The paper focused on single greatest change agent facing accounting in the next 15 years which is technology. Emerging trends in technology will fundamentally alter the way in which both business and accounting will be conducted. The measurement and reporting of business transactions, long considered a core competency of accountants, will be challenged by the information economy, forcing accountants to justify their role in business. The foundations of the profession will be eroded by the opposing demands of emerging services and established values. The prospects for accountants have never looked better: There is a growing demand for the provision and analysis of information in the new economy. But the value chain that accountants used to dominate, that between the firm and the long-term shareholder, is now on the margins of a wider environment marked by day traders, continuous media coverage, and rapid equity shifts.
Accountants/Financial Managers have yet to come up with a strategy, much less products, for how they will take a larger share of this marketplace. While continuous reporting and assurance are promising, there is no guarantee that the market will grant accountants a monopoly on these products; their legally protected role as auditors might actually be an artificial barrier to tackling competitive threats head on. It makes little difference to the emerging global economy whether its information processing needs are carried out by professionals called "accountants" or someone else. But that choice will clearly determine the future of the profession.
Relevance of Accounting in 2015
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Central to the future of accounting is the continuing relevance of accounting measurement for corporate management and firm valuation. The balance sheet and income statement are ceasing to function as relevant measures of a business as underlying processes undergo profound changes.
In the paper written about thirteen (13) years ago, Alles et al enumerated the changes in the field of accounting which some have already taken place and some are now unfolding right before our very eyes:
- Many companies only own research and development (R&D) and outsource distribution and manufacturing.
- Physical possession of inventory becomes meaningless where supply chain management is key.
- Businesses have adopted unorthodox ownership structures emphasizing alliance, tracking stocks, profit sharing agreements, and opportunistic joint ventures.
- Intellectual property is a primary source of a firm’s market valuation, but traditional assessment methods understate its value.
But above all these profound changes in the accounting field, the biggest goes to new technologies:
- Information capture technology
- Access and monitoring technology
- Telecommunications and inter-networking
- Pervasive computing
- XML standards
- Automatic workpapers
- System monitoring architecture
- Automatic inventory tracking disclosure
Broader and deeper financial statements, with drill downs and user based presentation, will push the limits of the current standards and acceptable practices. Financial Managers, as well as accountants and auditors, will have to get used to this environment and adapt their practices to a new world.
As the spread of the Internet revolutionizes access to information and spawns electronic commerce, it is bound to profoundly change accounting information systems and professional practices in auditing, financial reporting, management accounting, tax accounting, forensic accounting and business intelligence and counter intelligence. Many of these developments will be affected by future legal changes relating to electronic transactions, on-line contracts, and intellectual property rights. Accountants and/or Financial Managers, being information providers, are natural agents and users for information technologies. In an environment of continuous contact with customers, electronic care, and continuously changing costs and benefits, new roles and activities are emerging.
In a computer environment that will link many processes, intelligent agents performing many functions, deskbound and distributed, monitoring features will emerge to facilitate accounting practice and enable online auditing. Risks and exposures, particularly of intrusion and viruses, will present new challenges to accountants.
Future Challenges of the Accounting/Auditing/Financial Profession
With these changes already unfolded in the accountancy profession, the question is: Is the accounting profession attempting to “reinvent” itself, or what? As a future Financial Adviser, I agree with those who believe that the accounting profession should take the initiative to expand its role despite of these many changes mentioned above or to be flexible under any circumstance.
Even with the economic downfall or so-called “recession” in the United States of America, Europe and other parts of the world, I agree that the accountancy/financial profession will continue to be in demand whether there is economic growth or downturn aside. A Hongkong-based accountancy firm believed that Accountants/Financial Advisers in good and bad times, will have roles to play. One should not think that if the economy is down, there’s no more need for financial managers/accountants. Generally, there is a need for more accountants because of more onerous and more complex standards; and also in the longer term as economies will grow.
With economies around the world suffering from the global downturn, the role of the qualified accountant has huge importance. Qualified accountants/financial managers have key roles to play in steering organizations through the current turmoil, enabling them to manage risks and take decisions effectively, while influencing strategic plans to drive future business growth. In short, they can play a major part in ensuring the causes of today’s problems are not repeated tomorrow.
On the other hand, when the economy is booming, there is also a corresponding demand of qualified accountants given more resources, more businesses, more wealth to manage. In conclusion, the predictions/statements of Alles et. al in their article: “Accounting in 2015” are already realities of today. In the modern world, basic accounting, auditing and accounts preparation skills are increasingly taken for granted. On top of these, qualified accountants need to demonstrate complex business and managerial skills.
They need analytical ability and an understanding of the interconnectedness of risk across complicated entities. They also need the ability to communicate with peers and external stakeholders so that they can understand the future vision for the business, as well as clearly understand its past performance. Business success depends on the ability to make sound decisions in a risky, uncertain world. Qualified accountants can help management teams to make those decisions, based on information drawn from accurate data and informed by broad business knowledge.
These may be tough times for all organizations around the world, but they are also potentially exciting and enabling times for qualified accountants who have the opportunity to step up and take the lead in driving future business success. Rapid changes in the future even after 2015 in the accounting environment and the obligation to maintain technical competence confirm the need for accountants to continuously embark on further education to remain technically proficient and relevant.
Thus, whatever the future will bring, the role of the accountants/financial managers will evolve in the future to encompass new challenges such as global economic uncertainty and volatility, fluctuating energy prices, and turbulent currency markets, along with a shift in economic power.
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