A very unique problems and features of accounting is that there are no solutions available to accounting problems but there is availability of more number of solutions to every one of the rare main accounting problems (Conway & Byrne, 2018). The calculations of inventory estimation, calculation of yearly depreciation, goodwill treatment, overtime premium, cost of idle time, cost of “research and development” are some of the noteworthy instances of accounting issues with wide variety of resolutions.
An important thing is that all the other alternate varied resolutions are viewed as important practices by the bodies of specialized accounting. Furthermore, the corporate firms are permitted to make use of any available accepted methods (Byrne, 2018). Eventually, the final outcome of business enterprise simply lacks comparability because their performance gets swayed by varied accounting methods.
A new noteworthy issue is that there are certain rising accounting issues which does not has any solutions available. It means that for some contemporary or existing accounting issues, solitary objective based resolution is offered. Consequently, there are some certain amount of accepted resolutions is available. There are certain number of methods are also available to assess the financial equivalents some novel type of accounting issues (Nadeem et al., 2018). Accordingly, the corporate firms have the option of using any one of the methods suggested to control their accounting facts and also the “financial performance” to meet their requirements. As noted, accounting information users, especially the external parties are normally denied of objective, equivalent and consistent information.
On the basis of this reason, an effort is already made to recognize and converse about the “contemporary issues in accounting”. This includes an important issue of “corporate governance” and related administrative movement and structure which must be formed and maintained for appropriate functioning and reporting within timely manner. Another important issues include accounting for intangible assets. Besides this, there are also notable method such as “accounting for human resources”, “accounting for intangible assets” and “brand accounting” (Schaltegger & Burritt, 2017). Furthermore, issues relating to “internal” and “external auditing” and associated mechanics of monitoring on accounting functions needs to be addressed as well. This issue is very closely related to accounting systems and internal control examination.
The issue of corporate governance and the environment of organization as well its structure should be formed and it should be maintained in an appropriate manner for properly function in order to assure that the accounting system is functioning properly (Hoque, 2018). The rules of regulatory authority and its monitoring can help in enforcing a general business environment. Corporate governance is considered as a main function in a business, accounting should function as a unity within adjacent business environment and it should institute very well within the administrative environment for maintaining very higher quality of accounting functions.
Literature Review:
There were some articles made available in public for investigating the impacts of “corporate governance” and company environment on the accounting system, its reporting functions and overall quality. The findings emerged that having a sound and independent structure of corporate governance as well as healthy company environment can improve and maintain the accounting system along with reporting quality.
Civic ownership, established ownership and also marginal ownership can create an influence on the accounting management as well as overall quality of financial reporting (Ekaterina, 2016). The actual effects from healthy environment can translate into a smooth internal controls, organizational transparency and effective allocation of resource within the company. For instance, one example of health corporate governance is providing incentive compensation to management. As per Conway (2018), incentives to executive and executive compensation is related to irregularities in accounting and internal control effectiveness. The environmental factors can make significant amount of contributions to effective accounting functions and overall quality of accounting reporting.
Another noteworthy issue is accounting for changes in price level along with accounting system and internal control systems. In regard to the constant increase in price, the ways to take into account changes in price level were formed. These efforts have led to development of some approach to consider changes in price level which includes understanding the overall or existing level “purchasing power” and present “cost accounting method”.
The issue relating to accounting system and internal control system is also rising. Except for “organizational guarantee”, the typical division and segregation of “accounting functions” helps in supplying checks on internal accounting and balances (Crookes & Conway, 2018). This is important in front line prevention of possible violations and fraud, despite the fact that “conspiracies” and “management supersedes” can very effortlessly break down the combat zone. As per the present research, professional training along with secretarial ethics, expert moral and individuality education, can help in addressing internal control problems but it will not be able to prevent frauds.
The application of accounting functions cannot be considered evident until and unless the accounting reports is published in public. If the researchers are able to bring some more limiting requirements of Sarbanes-Oxley Act and functions relating to both internal and external auditing, some more novel topics regarding the effect on accounting in recent years can be seen. Nevertheless, several studies that touch on the “corporate governance” and “business environments” have more or less investigation on accounting “internal control” function. An important reason is that efficiency regarding functions can be obtained from its result of fiscal statements and overall quality of accounting info (Hogsden, 2018). Hence, it becomes easy to understand the results of process, which is very frequently not observable straight to the outsiders, rather than investigating the procedure itself. As understood, this area of topic is not very much taken into account for study purpose.
Accounting for Changes in Price Level
Another important contemporary issues of accounting are the accounting valuation and assessments, results of “accounting works”, “financial reports” and their overall quality. This is regarded as central element in “accounting research”. It is actually a group of “research topics” that involves majority of progressive and “pioneer studies” in the areas of “modern accounting research”. The “Financial Accounting Standard Board” along with “accounting academia and accounting” research have spent several years on testing numerous likely systems and methods of improving the accuracy in accounting measurements, operations and quality of accounting information (Conway, 2018). The accounting periodicals have largely been on numerous slices of accounting issues which may be raised and permit answers can be obtained.
Apart from this, determining the overall quality of accounting and measures adopted to improve them has always been the issue in accounting research. Several judgemental calls needs to be made in order to apply one method over the another. As noted by Thompson (2018), the judgement made on accounting along with methods or choices can create a significant impact on quality of accounting info. One key issue is the disclosure, either obligatory or intended. In recent year more “voluntary disclosure” have been made as significant amount of benefit can take place from more often than less of voluntary disclosures.
Another important issue is the “internal and external auditing” and the related mechanism of observing the functions of accounting. This is yet another area of research and it is very closely related to accounting system and control assessment. The “Sarbanes-Oxley Act” holds special and restrictive requirement regarding “internal and external auditing”. One of the requirement relating to auditor is that the auditor should uphold independence from taking material decisions and functions of business and must be sheltered from management influence (Alsharari & Lasyoud, 2019). The audit committee must be considered as the one to implement control and to administer the “internal auditors” as well as hire and monitor the external auditors.
As highlighted by Coyle (2018), the association amid accounting and other disciplines such as use of accounting statements is an emergent issue. The worth of accounting is dependent on the practicality of its reports to users, particularly by the shareholders, business professionals, tax officials and unions. Over several years of accounting, ideologies as well as methods of accounting have developed in a very adaptive to social growth and financial growth. For example, “historical cost” is viewed as “non-economic valuation” and they are very likely to distort from reporting about the “fair value” of “assets and liabilities” of an organization.
Accounting for Intangible Assets
The current study involves a systematic research which was carried out for understanding and analysing some present accounting problems. To report is prepared by following several important reports and articles for reference purpose. References has been made to numerous journal articles and latest scholarly publications. The current research paper provides explanation regarding the numerous contemporary issues in accounting. The purpose and format eventually creates an influence on the content about accounting issues in the research methodology. The content that is within the entire methodology is focussed on delivering a very concise summary of accounting issues, its approaches to get resolutions and outcomes. Therefore, the content associated to methodology involves understanding each aspect of accounting issues. The content that is presented in the research paper which details about the collected information and method of analysis is completely different because it is important to provide an explanation regarding the scientific approaches and research procedure with the help of academic journal articles for supporting the information.
The general findings relating to the above stated study is that having an independent structure of corporate governance and healthy company environment can be helpful in significantly enhancing and maintaining the accounting system along with overall quality of reporting (Akintunde, 2019). Having a healthy environment can allow smooth flow of internal controls, transparent corporate functions and effective allocation of company resources. It is found from the research that actual quality of accounting is changing however fundamentals are very much reliant on regulations. Consistent quality of accounting can be maintained if right accounting policies are employed in a consistent manner.
There are number of researchers that have shown that adequate disclosure can improve the quality of accounting. Although conversion of accounting is perhaps a vital nature of accounting quality, as per research findings there is a need for more conservative accounting measurement and estimation for reducing the accounting reports of inferior quality. Additional voluntary disclosure can actually increase the quality of accounting (Paterson et al., 2017). The voluntary disclosure and its impact on quality of accounting reporting have turned out to be the most recently talked about subject. Studies have noted the link amid the enhanced disclosure and enhanced quality.
There are still several unanswered topics are existent because several nations and different accounting governing organizations have undertaken diverse approaches and picked up numerous phases for meetings. With that being said, topics under this area will be more acceptable and published, particularly in emergent markets and emerging nations as well. While, for nations that are highly advanced and developed in accounting theories may not be much extensive and widespread.
Brand Accounting
As per the study conducted by Grima & Boztepe (2021), he understood the impact of adopting the IFRS on cost of capital. While Russell (2019), investigated marketplace reactions regarding the adoptions of IFRS in Europe. Their findings have suggested that the result is much more apparent much stringent rules and applications. The findings of researchers have noted that both “IFRS reporting” and “voluntary IFRS” reporting have positive impact on the overall quality of accounting, particularly in those nations that have very minimum or slack national accounting regulations.
The literature review presents that amid these topics some of them have been studied with more detail research and more frequent publications and have come with more findings. One key area is “accounting internationalization” and “convergences”. Topics relating to quality of accounting and irregularities have been restored to life following the outcome of accounting frauds.
The corporate firms are making huge amount of investment and they are spending very huge sum of money for acquiring, developing preservation, improvement of “intangible assets” involving technical or practical information, strategies and application of new process or system such as brand names, copyright etc. These type of assets make contributions in future financial benefits in numerous forms involving revenue from sale of “goods and services”, “cost savings” or other benefits that is obtained from using the asset by an enterprise (Deegan, 2019). This implies that intangible assets have the ability of making contributions so that it can stream revenue or generation of income. Hence, they are identified as asset by the corporate firms.
Furthermore, the accounting standards simply prevents the restoration of expenses which is identified as expenditure in earlier fiscal reports or “interim financial statements” (Baporikar, 2016). Only the succeeding costs such as the costs that has happened following the time when the “intangible assets” initially met the “recognition criteria” that takes account considerably and reasonably lower share in the actual cost of “intangible assets” which is “capitalized and amortized”.
In regard to the constant rise in price, the means involving account for changes in “price level” is also developed. These efforts have contributed in the creation of few approach to take into account the changes in “price level” that includes the general or present “purchasing power” and present method of “cost accounting” (Bul, 2020). The total effect is different from one approach to another because the common price indices are used under the general “purchasing power method” where “specific price” indices are used within the present “cost accounting method”.
Internal and External Auditing
Furthermore, under the common “purchasing power method”, all the items stated under financial statements are restate based on their “price level” by the end of “accounting year” and within the present “cost accounting method”, vital items get reiterated on the basis of their “average price level” throughout the “accounting year” (Jahan, 2019). The financial reports which comprises of financial statements are anticipated to have valuable information content. These reports must comprise of relevant, valuable, accurate and objective based facts and figures.
The terminologies such as earnings management, smoothing of earnings, engineering finance, smoothing of income, “disclosure management”, “innovative accounting” etc. are used to contribute “creative accounting”. The creative accounting involves monotonous selection of “accounting measurement” or rules of reporting in a very particular pattern and the effect of which involves reporting a stream of income resulting in small variation from trend than it would have otherwise appeared. “Creative accounting” represents any sort of action on the part of management that creates an impact on the income reported and provides no real advantage of income to companies. In fact, during long-term it is detrimental in type (Gitaharie et al., 2019). The main reason as why companies or managements must resort to “creative accounting” because it varies from “one company” to another and also from one year to another.
Recommendations can be given for further research in the areas of accounting internalization and convergence of accounting standards. It is anticipated that this area will witness more research and findings in the coming years. While some of the research topics are not much focussed, such as fundamental environments and its associations with quality of accounting reporting and accounting functions. One probable reason is that less data is obtainable or they are very much proprietary. Only the singular review within a business can peek into the core of such type of basics.
There is one more likely reason is that less amount of data is obtainable or they are very much exclusive. Only “special survey” within an organization can peek inside the core of such basics. There is additional likely reason might be that these characters are very difficult to get quantified. This is because “modern accounting studies” have now turned much more quantified. While quantitative methods and techniques have turned into benchmark and actual criteria for publications. Normative research is now not much observed in topics relating to accounting academic journals. Nevertheless, lack of research in these areas and calls for more adequate understanding of these research areas. There are some other normative oriented accounting or “non-accounting journals” that may experience added research findings in these areas.
Quality of Financial Reports and Accounting Assessments
Conclusion:
On a conclusive note, the important contemporary issues in accounting topics which have been identified under this observation takes into account both macro and micro environments within the accounting system. The research paper has also considered accounting quality and the related issues irregularities such as “internal and external auditing” that monitors accounting and later association of accounting or the usage of accounting information by the other restraints, particularly finance.
The research clearly makes evident that accounting regulations helps in providing the use of varied means by the different businesses for identical problems. Additionally, businesses are also given permission to move from one accounting method to another. These two provisions are harming the overall comparability of quality accounting info. Apart from this, there are also certain number of rising accounting issues regarding which objective measurement, although appropriate and necessary, is not probable. In addition to this, varied methods with the option of shifting from one part to another is suggested. Consequently, businesses are better able to control their accounts that interferes with their earnings and other financial info.
References:
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