In today’s business environment professional accountants are directly responsible to their customers, companies and to the society and also they should know possible legal obligations to the stakeholders. Accounting profession is not only limited to preparing accounting statements but also involves in wide variety of functions which provides inputs to the managerial decision making. If an accounting professional is not able to perform his duty and responsibilities in satisfied level according to the universal standards it is the major liability in the hands of an accountant. Compared to other type of professions this profession has its own code of ethics hence it is dignified and respective profession which provides practical inputs for the effective decision making.
In the context of professional accounting, the power and responsibility of an accountant can be justified when financial statements provides expected information according to the objectives functions especially protection of public and social interest. Under flexible business environment accountants are vested with enough power in order to perform their functions without any interruption for the healthy future of business firm. According to the scholars the up gradation of accounting skill is a specific task as the accounting profession also one of the component of employment structure which is influenced by policies of government and economic policies.
There is a argument the accounting skills and knowledge should be revised and updated time to time because these skills and knowledge should be according to the changing expectations of the society and the stakeholders of the business firm. But as a professional an accountant should utilize these skills and knowledge in optimum level for the interest of the employer as well as interested parties. The accounting profession has gained enough importance especially it is the sole body which has the ultimate authority on the financial related issues and matters. The one of the primary objectives is to work for the benefit of social interests that has analyzed for making the accounting profession as an appropriate occupation in modern employment world. And According to some experts accountants with traditional views are no longer sustaining in the present environment. According to the research the Today’s accounting and auditing methods are in modified forms compared to traditional methods of accounting.
Changing Role of Accountant
Today’s accountants should mostly focus on knowledge, skills and ability to manage these as a particular service. This requirement in business environment has created business and ethical issues for the accountants/ auditors and their customers. This includes problem-solving and customer advice features of the skilled professional. Changes also include the over emphasis on specific training for developing practical skills as part preparing of new graduates to the practical business world. The introduction of these practical training in academic degrees involves uncertainty and time frame because the academic institutions should ready for accepting the current changes. Company’s especially multinational companies mainly concentrate on these practical skills but facing problems of assessment for right candidates with practical knowledge.
Challenges to Accounting Profession
Due to the influence of globalization changes in financial strategies have been affecting almost every business and services around the world. Especially accounting and finance sector is directly affected, financial experts world wide are working for the improvements of the accounting system. Several seminars are going on in this regard; financial professionals, scholars have to share their ideas and views on the present challenges in finance and accounting today, and acquire sophisticated skills in order to face globalization effect. Today global recession and financial conflicts has developed new trend of threats and challenges. According to the experts of International Accounting Standards Board, the global financial conflict is the main which emphasized transference in financial reporting and flexible accounting standard with definite principle to face the new trend in future. The context and dynamics of modern strategic management accounting the changes in the accounting skills have forced to adopt by professional accountants who are cautious to provide value added service for their customers. Globalization process has made the business activities to cross the boundaries of nations. The global financial and business environment has put pressure on professional accountants and auditors as they are the important information providers for the business success.
Every company seeks opportunities in global market for the expansion of the business. But uncertainty in market conditions and rapid innovations in technology have made themselves to face any type of business situation for the interest of all their stakeholders where their business strategies, their market share and capital adjustments also subject to changes along with the marginal profit.
Internal Challenges
The first challenge to professional accountant is the measurement of financial performance. Revenue is a single measurable indicator of financial performance. The common feeling is that over-emphasis on revenues, unscientific ways of their analysis and interpretations financial information. But this information is the basis for long term business decisions.
Secondly issues regarding historical accounting information and statements. Some times there is feeling that a balance sheet prepared imperfect way and it does not reveal accrued profits based on future changes in market condition. This is the major draw back in disclosing true financial information of the company.
Thirdly financial statements do not measure the assets and liabilities on the basis of today’s accounting standard. Hence investors may be misled in making investment decisions, which will put them at greater investment risk. They also need the information regarding the value goodwill and other intangibles and capital structure.
Lastly the financial and accounting statements show only historical transactions and facts and they don’t concentrate much on the future events and transactions. They put limited attention on the hard profits and also limited attention to the required process for maximization of wealth.
Challenges of Globalization
Innovations in technology are the greatest affect on the profession and present system failure to coop with this challenge may be resulted in the devaluation of the importance of the profession. The introduction of the information technology has greatly influence the system in which companies do business, structure their organization and operate their reporting systems and each of these are the considerable challenges for the accounting profession.
E-Business has introduced new business risks along with the great advantages which a professional accountant should take into account. The unauthorized access company information; increased volume of business as created credit risks; and the proper allocation of income and expenses. Accounting firms and professionals should be concentrate on with these risks. The changes in Government financial policies and company the annual financial statements and other communications can be communicated to the concerned parties through the electronic media or through web sites.
Out of dated information will not reveal clear picture and hence share price of the company affected. Market expects the clear picture of financial and business performance and there are pressures on firm’s o provide such information when required.
Lastly the centralization of accounting system and accounting information systems will be the top management based decision where accounting is considered as secondary issue. Branch accounting is in declining trend today information will be directly flow to the head office of the firms.
Globalization can be defined as the existence of a situation where there is an easy access to any part of the world. It is in the form of information on any subject matter. A professional accountant should face several challenges with this situation; businesses expand sometimes beyond country borders in response to globalization. In market led globalization model an accounting professionals should play a dominant role. To make the Global markets to function properly, the accounting profession must adapt and modernize in response to the globalization of finance and investment. In corporate-led model of globalization the accounting profession does not merely adapt to forces of globalization. But accounting industry has played and continues to play an active role in the structuring global markets for accounting services. Due to the globalization there are some threats to accountants and the accounting profession as a whole
Accountants working for foreign-owned companies, their knowledge, skills, and abilities may be restrict them to performing only low-value, compliance-oriented work. Accounting professionals can be also benefited from the effects of globalization. These are Accountants who are ready to expand their financial accounting knowledge, skills, and abilities they can become expertise in understanding of changing business requirements. Accountants with their theoretical knowledge, skills, and abilities with the performance oriented knowledge, skills, and abilities of management accounting can be achieve high level of experience in this context.
Today businesses become increasingly globalize, there is clearly more pressure on accountants to increase the knowledge, skill, and abilities beyond their present limit of functioning in order to fit well into the globalization of the 21st century. In this context the accounting profession has an important role in assisting firms to face competitive finance and business environment