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The Role of Accounting in Society

 

 

Introduction

Accounting plays a notable role in defining the profitability and success of the modern society. So far, accounting occupies and controls almost all aspects that define the progress of the modern industrial society. Modern scholars further reveal that accounting is a form of communication between economists and community members. Besides, accounting facilitates the evaluation and analysis of the society’s progress and the projection of changes in the future market. According to Cooper and Sherer, (1984, p. 184), accounting challenges presented society’s problems. Ideally, ineffectiveness in the modern accounting sector has immediate and long-term effects on social and economic progress. Proper control and management of the accounting sectors also have direct benefits to the entire society. The existent of ineffective society may also undermine the success of accounting practices in the modern economy. To understand some of the challenges that undermine the success of accounting practices, accountants need to evaluate and analyze critical aspects and values in the contemporary society. The overwhelming orientation of investors is also a reflection of society orientation. Consequently, the alteration of accounting practices requires both social changes and awareness.

I agree with Cooper and Sherer, (1984, p. 184) observations that there is a close and mutual relationship between accounting and society. I also agree with Cooper and Sherer, (1984, p. 184) views that problems in accounting are a reflection of the society challenges. Consequently, to address problems in the contemporary accounting practices, policy implementers should examine and understand emerging society challenges. Currently, society beliefs define the direction and regulations in the modern accounting sector. Accounting is also an essential determinant that defines the progress of the modern society. The essay will use the example of recent development in the modern global electronic industry to examine effects of the society on the accounting practices. The study will also explore some of the theories that highlight the relationship between the accounting practices and activities in the modern society.

Accounting and the society

According to accounting theory, accounting is a history of the society economic progress. Accounting provides reliable and faithful records of transaction that define the progress of modern society. Modern businesses also use accounting records to review and examine transaction in their operations. Accounting reports also provide reliable data to evaluate whether organizations have attained their immediate and long-term goals (Morgan, 1988). For example, most of the United States electronic companies use their accounting records to examine their success in the modern market. The use of the accounting history helps the electronic companies examine their current position and its ability to attain their plans. The use of the accounting history also assists United States electronic sector examine society’s ability to purchase its products. The increase in the electronic industry sales is an indication that society members have the ability to purchase and use the industry’s products. Therefore, accountants should use the available data in the electronic companies’ accounting departments to evaluate their operation challenges. The accounting reports will also help accountants understand the United States population’s social and economic problems (Morgan, 1988).

The organizational theory also highlights the relationship between accounting and society. The organization theory indicates that modern business entities and organizations are cultural groups that represent the entire society. Modern organizations have myths, rituals, symbolism, and ceremonies that define activities and operations of the entire society. Organization values and beliefs must as well coincide with the prevailing social and cultural beliefs. Consequently, based on the available information, corporate cultures and accounting practices define the success of both modern organizations and society (Morgan, 1988). Recent Apple Inc accounting reports indicate that the company culture and its integration with America population play a notable role in defining its success. As a result, the company current success is due to the adoption of effective organizational culture that fits in the American population culture. The current success of the Apple Inc in the United States market is also an indication of the effects of American culture in shaping its accounting department. The knowledge on the American culture has led to the production of attractive electronic products that fits in the American cultures. Most of the Apple Inc organizational cultural practices are also similar to America population beliefs and ideologies. To continue with its dominance in the United States electronic market, Apple Inc and other electronic companies should undertake intensive market survey to unearth changes in the American market needs (Solomons, 1991).

Accounting is also an interpretive art that represent society position and possible future progress. Accounting provides reliable information to help policy makers, especially in developed states, make informed decisions regarding society progress. Studies further indicate that accountants evaluate and present information in complicated situations such as operation effectiveness of a given production system, business limitations, operation challenges, and enterprise economic viability (Morgan, 1988). Accounting also helps society and organizations’ leaders understand and appreciate the emerging reality of the market. Ideally, some of the information presented by accountants helps in rationalizing and shaping future decisions. Currently, United Kingdom government has been using accounting information from popular electronic companies to make informed decisions regarding the future progress of the entire community. So far, effective utilization of the electronic companies accounting information has been productive in helping United Kingdom formulate policies that shape the future success of the entire economy. Current policies that support the use of modern technology in the United Kingdom education sector also revolves around the information collected from the existing electronic companies’ accounting information. Consequently, the current challenges and success in the United Kingdom education sector is a reflection of problems in the country’s electronic sector. Although United Kingdom education sector has some challenges in implementing emerging technology, accounting information has largely helped the sector become the most competitive system in the global market. Accordingly, to address some of the witnessed challenges in United Kingdom education sector, policy makers should re-examine the presented problems in the country’s electronic industry. The relationship between problems in United Kingdom electronic and education sectors is an indication that society practices are influential in defining the success of accounting practices (Burchell, Clubb, Hopwood, Hughes & Nahapiet, 2009).

Studies also present a close relationship between accounting and social culture (Morgan, 1988). Ideally, accounting practices define modern businesses corporate culture. Furthermore, accounting presents reality in the operations of modern community organizations and businesses. Accounting also reveals numerical and quantitative data regarding the progress of a business. Although other strategies may support the presentation of accurate information, accounting facilitates the reshaping of general orientation and culture of modern business entities and community members (Roberts & Scapens, 1985). The existing accounting information indicates that there is high competition level between Chinese electronic companies and foreign companies. The ever-increasing competition level in the global electric industry is due to the availability of a variety of high-quality electronic products. Currently, the introduction of new and high-quality products in the market has increased society’s bargaining power. Besides, the emergence of high-quality products has forced the global population advance their interests to purchase quality electronic products. The accounting information on the huge competition level in the market presents the reality in the modern global market. To compete effectively in the global market, Chinese electronic companies need to produce products that meet customers demand. The available data further indicate that accounting information has changed the demand of the Chinese electronic sectors. Accounting information also presents reality that improves the competitive advantages among Chinese electronic companies. Consequently, accounting practices are critical in presenting information that transforms community members’ beliefs and attitudes (Deegan, & Unerman, 2003).

Studies further present a close relationship between accounting and society on technological changes issues (Morgan, 1988). So far, the process of introducing information technology and innovation in the contemporary business entities requires the approval of the accounting departments. Besides, modern technology undergoes intensive and rigorous financial evaluation before their approval. The financial approval determines the economic and financial viability of the proposed technology. However, financial approvals do not consider effects of other critical aspects such as social and human factors. Decisions making process in most of the modern businesses are also cost-consciousness, as opposed to the evaluation of broad impacts of the proposed technological changes. In addition, the evaluation of a project in a one-dimensional approach results to the adoption of a one-dimensional decision-making process. For example, Samsung Electronics Company has been witnessing a problem in adopting modern technology in its promotion and marketing strategy. Although the company has made intensive progress in integrating modern technology in its operations, the innovation has resulted to some ethical and management challenges. Recent studies indicate that the company has lost physical contacts with most of its loyal customers. The loss of physical contacts with its customers is threatening to undermine v popularity in the global market (Macintosh & Scapens, 1990). To address challenges in the adoption modern technology, business leaders should understand the customers’ views regarding emerging innovation. Although the evaluation of the financial viability helps to advance the business competitive advantages and profitability, accountants need to examine the effect of their decision to the entire population. Currently, the most effective means to address modern accounting challenges in the adoption of modern technology is through community members’ inclusion in critical decision-making processes (Davis, Menon, & Morgan, 2002)

Studies further present a close relationship between social policies, economic aspects, and accounting (Morgan, 1988). However, modern scholars indicate that accounting practices ignore the effects of social factors in determining business profitability and future progress. Ideally, accountants use financial and cost-related data to calculate the future progress of modern businesses. Accountants also use accounting information to determine the cost of the company’s products and services. Accountants also use accounting principles to approximate business profitability and possible development in the future. However, the exclusion of other aspects compels most of the modern business entities make uninformed decisions. The assessable data in the global electronics sector indicates that over 70% of the companies do not consider other aspects such as changes in global market needs in making essential decisions. The determination of the business profitability also revolves around the production costs and sales without considering other social aspects. The consistent use of accounting principles without considering other aspects has threatened the progress of most of the electronic industries in the global market. Studies further indicate that numerous social and economic aspects are essential in determining the profitability and success of modern business entities. Although effective consideration of accounting principles helps in making essential business decisions, accountants should consider other social market factors such as demographic patterns (Tinker, 2012).

The consideration of the relationship between shareholders views and accounting is also defines the success of modern businesses and communities. However, studies indicate that accountants in most of the modern organizations ignore the contribution of shareholders and community members in business management processes. The available data further reveal that most of the modern accounting practices revolve around other factors that support organizations’ success. Modern accountants examine the progress of modern economy by evaluating its financial progress and the benefits of the prevailing management and operation strategies. However, the consideration of shareholders’ views and opinions of community members help accountants make informed decisions. The evaluation of stakeholders’ opinions and views enriches the existing stock of knowledge among accountants. Furthermore, modern business entities are slowly becoming the properties of public, managers, customers, and employees (Cooper, & Sherer, 2004). Although most of the global electronics companies started as private-owned business entities, their ownerships are slowly changing to corporate businesses. Over 50% of the global electronic industries sell their shares in various global stock exchange markets. The sale of shares in the stock exchanges has increased public participation and control of global electronics companies. Equally, community members are adequately involved in critical business decisions in the global electronic sector. Accordingly, to address some of the challenges and problems facing modern accounting sector, accountants should consider integrating stakeholders’ views in essential decisions (Baxter & Chua, 2003). Although business investors provide the necessary investment capital, stakeholders invest their energy, creativity, careers, and lives in supporting the success of modern business entities. Business customers are also notable players in supporting the success of modern business entities. Consistent involvement of customers in essential decisions helps business entities reduce their management and operation costs. Community members also have the duty to ensure that business regulations do not affect their operations and daily activities (Hopwood, 2007). Besides, to progress and remain relevant in the modern society, accountants should consider and address the presented needs and interests of the entire stakeholders.

Conclusion

The available empirical data present a mutual and close relationship between the society and accounting practices. Some of the problems witnessed in the accounting sector are a reflection of the society’s challenges. The analysis of the community problems also helps in the identification of challenges that affect operations of modern accounting sector. Furthermore, the most effective mean for dealing with modern accounting challenges is to understand society changes. The adoption of an effective strategy to enhance social awareness will also support the success of the modern accountants.

Based on the available data, I agree with Cooper and Sherer, (1984, p. 184) that accounting problems reflect society challenges. So far, the most effective means for solving accounting challenges is through the evaluation social changes in the target market. The justification of my support to the Cooper and Sherer, (1984, p. 184) views is that most of the global electronic industries are facing accounting challenges due to their failure to integrate views and opinions of society members in their policies. However, companies that integrate community members’ opinions are witnessing encouraging progress in their operations. Besides, the most effective means for progressing in the modern markets is through the integration of society opinions and accounting principles in essential decision-making processes.

 

References

Baxter, J., & Chua, W. F. (2003). Alternative management accounting research—whence and     whither. Accounting, organizations and society, 28(2), 97-126.

Burchell, S., Clubb, C., Hopwood, A., Hughes, S. & Nahapiet,J., (2009)The Roles of             Accounting in Organizations and Society, Accounting Organizations and Society,           1,(3)5-28

Cooper, D. J., & Sherer, M. J. (2004). The value of corporate accounting reports: arguments       for a political economy of accounting. Accounting, Organizations and Society, 9(3), 207-232.

Davis, S.W., Menon, K., & Morgan, G., (2002). The Images That Have Shaped Accounting     Theory. Accounting Organization and society, 7, (4), 307-318

Deegan, C., & Unerman, J., (2003), Financial Accounting Theory. 4th ed. New York, NY:     McGraw-Hill Education

Hopwood, A. G. (2007). The archeology of accounting systems. Accounting, organizations and society, 12(3), 207-234.

Macintosh, N. B., & Scapens, R. W. (1990). Structuration theory in management accounting.     Accounting, Organizations and Society, 15(5), 455-477.

Morgan, G. (1988), Accounting as Reality Construction: Towards a New Epistemology for       Accounting Practice, Accounting, Organizations and Society, 13 (5), 477-485

Roberts, J., & Scapens, R. (1985). Accounting systems and systems of accountability—         understanding accounting practices in their organisational contexts. Accounting,             Organizations and Society, 10(4), 443-456.

Solomons, D., 1991. Accounting And Social Changes: a neutralist view. Accounting             Organization and society, 16, (3), 287-295

Tinker, T., (2012).Paper Prophets: A Social Critique of Accounting, New York, NY: Praeger

 

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