Accounting Assignment: A Literature Review on Challenges in Accounting
Literature Review: For this assessment, students are expected to demonstrate their understanding of the extant, academic literature related to an approved, business topic.
In consultation with their lecturer, students need to decide on a business-related topic/concept. Students need to select approximately eight to twelve (8-12), but at least three (3), peer-reviewed articles or comparable sources (online resource can be accessed using ProQuest or Google Scholar) that are related to the topic (as the basis of their literature review).
In the context of their chosen topic, students need to review the articles and sources selected, i. e. read and critically analyse (compare and contrast) the literature. In doing so, students are required to discuss the key ideas/arguments put forward by authors, identify communalities/similarities, differences and conclusions drawn by different authors. Based on this analysis and discussion, students are expected to point out potential gaps in the literature that will form the basis of Assessment 2, the research proposal.
Marking criteria of the literature review include: the quality and currency of the literature selected; the student’s ability to compare and contrast author’s arguments/viewpoints and identify gaps in the existing literature in the context of the chosen business topic; the demonstrated ability to use Harvard referencing.
1. Introduction: Global accounting presents various challenges and opportunities for the managers and accountants of the global organisations. The accounting aspect in current scenario does not only comprise of capital structure or making decisions based upon the dividend but in the global organisations, the accounting also comprises of capital structuring as well as profit repatriation. In a globalized economy, there are various challenges of accounting faced by the organisational managers. There is a need to sustain the challenges to have long term sustainability and improved organisational functions and productivity. Since past few decades there are a number of modifications as well as amendments taking place in the accounting practices.
2. Project Objective: The key objective behind the development of this Accounting Assignment is to analyze and understand the numerous challenges of accounting in the overseas and global business organisation and to effectively comprehend the measures by which the various accounting issues can be resolved in the global organisations.
3. Project Scope: The key scope of the literature developed in the Accounting Assignment is to develop a global perspective of the various practices of accounting in the global economy and overseas business organisations. There are a number of accounting measures which are indifferent in the overseas business organisations (Akisik, 2013). When there takes place any kind of trade between the global organisations, there is a need that the accounting should be done by the skilled and competent human resources to manage the various global accounting challenges and risks.
4. Literature Review: Accounting is regarded as one of the significant and most important aspect of the contemporary and Global Business organisations. With the various financial procedures and applications, there can be collection of constructive data for effective decision making in the organisation. Financial accounting is regarded as economic management aspects which supports in summarizing, monitoring as well as recording of the various financial transactions of the companies (Allen, et al., 2012). The primary aim of the financial accounting is to provide particular and specific information to the various stakeholders which comprises of investors, public, creditors and the government authorities. The aim behind providing the information is that with the help of this information, stakeholders can effectively analyze the financial condition, development, growth and profitability of the companies.
According to the views of Burns and Needles (2014), the concept of financial accounting was first developed in early 1930s. With the deep insight of almost more than 80 years, it has been evaluated that with the growth and development of financial accounting, there are a number of challenges which has also been raised in the past decades. With a mutual and shared aspect of accounting as well as globalization, there has been taken place reporting to the external parties, disclosures, reforms on recognitions and measurement of the performances as the various important financial principles which helps in regulating the recognition and measurement activities in the global accounting (Burns and Needles, 2014). The aspect of financial accounting is directly associated with its several challenges that are faced by the organisational managers and the companies because of enhanced globalization. According to the opinion and study of Weygandt, Kimmel and Kieso (2015), there can be stated that with the growth and development of accounting, there are several challenges which has also been encountered by the accountants and organisational managers in the overseas business operations (Weygandt, Kimmel and Kieso, 2015). The business organisations are putting high emphasis upon the various challenges and issues which takes place in the global accounting practices and are impacting the performance of the businesses (Hodges, 2012).
In the wide and diverse literature, Warren, Reeve and Duchac (2013) have emphasized upon a number of issues and challenges associated with the financial accounting in the overseas and global business organisations. The primary and the first challenge which has been stated by the various researchers is that the challenge related with the economic environment (Warren, Reeve and Duchac, 2013). In current scenario, there are several countries where the traditional accounting is still regarded as the main and primary stream which is followed while performing the accounting and business transactions and though it has a relation with the economic environment of the country. Because of the increased technological Innovation and development, there has been attained a number of improvements in the competence and skill of the managers to effectively manage the various changes and amendments which have taken place in the business operations because of these technological advancements. Because of this, there is a direct impact which has been let down upon the traditional accounting. In the Global business operations, there is high emphasis upon digital business operations, e-commerce and the technological innovation which has developed a significant need for the improved accounting models which are new and innovative. Due to this, an application of e-accounting which is related to the internet environment in the overseas organisation has been developed. There are both internet inside business and internet outside business (Gordon, et al., 2013). In the internet inside business there is flow of information as well as communication between the Global organisations, trading partners as well as the customers. On the other hand in the intranet, there is communication and flow of information among the several organisational departments. All these impact the accounting practices in a negative way comprising recognition, measurement and reporting of the accounting activities. The uses of advanced technologies and continuous innovation have left no room for the organisational employees to handle and manage the accounting functions effectively. Due to this reason, the employees do not possess adequate skills and competence to manage the new and advanced accounting techniques (Schaltegger and Burritt, 2010).
Another key challenge which has been faced by the organisational managers in the global business economy is the multi-jurisdictional reporting. The Global organisation used to have a number of branches and subsidiaries and there is a need to have adequate reporting and accounting of the business transactions of all the subsidiaries (Cavusgil, Knight, Riesenberger, Rammal and Rose, 2014). It is one of the biggest issues for the various accounting personnel to prepare adequate and correct financial statement of every subsidiary established in different nations abided by the various accounting principles and legal regulations of those Nations. There is a change in the accounting standards from country to country (Salvato and Moores, 2010). The companies are also necessitating reporting the complete group of organisations on a consolidated basis according to the accounting standards of the country where the parent company is established (Tayeh, Al-Jarrah and Tarhini, 2015). It is one of the most exhausting as well as complicated process which not only increases the time of completion of the accounting function but also decreases the productivity. A number of countries have agreed upon working according to the IASB (International Accounting Standards Board) accounting standards for achieving higher level of uniformity in the accounting transactions across the borders (Kimmel, Weygandt and Kieso, 2010). Several Nations have given their consent to implement the standards drawn by IASB but the issue takes place when these countries have their business functions in the other nations where such standards are not followed and separate accounting standards principles and practices are implemented (Zeff, 2012).
The next major challenge in the Global accounting is the non-financial measures. The companies analyze the future success or growth with the help of a number of factors but in most of the business organisation, there remain factors which are non-financial in nature (Collier, 2015). The factors such as customer satisfaction, goodwill, brand recognition, human resource practices, employment policies and various other factors are the one which are subjective in nature and therefore there cannot be interpreted the results based upon these factors (Owolabi and Iyoha, 2012). There can be change in these factors depending upon the users and therefore it becomes challenging for the accounting personal to effectively set the adequate measurement standards. Thus, it is one of the major challenge or issue which occurs in the financial accounting in globalized economy (Kieso, Weygandt and Warfield, 2010).
Another significant challenge in the Global accounting which has been stated by the authors is in relation with the financial instruments. With the higher complexity in the trading aspect there are increased challenges in the accounting as well (Otley, 2016). A number of assets such as the repurchase agreements, options, forward contracts, etc. do not have any kind of physical existence. Therefore the financial agreements based upon these assets comprise of higher complexity and thus it develops difficulty and challenges in their effect evaluation. It is easy for the Global business organisation to manipulate the values of the financial instruments which ultimately result in business corporate frauds (Narayanaswamy, 2017). In such type of frauds the business organisation takes use of over valuation of the financial instruments to show false profit and revenue. Therefore such kind of overvaluation activity is one of the biggest issue or challenge in the global accounting. The accounting standards are putting high Emphasis to overcome and have reduction in the complexity of the financial instruments so that such Corporation frauds can be reduced (Horngren, et al., 2012).
For overcoming the various challenges of global accounting there are a number of practices and policies which have been implemented by the Global Business organisations. The diversified and wide amount of literature has presented a number of ways for sustaining and managing the accounting challenges. According to Hopwood, Unerman and Fries (2010), one of the most primary and effective way of overcoming the accounting issues is implementing and taking use of the Green accounting practice. The practice of green accounting is regarded as an environment-caring business which helps in reducing and eliminating the negative impact imposed on the environment due to accounting practices (Hopwood, Unerman and Fries, 2010). There are various developing countries which are taking use of traditional accounting practices. These nations are required to take use of the green accounting practices and innovative accounting functions. There must also be providing adequate training to the organisational employees so that they can adequately work on the Advanced Technological accounting functions and e-accounting practices.
Another major practice which can support in sustaining the accounting challenges is effective implementation and use of the accounting harmonization (Hancock, et al., 2010). The literature and vast study shows that there can be reduction in the issues related to financial accounting raised due to high level of complexity (Schaltegger and Burritt, 2010). The multi-jurisdictional accounting results in higher complexity and therefore to limit the differences of the accounting standards as well as accounting practices there can be increased the organisational performance by involving in the Global business operations and trades (Needles and Powers, 2010). In the globalized economy there is a trend of international harmonization which has been used in the global accounting. to overcome the issue of non-financial measures in the financial accounting, the business organisations must use and implement the accounting practices such as by effectively analyzing the satisfaction level of the customers, the productivity scores of the employees, internal and external audit and the scores of the task completion (Northcott and Ma’amoraTaulapapa, 2012).
Quality and currency of the data: The entire data and information which has been collected from the various sources are academic in nature. The literature developed is the research work of the renowned authors and comprises of data from the Peer reviewed articles. It shows the validity and authenticity of the data collected for the development of the Literature. Google Scholar is one of the major source for accessing the various articles and research work of recognized authors and for fetching the most relevant and recent academic data. In respect with the relevancy of the Literature the sources are from past few years only, it denotes the significance and importance of literature in the current scenario. The literature developed is also rich in offering an adequate discussion of the research work as well as performing comparative analysis of the academic data. The data collected has a direct Association with the accounting function of the Global business organisation.
Contribution and Research gap: There also exists some research gap which has been analyzed by taking insights from the literature. The primary research gap analyzed is that the various techniques which are used for resolving and eliminating the challenges of accounting are much theoretical in nature rather than being practical as the issues and challenges of accounting will keep on rising with the change in the technology. From taking the concern of a global scenario the entire business organisation does not possess strong financial assistance therefore they are unable to use the advanced and innovative techniques for resolving the challenges of accounting.
The literature developed also has a significant contribution in academic field as it highlights the benefits of implementing green accounting practices and shows its significance in reducing the pollutants which are the major cause of environmental degradation. The next major contribution of the literature is that it supported the business entrepreneurs in understanding the key issues of accounting while performing global business. These business entrepreneurs can effectively learn and formulate strategies which can help them in sustaining the accounting issues in advance. The various other contributions of this diverse literature are comprehending the benefits of e-accounting, signifying the accounting application, understanding the approach of accounting harmonization and also attaining competitive advantages by implementing the application of e-accounting.
From the wide and diversified literature developed on the basis of the researches and studies of various researchers, this Accounting Assignment concluded that there exist a number of issues while practicing global accounting. There has been analyzed various issues such as the non-financial measures reporting, diversified accounting standards, multiple jurisdictional challenges, technological interventions, environmental issues and incapable human resource are some of the key issues of accounting in the global organisations. From the Accounting Assignment, it can be concluded that by performing effective analysis of the accounting issues and by taking use of a collaborative approach, a number of ways can be learned to overcome the accounting challenges. It can also be concluded from this Accounting Assignment that there is a significant role of non-financial reporting as it helps in resolving the issues of reporting of non-financial measures. It has also been learned that there can be taken use of the common and adequate accounting standards which have been established by the IASB. From the Accounting Assignment, it has also been concluded that by taking use of the accounting harmonization, green accounting practice and other significant measures then the challenges of global accounting can be overcome and sound financial accounting can take place in the globalized economy. Accounting assignments are being prepared by our commerce experts from top universities which let us to provide you a reliable accounting assignment help service.
6. Reference List
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Allen, F., Qian, J., Zhang, C. and Zhao, M., 2012. China’s financial system: opportunities and challenges (No. w17828). National Bureau of Economic Research.
Burns, J.O. and Needles, B.E. eds., 2014. Accounting Education for the 21st Century: The global challenges. Elsevier.
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014. International business. Pearson Australia.
Collier, P.M., 2015. Accounting for managers: Interpreting accounting information for decision making. John Wiley & Sons.
Gordon, E.A., Greiner, A., Kohlbeck, M.J., Lin, S. and Skaife, H., 2013. Challenges and opportunities in cross-country accounting research. Accounting Horizons, 27(1), pp.141-154.
Hancock, P., Howieson, B., Kavanagh, M., Kent, J., Tempone, I. and Segal, N., 2010. Accounting for the future.
Hodges, R., 2012. Joined?up government and the challenges to accounting and accountability researchers. Financial Accountability & Management, 28(1), pp.26-51.
Hopwood, A.G., Unerman, J. and Fries, J., 2010. Accounting for sustainability: Practical insights. Earthscan.
Horngren, C., Harrison, W., Oliver, S., Best, P., Fraser, D. and Tan, R., 2012. Financial accounting. Pearson Higher Education AU.
Kieso, D.E., Weygandt, J.J. and Warfield, T.D., 2010. Intermediate accounting: IFRS edition (Vol. 2). John Wiley & Sons.
Kimmel, P.D., Weygandt, J.J. and Kieso, D.E., 2010. Financial accounting: tools for business decision making. John Wiley & Sons.
Needles, B.E. and Powers, M., 2010. Financial accounting. Cengage Learning.
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Owolabi, A. and Iyoha, F.O., 2012. Adopting international financial reporting standards (IFRS) in Africa: Benefits, prospects and challenges. African Journal of Accounting, Auditing and Finance, 1(1), pp.77-86.
Salvato, C. and Moores, K., 2010. Research on accounting in family firms: Past accomplishments and future challenges.
Schaltegger, S. and Burritt, R.L., 2010. Sustainability accounting for companies: Catchphrase or decision support for business leaders?. Journal of World Business, 45(4), pp.375-384.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues, concepts and practice. Routledge
Tayeh, M., Al-Jarrah, I.M. and Tarhini, A., 2015. Accounting vs. market-based measures of firm performance related to information technology investments. International Review of Social Sciences and Humanities, 9(1), pp.129-145.
Warren, C.S., Reeve, J.M. and Duchac, J., 2013. Financial & managerial accounting. Cengage Learning.
Weygandt, J.J., Kimmel, P.D. and Kieso, D.E., 2015. Financial & Managerial Accounting. John Wiley & Sons.
Zeff, S.A., 2012. The Evolution of the IASC into the IASB, and the Challenges it Faces. The accounting review, 87(3), pp.807-837.