Accounting Profession in 2014 in Essay
- Length: 15 pages
- Sources: 2
- Subject: Accounting
- Type: Essay
- Paper: #38640327
Excerpt from Essay :
However, they have also changed the face of the accounting profession in a way that will affect the education and conduct of accountants in the future. In the future, the accountant will have to do more than to balance the books. In order to understand the potential educational requirements for accountants in the future, we will examine how they have changed historically and then apply the changes that have occurred due to new regulations in order to paint a picture of what the future of accountancy looks like.
The profession of accounting has been around almost as long as economic trade. An intimate relationship exists between accounting, finance, and the economy. Accounting differs from bookkeeping. When one thinks of bookkeeping, it generally refers to the recording of transactions. This is where bookkeeping stops. Bookkeeping is a part of accounting, but accounting goes farther and tries to paint a picture of the company's health.
Modern accounting arose as a result of the industrialization that took place in the early part of the 20th century. As manufacturing systems become more complex, accountants had to devise new ways to describe them. Throughout the years, the definitions of terms such as assets and cost have changed
. As business systems became more complex, accountants had to devise new ways to account for an imperfect world. Cost accounting has been an important part of the global success of technology in the latter part of the last century
As much as accounting has changed technology, so has technology changed accounting. Now accountants can use technology to perform operations that used to take much of their time. Accountants can use spreadsheets and put in their algorithms for rapid analysis. This allows the accountant to focus more on analysis, forecasting, and other parts of their role. The accountant now plays a much more important role in the management aspects of the business than they did in the past. The accountant no longer simply generates reports and hands them to management. They have become an important part of the decision-making team.
From an educational aspect, the accounting curriculum includes a much more diverse course offering than it did in the past. These changes in course curriculum reflect the fundamental changes in the accounting profession over the past several years. For instance, the College of Business and Economics at Western Washington University includes courses in marketing and operations management as part of their curriculum
. The University of Cincinnati includes courses in Corporate Law and International Accounting. Many colleges, such as these have recently added a course in ethics and accounting
. An examination of accounting curriculums reveals a much more diverse offering of courses. In general, an examination of curriculum reflects the new role for accountants, one that more closely reflects an intimate relationship with operations management and managerial decisions.
The popularity of ethics courses in accounting is a more recent development. Until the recent outbreak of scandals, ethics in accounting was assumed. However, this is no longer the case. The inclusion of ethics courses in the accounting curriculum is a reactionary measure to help resolve these issues. Accountants now need to consider their actions more closely than they did in the past. There are many opinions as to what the future of accounting will hold and the changes that will be seen in the future. However, it can be expected that the inclusion of ethics courses will grow as a standard part of the accounting curriculum.
Will it be business as usual, with only minor adjustments to processes already set in place?
There have been many suggestions and forecasts as to what the future of accounting will look like. There are some that feel the profession will look similar to what it does today, with only a few minor procedural adjustments. Others feel that the future of accounting will present quite a different face than it does today. The following discussion will highlight the most popular scenarios and their rationale.
One of the most important questions that are being asked is whether the accounting profession currently has the tools and resources that it needs to meet the challenges of the future
. This question was the focus of a recent conference of accounting professionals. One of the key concerns that arose was the question of the accounting of intangible assets. One of the key concerns is that GAAP statements do not capture these types of assets accurately. Intangible assets produce revenue and include things such as designs, brands, subscriber lists, computer programs, and employee skills
. The growing importance of intangible assets is a direct result of the growth of the information age.
If one compares the accounting that was needed at the beginning of the 20th century with that which is needed today, some fundamental differences can be found. At the beginning of the 20th century, much of the production was based on the manufacture of goods. Ideas were important, but the focus of management was on the tangible production of goods and their distribution to the end consumer. The idea of accounting for intangible assets was virtually non-existent. Accounting and managerial decisions were based almost entirely on tangible assets.
Accounting for intangible assets was almost entirely a product of the information age. The problem that accountants face is how to assign a numerical value to tangible assets. However, accountants now realize that intangible assets cannot be ignored as a part of the decision making process. One example of this is the trade name "McDonalds." No one can argue that McDonald's has a tremendous amount of value attached to its brand equity. Even use of the name can mean bucks for the company. Anytime the prefix "Mc" anything is used, people can picture the golden arches in their head. However, McDonalds is only a concept, an idea that has come to be associated with a product. This is one of the more pervasive examples of brand equity in our culture today.
No one can disagree that "McDonalds" has a certain value attached to it, but how much to assign to this asset in the ledger book is another matter. Is it worth $100,000, $1,000,000 or $1,000,000,000 in revenues to the company? This is the problem that accountants of today are faced with on a daily basis. They must find a way to assign value to intangible assets in a way that can be reflected in the ledger in a meaningful way. As society moved from the production of goods into the production of "ideas," accountants had to find many creative ways to accommodate this transition in their ledger. There are many methods for accounting for intangible assets. There is no right or wrong way to do it. The accountant must find the best way for accounting for intangible assets and customize it to meet the needs of the company.
The continued importance of intangible assets in the business world will be a key shaper of the future of accounting. The importance of accounting for intangible assets is already a key problem that is being addressed by accountants on a global basis. This adjustment represents a major change in accounting processes. The most difficult aspect of tackling this issue will be developing methods and guidelines that can help to account for the diversity of needs in this area. One-size-fits all approach will not work in this case. The accounting of intangible assets is essentially different from the accounting of tangible assets.
Another key issue is the appropriateness of GAAP accounting and its ability to produce a reliable picture of every business
. GAAP measures were first developed to accommodate a goods-based economy that featured tangible assets. The basic business model was that resources were purchased turned into a final product that could be sold to consumers. This produced revenue and the cycle continued. Today, there are many different business models and many different ways to generate revenue. GAAP accounting practices do not always make for a true representation of the nature of the business, particularly for businesses that rely heavily on intangible assets.
This was one of the key concerns raised at the American Assemble Conference
. At the current time, GAAP is still the gold standard in accounting. However, concerns have been raised that either these standards need to be adjusted to reflect the new business models that are emerging, or that new standards need to be adopted that are more friendly to today's business environment. Accountants in non-traditional businesses often have difficulty making their business fit the mold of GAAP. This issue represents another problem that will help to shape the future of accounting practices in the future.
In the past, the only people who saw accounting reports were manager, the accountants themselves, attorneys and others that understood the essentials of the report. Now, the general public has access to the same information that used to be relatively private, with a click of the mouse. This is especially…