Introduction
Even though accounting is devoted to describing business and finance, it is still is a kind of service or business that has to be responding to the changes in the modern environment (Atrill & McLaney 2012; Atrill & McLaney 2013a; Wadee 2010). The process of change maybe not easy, and errors can be made in the process; the recent accounting fraud scandals can be regarded as a kind of such mistake. Still, as accounting accumulates theoretical knowledge and practical experience concerning its aims, customers, and the changing environment, it is bound to change and accommodate appropriately.
The User Groups and Information
The information that accounting and financial management can provide includes the available forms of finance and the advantages and disadvantages of using this or that form (that incorporates costs, benefits, and risks) along with the possibilities and advantages or disadvantages of a particular kind of investment (Atrill & McLaney 2012). An example of accounting activity is the measurement of the financial position of an object that is used to provide information concerning its financing and fund allocation and gives ground for the assessment of its performance and value (Atrill and McLaney, 2012b)
The major groups of accounting users include government and community representatives, customers, competitors, and employees, investors, suppliers, and lenders, as well as managers, and owners (Atrill & McLaney 2013a, p. 3). The group of users that request accounting information defines the type of information that is going to be presented (Atrill & McLaney 2012). The same object that is being analyzed (for example, a company) would be regarded from different aspects to satisfy the needs of a particular user group.
For example, the government would be interested in taxes that the company has to pay and does or does not pay, investors would want to know about the risks and benefits of investing in the company, suppliers would require information concerning the company’s ability to pay, and so on. In case the accounting information satisfies the needs of the user and allows him or her to make the decision, it is relevant. Apart from that, it is obvious that the information has to be complete and correct (Atrill & McLaney 2013a). Distorting the information, especially with the intent to do so, is unacceptable.
Financial Scandals
Still, accounting scandals do take place, for example, because of the pressure that a company experiences concerning its performance. In this case, a company is tempted to conceal its difficulties and misinform the stakeholders; this is performed through accounting frauds. An example of such fraud is the bankruptcy of Enron, the company that used to conceal its enormous debts, which was uncovered in 2001 and resulted in a catastrophe for all the stakeholder groups (Farrell 2015).
While it is obvious that the possibility of such frauds may lead to skepticism in respect to accounting, it is also understandable that the possibility of losing the reputation is a powerful deterring mechanism for most accounting services. Transparency and honesty are an important part of ethical business conduct (Atrill & McLaney 2012). The International Accounting Standards Board demands that accounting is carried out responsibly and points out that consistency with business ethics contributes to a business’ sustainability (Wadee 2010).
To conclude, it should be mentioned that accounting is an important part of the modern business that needs to take into account the lessons of its past and proceeded to develop along with the current environment. By providing relevant, complete, and consistent information to its users, the accounting will be able to fulfill its purpose and contribute to global economic development.
Reference List
Atrill, P & McLaney, E 2012, Accounting and Finance for Non-Specialists, 8th edn, Pearson Learning Solutions, New York, NY. Available from: VitalBook.
Atrill, P & McLaney, E 2013a, Accounting and Finance for Non-Specialists PowerPoints on the Web: Chapter 1, distributed in Name of the Course at The Name of the University, City on Day Month Year.
Atrill, A & McLaney, E 2013b, Accounting and Finance for Non-Specialists PowerPoints on the Web: Chapter 2, distributed in Name of the Course at The Name of the University, City on Day Month Year.
Farrell, S 2015, ‘The world’s biggest accounting scandals ‘, The Guardian. Web.
Wadee, N 2010, ‘Changes in the accounting profession’, Accountancy SA, vol. 3, pp. 12-13.