Challenges Of Global Financial Accounting: A Critical Essay.

Project Objective

Patricia Arnold has argued that the bankers are often charged and blamed for their bonuses for the ongoing global financial crisis. However, the economic ruin digs out one more fundamental questions pertaining to the economic organism and the institutions upon which the entire threat is based.   The following paper forages how difficult it is to consider accounting in the global organisations. It also penetrates to ascertain the complexes of the prevalent accounting system in such institutions thus involving certain economic convolutions.  In case of the economic development, a standardised financial accounting system needs to be developed. The investors depend on their financial decision with the help of ethical auditing based on an international accounting standard. This research paper thus aims at investigating the actual challenges faced by the international organisations.

The objectives of this project are

To find out the exact challenges faced by the international organisations while performing accounting

To create a business overview of the organisation in order to understand how the basic criteria of global accounting standard

To sketch a virtual diagram of the remedies that are being used by the organisations to revamp the existing accounting system

To provide a strategic substitution for the organisations that would assist them find an alternative way for accounting method

To bring the conformity into account within terms of global financial accounting

Following challenges can be detected while studying the standard of the global financial accounting in the organisations:

Dogmatic challenges and the acceptance of these regulatory standards on both international and national level

Gap bridging in between the accounting practices that are ensured

Cultural Constraints And Conflicts in terms of the entire business adoption of a specific accounting practice and its effective implementation

The impact and link of accounting to macro political economy

There are different scenarios in terms of understanding the effectiveness and factors of accountings in various conditions. These are the economic scenario and regulatory standards.  They play a major role in determining the growth and expansion of  accounting profession in national and international organisations.

One of the aforesaid determinants of accounting performance is the economic scenario of a country or the current economic environment of the global market. In this case it has been understood with the effective criteria of how the basic need in the market can be devised through effective global standard of accounting. Economic factors constitutes of the strength and weaknesses of financial sectors of different countries. Depending on the economic growth in the countries the accounting performance is done. As per the argument stated by Belkaoui (Belkaoui 1983), communication of economic data is highly impactful in ensuring various accounting functions. The easement of those economic data plays a crucial role in performing different accounting tasks. Mhedhbi and Zeghal (Zeghal and Mhedhbi, 2006) have projected similar example as they have argued that measurement of accountancy is typically important in the countries with sheer economic development.  The scholars have also held the social retrenchment and expansion responsible for the functional attribute of accounting. They are, in fact, used as the tools of measurement.  On the other hand, countries with low economic structure and growth, have accounting activities and scope lesser than those with the stronger ones.  With the help of adequate strategic planning and stronger leadership quality the international organizations need to find whether finance and the institutions have mutuality maintained in a balanced ratio. If it is not possible in the organizations, it becomes quite hard for the organizations find out the basic understanding of how the entire effort becomes worthy to be the basic need of financial accounting. Financial strength is devised through the proper use of technologies and positive mindset, as discussed by Wong (Wong 2014).  Wong has rather emphasized on the relevance of human capital and implementation of knowledge over direct economic relation to the entire financial functions within the organizations.

Literature Review

An organization might adopt certain standard of accounting practiced in the international level.  Though the accounting tasks depends on the scenarios of specific countries, it needs to be assured whether the countries are engaged in the regulatory format of accountancy. For example, economics, law, politics and cultural regulations are the factors responsible for the entire business for accounting.  As a matter of fact, it can be stated that the basic factors behind national accounting practices are considered as per the changes of the entire portion of country’s taxable income and revenue process.  The practice of tax authorities also differ at place. For instance, the local tax authorities in the countries have different process than the national ones.  The central authority of a country often differs its policies from the provincial ones. In this case, the variation in financial processes of the local and federal authorities needs to be fixated.  

Variation of the accounting standard in terms of the authoritative bodies and the regulatory institutes, determine the task how integrated or diversified the tasks become.  In this case, the auditor is held responsible in terms of its entire unitary accounting performances. As a matter of fact, there have been proper criteria that determine how effectively the accounting performances are driven through the financial practices. According to Adagye, Azagaku and Umbugadu (Adagye, Azagaku and Umbugadu, 2015), income tax related law of a country are generally influenced by different practices and tasks of accounting. It is in vogue in both private and public organizations.

According to Ryan (Ryan 2008),  a gap is persistent between the academic global researches on this topic and the practicing of accountancy in the countries as well as in the global organizations.   With effective venture of different organizational policies and the methods, accounting performance is driven to captivity. Though this topic is a mundane affair dealt by many of the theorists, it aims into reaching to faraway dimensions.

The cultural challenges refer to the differences in human activity. According to the theory of Hofstede (Hofstede 2007), it can be stated that the collective nature  of human  being in  different countries have its effect on the financial accounting. Cultural challenges can be considered through the understanding of different behavioral pattern of human being depending on the social discourses. Though cultural differences are minor ones in terms of judging the accounting facts, it often puts greater impact upon the performance. For instance, accounting figures in Australia, United Kingdom and the United States differ in terms of its cultural belongings.

Critical Review of the Literature

The following questions would be taken in to consideration while investigating specific challenges of global accounting. These questions have been designed in association with the research objective:

What would be the most effective strategy to bring all the organizations  in to a specific standard of accounting?

How can the challenges be addressed and resolved?

What are the impactful ways to detect the challenges for financial accounting of a particular country?

Can the countries share equal standard of accounting in a global level so as to confirm globalization in that particular business?

This portion illustrates different ways of the research with the help of impactful procedure depending on the research rationale. There are different methodological discourses while that are taken into consideration while conducting a research.

Research design refers to the framework depending on the entire procedure of the research paper that is likely to be conducted on a specific topic. Research design can be segmented in to two different types; these are qualitative research and quantitative research. In this aspect it can be stated that most of the researches are conducted on the basic of both qualitative and quantitative frameworks.

Quantitative research depends on the retrieval of the statistical data. With the help of those statistical data, an effective assumption is made in order to establish the hypothesis.  Both primary and secondary methods are used while designing the quantitative methods. In order to perform quantitative research, a set of questionnaires would be designed that would address to the bank and the employees of different financial institutions. The questionnaires would be based on the agreement and disagreement of the topic related to the questions.

Qualitative Research is based on the reflective answers provided by the chosen respondents. In this case, an interview session needs to be organized so as to get a chance to talk to the accountants of different shops and companies.

The research has various limitations that might act as he prime hindrances before the conduction of the research. The research only focuses on the challenges and its remedies. As a matter of fact, the other ways to find the research mode needs to be addressed properly.

Reference:

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Icsi. (2013). COMPANY ACCOUNTS, COST AND MANAGEMENT ACCOUNTING. Available: https://www.icsi.edu/Webmodules/Publications/Company%20Accounts,%20Cost%20and%20Management%20Accounting.pdf. Last accessed 2nd May 2017.

Muis, J. (2008). Written submission to the Advisory Committee on the Auditing Profession, US Department of Treasury, Washington, DC, May 23.

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Wallace, R. S. O. (1992). Growing Pains of Indigenous Accountancy Profession: The Nigerian Experience. Accounting, business and Financial History, 2(1)

Wong, P. (2014). CHALLENGES AND SUCCESSES IN I PLEMENTING INTERNATIONAL STANDARDS. Available: https://www.cimaglobal.com/Documents/ImportedDocuments/ifac_report_challengesuccess_111004.pdf. Last accessed 2nd May 2017.

Zeghal, D., & Mhedhbi, K. (2006). An analysis of the factors affecting the adoption of international  accounting standards by developing countries. The International Journal of Accounting, (41), 373–386