are reflects problems in the society (Cooper & Sherer, 1984). In order to change the principles of accounting, it is important to create awareness in the society. The accounting social awareness is required for the purposes of ensuring social change in accounting are made. The paper discusses the role of accounting in society in agreement that problems in accounting are potentially reflection of problems in the society; Enron Corporation is the case study. Critical article review Overview of the article The article by Gareth Morgan provides explanations on the different perspectives of accounting and how it influences the society. The article highlights that the knowledge of accounting is metaphorical and it can be easily misinterpreted due to diverse views. Although accountants consider accounting as objective, it is time that it is considered subjective. According to the article, accounting can be considered as a metaphorical enterprise as well as an interpretive art. This is because it is based on interpretation of figures. The interpretation of the figures is useful in making decisions that affects the stakeholders as well as the society. The accounting practices are aimed at enhancing the views of the stakeholders. The stakeholders involve the employees, customers and the general public. It is for this reason that the problems in accounting are a reflection of the problem in the society. Tension also exists between the world view of accounting and the world in wider sense. Positive and negative aspects of the article The article has provided different theories that are useful in terms of explaining the concepts of accounting as well as organizations as a whole. The use of theories in the article is useful in providing comparisons and creating a better understanding of the accounting concepts. The article has provided a wider perspective of the organizational as well as society issues before explaining the accounting concepts. Simple language has also been used in the article to explain the complex accounting issues and hence providing an understanding of the article. Different perspectives have also been used for the purposes of providing an explanation with regards to the accounting issues. The use of different views is an indication that the article is not biased and hence its ability to provide detailed information with regards to the accounting concepts. The article has also linked the accounting concepts and the society which is relevant to the topic of discussion. However, the article has a few negative aspects. The article does not provide many examples with regards to the issues under discussion. Real examples play an important role in clarifying the issues to the readers. Little information is provided in the article with regards to the views of some of the stakeholders in accounting. Most of the views are from professionals and hence making the article a little unbalanced. The strengths and weaknesses of the accounting concepts have not been provided in details in the article. However, the article is generally good and it addresses some of the pressing issues in accounting. Relevance to the chosen essay topic The article will be able to provide most of the information that is required for the essay. This is because it addresses the accounting issues that are relevant to the essay. On the other hand, it provides a relationship between accounting and the community which is important to the essay. Some of the changes that are required in accounting have also been provided and it will be useful in addressing the requirements of the essay. However it is important to note that the article may fail to provide some information regarding the essay. Critical Evaluation In the case of Enron Corporation, there were a number of accounting problems as the accounting figures had been inflated. The associated members and the society in general suffered as a result of its collapse (Munawer, et al, 2012). Most of the community members and stakeholders who had invested in the company faced massive losses after the collapse of the company. The employees who were also shareholders of the company were negatively affected. This is an indication that the accounting principles and concepts have a direct impact on the members of the society. Problems may also arise when the accountants work on the interest of specific stakeholders like the owners of the company. The accountants at Enron Corporation were only interested in ensuring that the owners of the company make profit. This led to negative accounting practices like providing false and misleading accounting records. The presence of such practices is a reflection of problems in the society as people tend to manipulate the accounting data for their own benefits. In an organization, stakeholders play an important role in influencing the operations of the organization. This means that the direction taken by an organization is usually aimed at meeting the goals and objectives of the stakeholders. The accountants should therefore ensure that they act in the interest of all the stakeholders. However in most cases as highlighted in the case of Enron Corporation, accountants usually act in the interest of the owners of the company or directors (Turnage & Keyton, 2013). This is an indication that the accounting problems can affect the whole society. The economic and social issues are usually affecting the society from time to time. The economic issues usually make it difficult for the people to live. The cost of living is usually high in times of economic problems. The presence of such problems in the society is related to accounting. The accounting principles are usually used for decision making process as was highlighted in the case of Enron Corporation (Bradley, 2011). The accounting calculations play an essential role on enabling the organizations to make adjustments. The adjustments in pricing are for the purposes of ensuring that the organization is able to balance its accounting books and make profits. Enron Corporation falsified the accounting records in order to balance the books and convince the members of public that the company was doing well. However, this led to the collapse of the company after the accounting problems were discovered (Whittington, R, 2011). The accounting concepts can be used to determine whether an organization should be closed down or not. The information can also be used to determine the ability of the organization to compensate the workers incase it is shut down. In the United Kingdom, the accounting principles and practices were used for the purposes of determining which coal mines to be closed. It is through the use of the accounting principles that the several people had to loose their jobs. At the time, the economy was not doing well which is an indication that the accounting principles were related to the society. The accounting systems and principles are usually used for the purposes of monitoring reality within an organization and the society as a whole. Accounting principles are also used to shape and mirror the reality (Cho, et al, 2012). In the case of Enron Corporation, the directors inflated the accounting figures after the reality indicated that the company was not doing well. This in turn influenced the corporate culture of the organization. The corporate culture is closely related to the practices in the society. In most cases, the corporate cultures are derived from the practices in the community. This indicates that accounting problems can be influenced by the society. Enron Corporation indicated that there were problems in the society. The level of greed and corruption was on the increase at the time and the accounting problems was a reflection problems in the society. In the society, the relationship between the patients and the healthcare staff can change when rigorous financial controls are introduced. This is because the healthcare staff will put more focus on working within the budget as opposed to satisfying the needs of the patients. The problem in the society with regards to the healthcare can therefore be traced to the accounting principles and practices (Hall, 2010). Meeting the budget is one of the aspects that influence the services that are provided to the society by most of the organizations. The quality of the services usually ends up being affected when the budget is tight. The political economic approach is also useful when dealing with accounting for the purposes of ensuring that the information availed is accurate. Power and conflict in the society is one of the important factors that should be considered when compiling an accounting report (Luft & Shields, 2013). At Enron Corporation, power and politics was involved in the inflation of the accounting records. The directors were trying to avoid the political issues that would have arisen if the members of the public had discovered the problem earlier. The company therefore wanted to portray a powerful image in order to convince the members of the public that it is doing well. It is also important to note that the concepts of power and income are not evenly distributed within the society (Neu, et al, 2013). This means that it is important to for the accounting standards to consider such factors. Considering the accounting principles when dealing with the society is an indication that that the two are related. The alternative views of the society can also be highlighted through the use of the accounting principles. Different classes are usually in conflict with each other. This is can also be attributed to political issues like power and status. Accounting therefore plays an essential role of providing explanations to such problems. Accounting highlighted the potential conflict between the management of Enron Corporation and the stakeholders and hence the inflation of the accounting figures (Carnegie & Napier, 2010). This is usually achieved through the use of accounting data. Inconsistencies in the accounting data can be due to problems in the society. Changing the accounting practices also requires social awareness as the accounting problems is related to the problems facing the society. The changes in the accounting principles would have played an essential role in avoiding the unethical accounting practices at Enron Corporation. The social and political structures in the society usually influence the way accountants operate (Robson & Young, 2010). Most of the accounting works usually consider the social and political issues. Changing the accounting practices will therefore require changing the society which influences the work of the accountants. The theories of society also influence the accounting principles. The changes in the society theories require changes in order to ensure that the accounting principles are also changed. The changes in the organizational structures can be useful when changing the accounting principles and practices (Malsch, 2013). This may also include the reporting which is influenced by the organizational structures. However, changing the organizational structures requires changes in the society. This is because most of the organizational structures are based on the concepts and perceptions of the society. The social values are influential in most of the accounting principles and hence the need for creating awareness among the members of the society (Kilfoyle, et al, 2013). It is also important to note that the role of accounting in the society is mainly influenced by the social values. Any changes in the accounting principles and accounting therefore require changes in the social values. The attitudes and orientations of the accountant are derived from the society through social and education training. Social awareness and social change is required for the purposes of changing the accounting concepts and principles. The social indicators are useful when carrying out an accounting research (Rowe, et al, 2012). However, most of the research usually focuses on a few stakeholders. Changing the accounting principles is thus important for the purposes of ensuring that a better understanding of the accounting concepts is created. This may lead to a change in perspective and views when carrying out the accounting research. In some of the instances, the accounting principles are seen as biased. In most cases, the companies usually provide the accounting data to justify its inability to increase the wages and salaries of the employees. However, the companies are usually reluctant to provide the accounting information when the economic situation is good. Enron Corporation manipulated the data to convince the stakeholders that it was doing well which was not the case. This is an indication that the principles and concepts create mistrust among the members of the society. Changing such a view will therefore require creation of awareness in the society. The tension that exists between the world and the views of the accountants are also complex (Bezemer, 2010). This has led to misinterpretation of accounting by the society. The creation of awareness is therefore the only means that can be used for solving the problem. The changes will also be useful to the accountant to approach issues in a more interactive and open ended manner (Arnold, 2012). A better understanding of the accounting principles is useful therefore beneficial to the society and the field of accounting. Conclusion In conclusion, it is evident from the case of Enron Corporation that accounting problems are a reflection of the problems in the society. The perception and attitudes of the members of the society usually influence the accounting principles. Accounting principles are also related to some of the society theory. The decision making process in accounting requires consideration of some of the societal issues. It is also evident that the society and the social environment affects the decision making process of the accountants. The economic and social concepts also affect the accounting principles and concepts. Most of the companies usually make decisions based on the accounting policies and principles and it usually has effects on the society. Creation of awareness in the society is required incase any changes to the accounting principles are to be successful. The changes in accounting principles also require the changes in the perceptions and attitudes of the society. It is also evident that the society affects the manner in which the accounting research is carried out. 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