Essays on Accounting Practices

Introduction

Management accounting (MA) involves collection and dissemination of accounting information for purposes of decision making. Over the recent past, management accounting has experienced significant changes, an aspect that is explained by different scholars (Sven, 2007, p. 336). The topic has attracted different concerns from various stakeholders, linking recent changes to globalization and changes experienced in the organizational settings. The concept of MA is understood to have significant impacts on organizational management as it is used in making strategic decisions (Arroyo, 2015, p. 287). This paper evaluates various theories explaining factors influencing change in management accounting. To achieve study objective, ...

Introduction

Multinational corporations across the world usually consolidate and present their operational results in financial and non-financial terms at the end of every term, usually a year. The financial aspect of reporting is supposed to comply with a clearly prescribed set of regulatory standards. The adoption of the International Financial Reporting Standards and GAAPs was meant to ensure that all compliant firms across the world produce financial statements that conform to the industry specific reporting frameworks and thus achieve a degree of uniformity in reporting. Different firms in operating in multiple locations operate under the strict guidelines of the specific ...

Abstract

The paper will explore the business environment and the fraud scandals that prompted the need for more comprehensive and stringent regulations on financial disclosure by all public business entities operating on U.S. soil. The primary financial issues that the Sarbanes-Oxley Act was meant to address will be addressed, with a specific focus on how to restore investor confidence by imposing more strict rules on companies in terms of recording investments, cash flows and periodic profit/loss statements . Through an analysis of the basic provisions of the Act with regards to assigning personal responsibilities on officers of the company, as well ...

Introduction.

The prudence concept has been an area of controversy, especially in accounting standards as there have been conflicting ideas on its relevancy and its desirability as a useful tool in the field of financial reporting. There has been a need to develop the prudence concept to suit financial reporting needs both in the contemporary context and in the future. A conceptual framework that incorporates the use of accounting practices that ensure consistency, coherence, acts as a guide to financial reporting and is easily understood by users is what is required for financial statement users.

Issue of prudence.

Over the years, there has ...

Section one

The research below will present a discussion on Samsung as a preferred multinational company that is originally of a South Korean origin. Notably, it is comprised of several affiliated, as well as, subsidiaries businesses that are mostly united under the brand of Samsung. The company has a significant influence on the economy, politics, culture, media and the development of all other aspects of the South Korean state. Essentially, the revenues of Samsung make a huge chunk of South Korean GDP. The company as a global corporation is present in the six out of the seven continents in the entire ...

Introduction

Definition of Managerial Accounting Businesses must implement effective decisions at varying phases of growth through management accounting for a chance of a future. According to an article on the Harvard business Review, businesses mainly go through two main phases of growth: the start-up phase or the mature phase. According to Churchill and Lewis, each of these phases demand and rely on differing strategies that fulfill a need and/or takes the business to the next phase. The techniques used or applied to haul business through these phases are referred to as managerial accounting techniques. The parties responsible for reinforcing managerial ...

Introduction

The Financial Accounting Standard Board (FASB) is an independent board that incorporates different professionals who are mandated with the responsibility of communicating appropriate standards used for financial accounting and reporting purposes. The concept is referred to as the Accepted Accounting Principles (GAAP) and is often used by organizations in the preparation of financial reporting. Existing standards in FASB face a lot of criticizing for failing to meet the needs of users more effectively as far as financial reporting is considered. The reason why the facets are considered inappropriate and should be amended is that they are not a faithful ...

Accounting refers to the activities of recording, summarizing, maintaining and publishing financial statements for public, etc. These activities play a vital role not only for internal users of the information but also for the external users who might raise issues and concerns to the work being carried out. It is essential for the investors to get the correct picture of the business before taking the risk of investing in the venture. The ethical practice also enhances the performances and procedures of the organization. Ethics relate to segregating what is good or bad for the consideration of the moral duties ...

Accounting Practices in third world countries

The developing or less developed countries are referred to third world countries that have great diversity among them. In this category, some poorest countries of the world (Bangladesh, Ethiopia and Grenada) and some are not-so-poor countries (Qata, Saudi Arabia) are included (Guan and Pourjalali, 2010). For industrialization, some are very poorly industrialized while others have moved to industrialization. So, the culture and political environment of these countries are different to each other that influence the accounting practices of these countries and affect the accounting of companies or branch operations which are US based.

Financial accounting in third world ...

The importance of accounting analysis was emphasized in the Chapter 3. The authors stated that disclosures of the financial statements are made on the basement of accounting analysis. Also, they noted that understanding of accounting information collected helps use the financial information more effectively.

Chapter 3 of the book highlights three important concepts namely: factors influencing the quality of financial reports based on accounting analysis, the drivers of accounting choices, and incentives of the managers that should be considered when making the financial reports. According to Sarbanes-Oxley Act, CEO, CFO, Board of Directors ...

- Introduction

1.1 Background developments

Traditionally, accounting standards have been developed by different countries on the basis of local legal, economical and cultural institutions frameworks (Elliott and Elliott, 2009, p. 158). As a result, the standard setting was very country specific. With the globalization process at work for the last 3-4 decades and increasing mobility of capital internationally accepted accounting standards have become necessary to facilitate cross border transactions and make financial reporting comparable between countries and companies thereby leading to a greater transparency for investors (Nobes, 2004). IASB has been set up as a private international standard setter with a mandate to create high quality accounting standards ...

Introduction

Scapens takes us through his 35 years of research in management accounting, initially starting his research in financial accounting where he majored in inflation accounting. Throughout the years, Scapens together with others has been involved in extensive research in this subject. Together with Burns, Scapens developed the commonly known as the Burns and Scapens framework of management accounting change that explains the reasoning for the slow change process in the management accounting processes.

In the late 90’sThe Chartered Institute of Management Accountants commissioned Scapens to conduct some research on the resistance to change by the management ...

Question1

The full revenue recognition ensures the matching principal is met. It establishes the accounting period where the expenses and revenues are recognized. In the case of the sale of an extended warranty, the method ensures all the cash is received at the period when extended warranty is sold. This method can be used to attract investors in the future because Circuit City Stores can manipulate this method to make their financial position better.

The deferral of revenue method could require the Circuit City Stores to change its accounting for extended warranty and product maintenance contracts. It could also ...

- Ethics refers to a set of moral principles. These set of principles affects how people or organizations make their decisions. Specifically business ethics refers to the moral rules/principles meant to govern the way businesses operate, how employees are treated, how decisions are made.

- Insider trading is the use of non-public information to benefit financially. The non-public information is, usually obtained by virtue of engaging with the organization in various capacities e.g. as a board member, employee of the firm, manager . Insiders are regarded as people who are privy to information about accompany that is not publicly available.

- Insider ...

Introduction

The International Financial Reporting Standards (IFRS) is a traditional mechanism of managing fiscal side of the business. However, the framework of Generally Acceptable Accounting Practices (GAAP) is a new breed of standards in this regard. There are marked differences present between the prevalent approaches, GAAP is blamed to provide enough room to the accountants to do their jobs creatively, and hence, the term creative accounting has been coined in order to define the phenomenon. The researchers have found significantly pronounced linkages between the presence of accounting irregularities and application of GAAP. Additionally, the accountants have been known to book the inventory ...

Question #1

The NAFTA was created in 1994 in order to improve the condition and process of business trade in North America. Specifically, it does this by getting rid of the tariff barriers and improving the trade infrastructures (“Chapter 8”). One particular business that benefited from the emergence of NAFTA was Walmart in Mexico. The combination of Mexico’s low-costs labor and NAFTA’S improved infrastructure and lower tariffs gave Walmart an extremely high competitive advantage. This is because while businesses like Comerci, Walmart’s main competitor, chose to make a profit out of the differences the lower tariffs made, Walmart ...

Introduction

The Enron scandal of 2011 revealed that the Federal government’s accounting and auditing regulations of Fortune 500 firms were lax at best. The fact that one of the largest accounting and auditing firms at the time was an active participant in the scandal illustrated the need for additional industry oversight. Andersen was the accounting firm that was responsible for auditing Enron’s financial statements. The accounting firm failed to call out Enron on discrepancies and questionable accounting practices that overstated Enron’s earnings and understated its debt (Cross & Kunkel, 2012). This showed that generally accepted accounting practices or ...

Part 1

The inside chemistry of the top management at Levendary Café at the moment seem to be very confrontationist. Mia Foster the newly appointed CEO, Luciene Leclerc the tenured Concept officer and Louis Chen the business builder in China for Levendary have disharmonious roles. Mia Foster- The role of Mia is to provide the company with strategic direction and leadership, define the business, make meaning of the market, craft a future for the company with growth and integrates the US, China and Dubai operations. The current situation puts a challenge to Mia’s role that Chen is partially playing the role ...

Abstract

This report analyzes the case of Enron and its failure. The practices adopted by the management have been analyzed and criticized in order to identify the main cause behind the whole issue. Along with this, the report also suggests different solutions and recommendations for the management in order to minimize or stop the risk of such issues in the future. The report has also highlighted the importance of Information System in this case. Moreover, the report presents suggestions regarding how the implementation of Information System can help the management to avoid such issues.

Organizational analysis: Enron

Enron scandal is one of the ...

GUARDIAN ANGELS FASHIONS

Executive Summary Guardian Angels Fashions is a modern clothing retail outlet that deals with youths’ attire. This retail outlet will deal with the upcoming youth fashions, and thus this will make it fulfill the uniqueness criterion. The target customers for Guardian Angels Fashions are the youths who dominate in the society. Youths value the upcoming fashions in the clothing industry, and thus this retail outlet aims to utilize this opportunity by providing these basic commodities to them at pocket friendly prices. Over the next four years, Guardian Angels Fashions outlet aims to expand its operations up to the national ...

Integrity

Introduction Warren Buffet, who is the Chairman and CEO of Berkshire Hathaway, stated "In looking for people to hire, look for three qualities: integrity, intelligence, and energy. And if they don’t have the first one, the other two will kill you" (Anderson 2012). Indeed, integrity is that special virtue of one's character that makes a person trustworthy to others. Integrity is the very foundation of principles and values that form the core of a person. Integrity means adherence to moral and ethical principles and the path of honesty. Integrity is extremely valuable and has become a rarity in the present ...

Management Accounting Literature Review

The business environment in Malaysia has experienced several changes over the recent years. These changes have been brought about by globalization that has introduced new technologies in the country. The technologies have opened the business environment in Malaysia to new challenges and competitive forces. The central Government economic policy has helped business people to mitigate challenges associated with management accounting. The policy is in line with the country’s vision 2020, which aims at reforming the management of its resources, and it has contributed greatly to the manufacturing industry in the country. The manufacturing industry is a key contributor to ...

In any business, the major battleground is financial accounting, and there is no government or industry regulation that can prevent unethical ways that people use in dishonestly reporting given financial information (Duska, 2007). For example, there are certain accounting practices that are illegal like misinterpretation of figures and expenses on a company’s financial statement. However, some legal accounting practices are unethical (for example, influencing financial results by shifting expenses unjustifiably). Arthur Andersen LLP is a good example of a company that violated accounting ethics. This accounting firm would have become one of the largest firms in the USA because it ...

Based on the documentary film Enron, it is apparent that Kenneth Lay was motivated by a genuine goodwill to prosper commercially when he merged two energy companies in Texas to form Enron. After its incorporation, Enron would later ride along the economic convenience created by deregulation of natural gas trade. Deregulation of natural gas market facilitated generation of vast revenues through sales at high prices. As the company’s revenue increased exponentially, human ingenuity infiltrated into Enron’s executive body. Consequently, executive officers and financial professionals within the firm adopted accounting principles that gave birth to what became an overt ...

Section A

Traditional management accounting techniques track an organization’s business performance on the basis of long-established systems and standards. Despite this, these techniques sometimes fail to respond to the rapidly changing business environment. Advanced and innovative business practices make certain current accounting practices obsolete or unfit. Numerous problems with traditional management accounting techniques include ineffective and inaccurate measurement of business performance in non-conventional manner. Over time, these practices need to adapt to the changing business characteristics which they tend to measure . Traditional management accounting is useful for those businesses offering narrow range of products/services and do not manufacture based ...

Introduction

With the emergence of a global competition, every business faces a challenge to capture more market share by improving the bottom line of its financial statements and reinvesting much of the earnings to expand operations. For this organizations implement tight internal controls so that none of the business transaction goes unchecked. In this regard, an auditor’s role is critical to track any possibility of fraudulent activity within the business finance. With such a concept in mind, this paper has been written to identify the roles and responsibilities which an internal auditor assumes within an organization. The major focus of this ...

Introduction

A recent research on management accounting culture change established how accounting practices are woven into the cultural fabric of any organization. The study adopted and explored theories of a series of cultural change interventions related to management accounting. The traditional accounting methods involved process costing, standard costing and job-order costing. The evolution of business environment was considered efficient because of its role in the accounting techniques. The new methods labeled as advanced management techniques were considered to provide tools of achieving a competitive edge. They include Kaizen costing, activity-based costing, value-added accounting, cost of quality, strategic management accounting and back-flush costing. ...

Situations that might lead to unethical practices and behavior in accounting

Opportunity is one aspect that may lead to unethical practice in accounting. Accountants normally encounter or are involved in transactions that have large sums of money changing hands. As such, the constant access to this money may provide the best opportunity for an individual to start siphoning small amounts of money, which cannot be easily recognized since the transactions deal with huge amounts of money. For instance, in transactions that involve billions, an accountant may decide to be siphoning as little as 100 dollars. Increasing financial needs make people to seek opportunities that may lead to unethical practices. ...

Corporate fraud is a serious offense that can have huge ramifications on society, clients and the business or organization itself. There have been famous cases of corporate scam that resulted in gigantic financial losses for firms, loss of their reputation and costly legal battles. Famous ethical scandals include: Enron, Arthur Andersen, Lehman Brothers, AIG, Barings Bank, etc. Lehman Brothers was involved in a scandalous ethical scheme and was bound to file Chapter 11 bankruptcy after its loan extension request was denied. The bankruptcy of Lehman Brothers was a shock to the economy and financial markets in the US. It was the ...

Introduction

An accounting framework essentially influences the way business entities delineates success. Traditional accounting predominantly concentrates on increasing the shareholder value while also influencing the bottom lines of the business in terms of its finances. However, an growing number of corporations now-a-days, are primarily interested in either the so called “double” or “triple” bottom line accounting. Their focus is not just on measuring the impact their business practices have on the financial bottom line, but also upon the impact their business practices have on their personnel, the societies in which they operate, as well as the environment surrounding them. ...

INTRODUCTION

The on job learning experience is acquired while working in a job setting which boosts career aspiration. They are positions in the public or private organizations which are structured and supervised for understanding the industry norms. Engaging in an internship program is a source of acquisition of knowledge and abilities for the participants. In the industry the participants get jobs on the basis of academic records and the relevant work experience which they possess. The acquired skills and experience ensures that the students succeed in securing jobs upon graduation. Participating in an internship program is considered as a best way for starting a ...

Business Research Report

Executive Summary

The foregoing CPA report by the public accounting firm reviews XYZ Corporation’s financial statement in the interest of audit reporting on a publicly traded, multinational corporation. The report addresses the International Financial Reporting Standards (IFAC) establishment of general accounting rules followed by International Accounting Standards Board (IASB) and International Federation of Accounts (IFAC) in control of financial audit.

Introduction

The CPA report by the public accounting firm reviews XYZ Corporation’s financial statement in the interest of audit reporting on a publicly traded, multinational corporation. The report addresses the International Financial Reporting Standards (IFAC) establishment of general accounting rules ...

Executive Summary

One Tel Communications was the fourth largest telecommunications company in Australia. It touches on matters regarding poor management, fraudulent misstatements, the use of remuneration packages for self-interest and lack of regard of accounting policies and legal regulations. These, together with other factors, have led the company to liquidation in 2001. This report summarizes the key facts from the start of the company business, its capital structure, the people involved in the accounting scandal, the auditing scenario, factors that contributed to the business failure, the audit risks existing at that time, to the conclusion and possible audit procedures that ...

Its Impact on the Financial Position and Performance of Australian Companies

Abstract Lease Accounting is an area which currently has different practices proposed in IFRS and US GAAP. Even lease accounting practices are not interpreted in the same way by different companies within IFRS. This causes confusion for the investors as due to different interpretation by different companies leases are accounted for differently in the annual report and accounting books. This causes problem for regulators, government and investors to judge and rate companies uniformly. As an effort to consolidate and bridge the current gaps, IFRS and US GAAP have come up with Exposure Draft –ED 202. There are some ...

Current Situation

The situation presents the unethical practices by Enron’s Chief Financial Officer, Andy Fastow during a period of massive violations of ethical and accounting practices. Fastow started Special Purpose Entities (SPEs) such as LJM which unethically grew and boomed out of Enron’s shares and assets (Arbogast). There was a serious conflict of interest since Fastow owned a big share of LJM. Before I joined, Global Finance as lawyer in the Tax Department, I had heard of LJM being a special purpose vehicle to purchase assets from Enron. I obtained a memo addressed to Enron’s executives in which Fastow sought exemption from Enron’ ...

Being the largest Middle East economies, Egypt is starting its changes in the market economy. It has experienced significant changes in its accounting system in the last two decades. The evolution of accounting in Egypt demonstrates its capability to adapt in response to changing conditions. Meanwhile, various cultural aspects have greatly influenced accounting practices in Egypt. Although Egypt is leading Middle East economies, it has experienced cultural mistakes and challenges in transforming its accounting systems and standards. Thus, this paper will discuss cultural challenges and mistakes that Egypt has encountered in the process of changing its accounting systems and ...

Introduction3

Core Standards Project4 Toward an International Code of Ethics.5 Conclusion..7 References..9 Introduction Since the 1980s, the transformation of accounting in the global financial landscape has led to significant transformation in ethical rules to professional practice. In the international acquisition context, the development of a new ethical accounting best practices framework establishes a baseline decision model for managing challenges in cross-border transactions. Multinational corporations obliged to accounting standards compliance in both the home country, and foreign jurisdictions work toward resolving ethical dilemmas according to legal rules of preemption, and in conjunction with international policy guidelines. In ...

1. Given the corporate ethical breaches in recent times, assess whether or not you believe that the current business and regulatory environment is more conducive to ethical behavior. Provide support for your answer. Unethical conduct has been all-pervasive in all sorts of business for the last few decades. Many changes have taken shape in the business environment giving rise to immoral behavior and the inclination for corruption. Unethical accounting behavior is the consequence of the growing corruption that has engulfed the corporate world. After the unethical accounting scandals like the Enron, WorldCom, Peregrine Systems, Adelphia and Tyco International ...

CHAPTER ONE

1.0 Introduction This chapter provides the background to the study. It details the problem statement, research objectives and research questions. 1.1: Background of the Study As businesses grow out of the start-up period and expand their capital and operation, size and product or service offerings, their accounting based informational needs some changes (Bodnar, 2010). Most small business start-ups begin with an off-the-rack accounting based package for instance Peachtree or QuickBooks and run the basic accounting reports from them. However, there comes a time when the environment, government, accounting rules and standard and other technological based factors force ...

Question 1 - What is a sub-prime mortgage?

The consumer financial protection bureau defines sub prime mortgage as “A subprime mortgage is generally a loan that is meant to be offered to prospective borrowers with impaired credit records.” A subprime mortgage is a kind of mortgage granted to borrowers with impaired or zero credit history. A prime or conventional mortgage is not offered to such borrowers as they have greater risk of defaulting. These loans are also called interest only loans and do not require any principle payments for initial few years, number of which is settled among the borrower and lender The interest charged on such ...

Profession

Introduction Lessons from historical crisis management scenarios Lesson that are most important to consider in crisis action planning include the impacts of catastrophes on the shareholder and the crisis as opportunity. The consequences of catastrophes appear to be the most significant element to consider in the effective management. One of the effects that are as a result of catastrophe is the stock price. For example, the catastrophe would result into an increase or a decrease in the stock price in the market. This would of significant value to the crisis manager when they are formulating an action plan

Considering the abnormal to be normal

It ...

Introduction

It is a requirement for all the financial institutions to be accountable for their financial activities and present their financial statements in such a way that they are not fraud. This means that they have the mandate to provide financial information that is trustworthy and reflect the mission of the entire institution or company. However, this has always not been the case where in some cases various financial corporations and companies try to present financial documents that do not reflect their shareholders’ interest. Because of this, the stakeholders who have interest in them are only left frustrated hence, lose their interests ...

Meaning, Completion and Implementation of the Accounting convergence

IFRS is the framework of accounting employed by economic leaders globally like Japan, Canada and European Union among others. This accounting framework is founded on the reliability, comparability and understandability tenets. It employs the International Accounting Standards (IAS) and has over time gathered, built and incorporated accounting principles and ideas that are globally used (Saudagaran, 2009). The U.S. GAAP framework is a conglomeration of rules used to demonstrate how to account for transactions in an appropriate manner. This accounting approach presents the transactions with full disclosure, consistency and reliability. The level of clarity makes it easier for even for ...

Literature review

Introduction Corporate governance, the system used in the administration and control of corporate bodies has undergone a history of evolution to the point which it is today. In the last two decades, the advancement in technology have also seen a drastic change in corporate governance where the distinction between ownership and management has become more and more blurred and directors and management are usually now part owners of the firms that they work for. Ideally, corporate governance is a system which involves the establishment of a system of the management and control of companies through complex mechanisms of regulatory frameworks and money ...

Accounting: “the origination and development of China’s audit firms: ‘translation’ meets self-determination” by Shuwen Deng and Richard Macve. Presentation at the Interdisciplinary Perspectives on Accounting Conference 2012.

1. The authors state, page 3-4, “our primary research question is to explore how far it is realistic suppose that one or more indigenous Chinese firms can occupy a position internationally alongside the current Big 4”.

a. In your own words, provide a few details of what they mean – about 3 – 5 sentences.

Some people are predicting that the next big international firm will be a Chinese indigenous CPA firm – one that is purely a ...

Overview of the National Banking Sectors in North Africa

Banking regulations on the acceptable standards have become a central point of discussion in most developed nations especially due to the recent financial crisis. A program or scheme that enforces the channeling of resources into more investments would boost the financial stability of the economies of most developing nations. A study of the regulations in the banking industry on the economic growth can reveal a lot concerning the economic growth in some specific South Mediterranean countries (Algeria, Tunisia, Morocco and Egypt). The banking efficiency and its proximity to internationally acceptable standards are measured using convergence methodologies such as β-convergence, Meta Frontier ...

A) Briefly discuss the treatment of employee stock options under each of the following:

1. Previous FASB/APB/CAP on Stock Options [Hint APB Opinion #25] APB Opinion 25 calculated stock options employing the intrinsic value technique, in which compensation expense appeared to be realized as the stock price surplus at the grant date divided by the price of option exercise. This technique however overlooked any possibility that the stock price might go beyond the exercise price, since most stock options possessed exercise prices as a minimum equivalent to contemporary market values, compensation expense thus not acknowledged. 2. FASB SFAS ...

Task 1

This section presents a brief report of the research conducted on local accountancy firms. It clarifies the accounting services offered to the clients. It begins by giving an in depth understanding of the various services offered and the utility added to the client. Services generally range from independent auditing, tax advisory and financial planning advisory.

A research on services offered by local accountancy firms indicates that most of local firms offer both managerial accounting services and financial accounting services. Under managerial accounting services, the firms aid clients with the understanding of how management decisions should be made for business performance. ...

Introduction

The 1950’s were a remarkable period in the business world. The world at large was on a recovery path after two devastating world wars which had changed the focus of business towards the provision of military goods than on providing quality value to customers. Production was mainly concentrated on few organizations and was characterized mainly by bureaucratic methods of organizational management. It was during this period that there was increased pressure to develop internal methods of cost evaluation that would aid in the decision making process of managers. It was necessary to have in place relevant accounting information that was ...

Contribution of entity theory to accounting practice

Entity theory was developed as a result of the inadequateness of the proprietary theory before it in explaining the treatment of a businesses assets and liabilities in relation to ownership. The proprietary theory had been developed at a time when the size of businesses was relatively small and the ownership was mainly sole proprietorship or partnerships with small number of partners. In this situation, the ownership of the business and its relationship with its creditors could not be adequately explained in accounting terms since the fact that a company is an entity separate from its owners could not be effectively disclosed under the ...