ACCOUNTING

ACCOUNTING

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1. Accounting is the process of providing information used by organizations as a means of communication in order to make important economic business decisions. This economic information shows the financial activities of a company. Accounting is useful for the preparation of financial reports that show the organization’s annual and quarterly performance. The information used in accounting has to be identified and measured. For the information to be measured, the company has to know the value of its assets and liabilities. Accounting information is communicated through annual reports and accounts, management accounting reports depending on who requires the information. Financial statements are used to communicate accounting information (Das, 2011).

Accounting information is very beneficial as it shows the financial position of a company. It also indicates the performance of an organization over a period. A company’s performance is measured by the profits it generates. The main objective of accounting is being accountable. The objective of public and private companies is to make profits, and they are accountable to their shareholders, employees and their customers.

2. The purpose of corporate governance is to guarantee the success of a company and accountability of the people in the business. Stakeholders in a company include shareholders, creditors, customers, board of directors and employees. For good corporate governance to be effective, it is essential to communicate information effectively and encourage stakeholders to attend general meetings. Corporate governance ensures that companies recognize their legal and social obligations to their employees, investors and creditors. For effective corporate governance, the board should have relevant skills to run the organization, and they should review and challenge the organization’s performance. The board members of a company should be people of high integrity and companies should have a code of ethics for its directors for it to have good corporate governance. Corporate governances ensure that an organization is run in a professional manner and is there is accountability to ensure the company brings in sustainable profits. For a company to be successful, accountability through the publishing of financial statements and disclosure of a company’s operations is necessary. Good corporate governance ensures that the interests of the shareholders of a company are taken into account. The objective of good corporate governance is to ensure that there is prevention of malpractice and fraud. Due to the high profile, collapse of large number companies there has been the emphasis of good corporate governance (The Importance of Corporate Governance, 2009).

3. An accountant’s integrity is important because accountants with integrity are knowledgeable, as those who lack knowledge do not have integrity. An accountant with integrity knows that their responsibility is providing good accounting practices to their company. An accountant with good integrity is honest, and their integrity is not compromised by the desire to collect higher fees. An accountant with high integrity is confident and does not take advantage of the organization for personal gain or use the company’s confidential information for their own gain. An accountant should maintain a high level of integrity and discipline that goes beyond the code of professional conduct, and they should be straightforward in a business relationship.

4. Technology has affected accounting profession in many ways. Technologies such as computers are making work done faster; the work is cleaner and easily done. The rate at which new accounting technology is being introduced is making it difficult for accountants to keep up. The impact of technology in accounting has increased functionality, improved accuracy and has better reporting systems. Technology such as computerized accounting systems has improved timeliness of accounting information. This has enabled accounts to prepare accurate financial information in a short time (Fricke, 2010).

References

Das, B. (2011) What are the main objectives of Accounting Retrieved from <http://www.publishyourarticles.org/knowledge-hub/accounting/what-are-the-objectives-of-accounting.html.>

The Importance of Corporate Governance (2009) Retrieved from <http://www.applied-corporate-governance.com/importance-of-corporate-governance.html>

Fricke, A. (June 2010) The Impact of Information Technology on Today’s Accountant. Price Water House Coopers