Discuss about the Rising Power Clusters and Challenges.
The current paper examines the challenges faced by global organizations by reviewing literature and there are significant implications on accounting due to current economic and financial crisis both for research community and in practice. The fundamental objective of this paper is to discuss and analyze the changes that are encountered in the research literature by accountants and accounting as a whole at global level. Accounting development was mainly in response to social, economic and political pressures. In addition to this, there are many factors that have influenced transformation and practice in accounting knowledge such as ad hoc influences related to period of economic decline, wars and disputes of labor. The rules of accounting came under a lot of criticism attributable from credit crisis (Al-Rousan 2015). The analysis of literature review regarding the challenges faced by accountants have been done with several aspects such as global financial crisis, adoption of accounting standards, regulations and rules at organizational levels.
A literature review is an evaluation of report of information that is found in literature in relation to topic of selected area. Such review helps in describing that summarizes that is clarified and evaluated by literature. The purpose of literature review is to identify the gaps in literature regarding the accounting challenges at global level. Reviewing of literature comparative analysis and views presented by different authors regarding the topic concerned. Research on accounting lagged behind the burgeoning world of accounting practice it is perceived that accounting research will lack behind the world of accounting practice and the reason is attributable to the fact that there has not been any development in theoretical capability for interpreting and analyzing the relationship between accounting and macro environment and political environment in which it operates (Apostolou et al. 2015).
The accounting profession is reorganizing, constantly changing and standing in front of many challenges attributed from modern world. Every single aspect of modern world is being defined with the technological revolution. Specialized software and technology is regarded as an integral part of accounting profession. The automation of various functions by technology is making transactions a low complex task. There is difficulty in segregating important duties due to increase in efficiency that has resulted in increasing risk of fraud and compromising of internal controls (Cimaglobal.com 2018). In today’s conditions of globalization, an accountant is required to posses’ adaptability that is a crucial feature and skills. Accounting today can become a truly international and comprehensive service due to knowledge and application of international accounting standards in association with the experience and skills of accounting professionals. Accounting standards contributes by way of increase accounting professional quality by possessing right skills. Moreover, the importance of accountants is underscored by what is attached to ethics. It is imperative that accountants should strictly follow ethical principles and failure to follow such principles can have adverse impact on auditing professions (Dumay et al. 2016). Therefore, it is required to incorporate ethical guidelines into the formal continuing education and training of accounting professions.
The analysis of literature review regarding the challenges faced by accountants is done by selecting several articles and journals and considering views of different authors.
One paper on accounting issue that is presented in an article is about challenges faced by organizational level in implementation of International financial reporting standards. In this particular paper, the existing literature is complemented by offering qualitative alternatives for considering transition to IFRS. The main objective of this research work was to focus on exploring organizational challenges when transitioning to IFRS by accountants of reporting entities. The considerable challenges faced in transition of the standards are mainly attributable to the difference in IFRS and national accounting standards. Knowledge and education was found to be issue that was involved in the adoption of IFRS by European Union as depicted by evidence from literature review (Brusca et al. 2016). Very few accountants at the time had practical experience required by the standard. In addition to this, many fundamental changes were brought into the skills and background of auditors and accountants due to implementation of principal based approach to IFRS.
Accountants also faced challenges in terms of transition to principle based to rule based accounting. Furthermore, the requirement of accounting in preparation of financial statements for engaging with other business functions has the implication of lack of support from senior management. It would be difficult for accountant to create support across the business and elicit necessary information when the importance of transition process is not acknowledged by management. The reason organization was not prepared to transition process of standard is because such process was considered as accountants problem and they often lack training and education. Reporting entities that are yet to adopt IFRS will have comparatively less challenges in findings accountants with required experience and knowledge of the standard (Busco and Quattrone 2015). However, the challenges faced by business at wider level such as those related to executive support, system and knowledge support may remain. It has been suggested by findings that the organizational context of transition to the standard is still under researched.
An article on threats and challenges to accounting professions presented by department of accounting practices in Nigeria presents the views and perception of many accounting professions in the field of accounting in Nigeria. It has been found that development of organization is affected by the challenges and threats faced by such professions and they can be obstacle in overall development. The article presents several challenges faced by accounting profession such as tax and legal factors, corruption and politics and differences in accounting practices (Trigo et al. 2014). Development of accounting profession is directly impacted by the legal system of different countries because accounting is dependent upon the legislative requirements that is determined by government and enforcing such requirements (Ball et al. 2014). The laws and legislative requirements of different countries contain detail that specifies the procedures and comprehensive rules of accounting. For example, the development of accounting practice is influenced by income tax laws of different countries. Moreover, the practice of accounting profession is constrained by political environment that is uncertain and pursuing personal gains and short term orientation sacrificing the legality (Massaro et al. 2014).
The differences in accounting standard of different countries have also constraint the development of accounting profession. Accounting framework of US is based on GAAP while UK has sought of adopting IFRS. Some countries have their local GAAP that is influenced by local standards while some other countries have adopted IFRS. This difference in reporting standard makes it difficult for accounting professions and makes it a subject of severe criticism. With the extensive collapse of corporate such as financial statement fraud of Cadbury Plc and Enron of United states of America, the accounting profession have been criticized. Development of accounting practice is likely to be frustrated in countries where corruption is prevalent leading to weak process of accountability (Www3.kau.se 2018).
Another article extracted by science.direct.com presented by Antonio Trigo and Fernando Belfo depicts the challenge faced in real time reporting in relation to accounting information system. Substantive acceleration in the assessment, business measurement and process of decisions are some of the characteristics of new economy that is regarded as real time reporting. The implementation of such real time reporting is faced with some challenges. Some accounting challenge faced in light of real time reporting are mobile devices, business process management, business intelligence, cloud computing, enterprise application integration and enterprise architecture. Selection of best visual option for representation of data is one of the important implications of business intelligence. Representation of large amount of data on single screen is main challenge faced now days. Some serious challenge is represented by some accounting activities facing special concerns. Technological issues forms the main basis of success of implementation of an accounting information system (Galliers and Leidner 2014). However, in order to provide answers to accounting challenge faced by real time reporting, it is required to take into account new technological solutions. This is so because technological answers would partially helps in addressing the real time reporting challenge of implementation of accounting information system. Such technological answers might involve monitoring of business activities, business process management, mobile devices, business intelligence, integration of enterprise applications enterprise architecture, and cloud computing (Ceulemans et al. 2015). However, some of the issues pertaining to real time reporting require conducting of a more detailed research that would consider some more practical considerations regarding their implementation.
In an article titled “challenges and success in implementing international standards by Peter wong. In most countries, preparation of financial statement is in compliance with the national regulations and laws and they are required to be audited according to the generally accepted standards of auditing. Some of the concerns that are examined in this particular article are cost of compliance with IFRS and the associated benefits, complexity and length of international standards, international application inconsistent application and lack of accounting firm presentation on the international standards setting board. It has been ascertained that the individual national approaches are not viewed as efficient and they pose a risk to international convergence. Existence of alternative approaches would lead to compromising of consistency and comparability of the reports and working of accountants (Ro.uow.edu.au 2018).
Another article extracted from science.direct.com regarding the Australian perception of role of universities and practice in professional accountant’s education. In this particular paper, the respective responsibilities and roles of professional accountants gas been addressed. Issues pertaining to such profession are explored by reviewing literature in accounting and other profession concerning the role of employers in development of skills of professionals and technical and non technical knowledge particular accounting practitioners. It has been suggested by the findings from literature review university based education failed to recognize the opportunity cost associated with generation of accounting degrees and changes that have occurred in responsibilities and roles of accounting practitioners (Steconomiceuoradea.ro 2018).
An article of digitization and accounting information transformation extracted from tandfonline.com discusses about the information, understanding of data and knowledge relationships. Development in accounting knowledge is examined in terms of cost and organizational structures, outsourcing, digitization and cloud computation. It is required by organization to be sensitized to different types of knowledge and challenges in application and creation of knowledge. The article points to points to the complexities presented by Big data in relation to management of accounting information, financing function and making specific functions. In addition to this, the change in structure of costs is affected by the development in utilization of information, data and knowledge (Parida et al. 2015). It can be concluded from the analysis of this particular article that a range of information literacy challenges is created by the possibilities for digitally enabled business along with generation of new possibilities for providers of accounting information.
In an article titled “Accounting in global environment” it has been found that accounting for multinational organization is involved in issues of management accounting that particularly concentrated around the costing procedures. This can be explained with the help of an example that foreign corporations are allowed to carry out their operations in developing country where such benefits are derived from operations in terms of taxes and employment. Many global organizations were criticized due to their loading cost of their operations in developing country and such issue is regarded as issue of transfer pricing (Oaji.net 2018).
A paper on the new challenge of accounting system related to environmental accounting was extracted from semantic.scholar.org helps in exploring the tendencies and roots of environmental accounting development. The paper has examined the challenges faced by accounting system generated by environmental activities. It has been ascertained that the accounting system is not well equipped with providing sufficient information about organization environmental activities. Interpretation of environmental accounting is done at different levels due to the fact that environmental problems are becoming a global issue (Unctad.org 2018). This area also incorporates the accounting reactions into the sustainable development. A new accounting system have been developed that would help in providing solutions to the new challenges faced by sustainable development. In today’s world, pressure on environmental accounting is increasing so that they are able to integrate every day accounting activities. The existing system of record keeping comes with role of integrating social matters and financial impact of environment (Knorringa and Nadvi 2016). It has been found that environmental management tool within the environmental financial accounting plays a very crucial role in informing external stakeholders.
The objective of this paper was to make comparative analysis of the literature review presented in different articles regarding the challenges faced by accounting in global organizations. It was ascertained by literature review that there is considerable volume of qualitative and quantitative research in relation to the impact of implementation of reporting standards on accounting. However, the actual process of adoption of such standards by reporting entities and how it has changed the accounting profession has not been researched widely. Furthermore, it has been found that previous research paper did not conduct exhaustive literature review and going through the research work available concerning several aspects of the given topic, it is indicated that there exist some gap in the study of accounting challenges faced by global organizations (Guthrie and Parker 2014). Nevertheless, information is available on aspect of accounting issues regarding the adoption of international standards in different countries. Most of the research works have shown the studies that are related to the adoption of IFRS by reporting entities in different countries and the challenges that are faced by accounting profession with reference to this. The challenges faced by global organizations due to adoption of international reporting standards have been analyzed. There have been extensive efforts on reviewing the available literature for gaining proper insight into the IFRS implication on accounting profession. It is essential to throw some light on the critical aspect of accounting issues faced by reporting entities at global level in relation to adoption of technological system. Different authors who have contributed to the given research topic have agreed point on the research practice gap is that the academics focus on journal article in which their research findings are published and the accounting professional seeks immediate solutions to their own problems (Ceulemans et al. 2015).
Conclusion:
From the analysis of the given topic, it has been found that accounting profession faces several challenges in carrying out accounting tasks at the global level. Accounting standards of different countries and international accounting standards have considerable implications on the accounting profession as the accountants are faced with the challenges of treating various books of accounts. However, it is required to further develop the literature review so that insight information is gained on the practice of accounting profession and the challenges faced. It is required by researcher to have a better understanding into the differences and similarities for professional accountants between qualification and educational system of selected countries. In order to continuously improve the auditing practice and corporate practices, the competences of professional accountants should be strengthened that is regarded as central elements in alobal efforts.
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