corporate accounting assignment help

corporate accounting assignment help

Importance of Corporate Accounting

1. Introduction

Indeed, the work of accountants requires them to continually and generally rely on the work of others. This also applies strictly to civil society actors. This is because accounting reflects a complex network of national and international standards, as well as corporate and professional practices and ethics. The importance of accounting is defended by the large quantity of paperwork required for its proper delivery. Especially the actors in the capital market rely on high-quality financial reports and ensure that this process continues. This can be achieved through auditable processes and is supported by the capital markets, top stakeholders.

Accounting is one of the key functions in companies that must be performed with optimization motive. This function plays an important role in most companies, especially large-scale ones. The essence of accounting is to collect and process information, such as the financial situation of a company and its commercial performance, among others, in order to provide them to both internal and external users. In addition, accounting societies directly interact with society, providing them with informative guidance and trend analysis. It shows that the information provided by accounting can determine whether a company can attract capital on the capital market. Particularly, according to the definition of the role of accounting by Kaplan, expressed in 1, it seems to be of great importance, especially to the shareholders. It contributes to the effective use of assets, capital, or arguments, particularly by means of creditors. There is no centralization of these – accounting is a highly specialized field, with special requirements that qualify accountants to perform a very important job for the company.

2. Role of Corporate Accounting

The role can be concluded as follows: 1. Corporate accounting has a role to increase investor confidence in financial markets. 2. Corporate accounting has a role to increase the efficiency of investment allocation in financial markets. 3. Corporate accounting has a role to increase corporate economic value; this is supported by the fact that good accounting management will improve company performance. 4. Corporate accounting has a role to assess corporate business prospects. 5. Corporate accounting has a role to strengthen investor protection. It is proven by the many regulations that put forward the principles of “good corporate governance” where the implementation has a positive correlation with the value of the company’s stock.

There are numerous reports that corporate accounting has a major role in rebuilding the confidence in the capital market. It should be reviewed carefully because it will have an impact on all listed companies. Corporate accounting has an important role because it reflects the financial condition of a company. In Indonesia, before the introduction of PSAK that has been considered appropriate by international standards, companies were more inclined to use standard taxation regulations and accounting regulations that were not obeyed as they should. This fact resulted in companies not drawing up a balance sheet to be accountable to their equity owners because the balance sheet is considered to be a part of the company’s business secrets. Companies that want to go public must disclose their financial condition to the public and corridor accountants are invited to be transparent, professional, and responsible in the preparation of balance sheets and important company reports. Therefore, financial accounting is also included in this so that the results of the reports are really fair and in accordance with generally accepted accounting principles.

3. Benefits of Effective Corporate Accounting

Some companies have a short cycle where they can utilize their information only once every two or three years. This evening allows the business to make changes based on historical data, which are particularly beneficial. Moreover, the business party navigating to this financial system can visit reports and increase data with theoretical knowledge because it uses pilots. Businesses must include their documentation in the information collected from the audit that is being made in conjunction with the accounting sector including reducing the error of the report. Businesses may also contain reports of negative financial statements presenting capital requirements to close the company’s circulation, etc.

One of the benefits of effective corporate accounting is the budgeting and forecasting for the company. Individual companies can use the data that has been created through accounting to estimate the amount of future costs of the company, i.e. sales or revenue generated, distribution and marketing expenses, R&D expenses, etc. All the information will help the business to establish the profit that can be expected in the future and accordingly make decisions contrary to the organization’s objectives. The information may also include data that can be used to create reports based on the budget reports. Issues may involve utility costs for every department, contingent liabilities, warranties on sales, price effects, etc. When the individual business needs these data, they can view reports that present estimates and categorize different assets, liabilities, and equity rates.

4. Challenges in Corporate Accounting

For the investor, it is important to have accurate, reliable, independent annual reporting. There are too many cases where the security of investor funds has been compromised due to poorly prepared financial statements. Thus, there is a growing awareness of the importance of corporate financial reporting. However, what constitutes a good annual financial report could be interpreted in a number of ways. Specifically, board members of corporate reporting continue to represent the perspectives of a variety of stakeholders including the investing community, especially in the financial industry, rendering corporate evaluation a personal task. Even though financial statements report fairly straightforward information, International Financial Reporting Standards (IFRS)-based (and generally accepted accounting principles (GAAP)-based) reporting remains a complex phenomenon due to the various methods for ensuring the degree of freedom for which corporate accounting is criticized and the existence of administrative choices. Further, investors are increasingly demanding, in the face of the economic crisis, more research-based reports in the corporate financial industry. Their evaluations often result in poor decisions which have negative effects on the customers’ welfare. Clearly, the value of corporate accounting must be directed towards providing useful information to corporate stakeholders which can then be used to value the investment provided.

Challenges in corporate accounting today, businesses operate in complex business environments, each with its specificities and demands. With increasing globalization, historically national economies are becoming ever more intertwined. This means businesses are investing in emerging economies, expanding their range, and doing business internationally on a scale never before seen. The increasingly information-driven, knowledge-based economy requires highly developed and flexible information technology (IT)-based financial reporting systems to ensure the free flow of capital and attract the necessary investment derived largely from third-party accounting information which is perceived to meet the conditions of transparency, credibility, and comparability. However, businesses are faced with the challenge of keeping up with the regulatory and statutory environments in which they operate. Moreover, the nature of the ownership of businesses has changed significantly over time with the corporate structure becoming more complex as businesses seek to extend their reach. This requires increasing regulation and reporting by the business.

5. Conclusion

Corporate accounting is significant and plays many roles in the current economic environment. It enhances the corporation’s operation and progress in terms of efficiency, economy, and results. The traditional-oriented (or real economy-oriented) economic concept believes that the economic value created from the production, service, and trade of material goods is the direct source of economic development. In contrast, the modern-oriented (virtual economy-oriented) economic concept regards corporate income or asset prices created by labor management practices, holding various financial assets that have appreciating value, as the most direct source of economic development.

The paper examined some of the key roles of corporate accounting, including financial reporting and internal management control. In the traditional or real economy-oriented accounting concepts, financial reporting is currently the core part of accounting, and its significance is to provide decision-making information to stakeholders such as investors, creditors, and management through financial statement changes. As part of the modern or virtual economic concept, internal management control aims mainly at providing stakeholders within the enterprise management team with some management information. And in order to regulate financial reporting and internal management control, there are audit and auditing process regulations under International Auditing Standard (ISA), and laws and regulations such as the Enterprise Bankruptcy Law.

Corporate accounting plays an important role in decision making as accountants are an important part of the decision-making process. They work as a bridge between strategy and monitoring. In this manner, the corporation would invest in economically valuable companies, which will also be an important measure of improving the quality of accounting information. As such, corporate accounting from an ethical perspective will benefit the development of the real economy.