Essay on Report the Role of Accounting in Organizations and Society

898 Words Dec 11th, 2011 4 Pages
REPORT
The Role of Accounting in Organizations and Society

Accounting plays an important role in interfacing society and organization. As it is also mentioned in Burchell article “it is presumed that accountings are there to facilitate organizational and social actions.”As we know that accounting is helpful for structuring of organizational objectives, to reduce financial risk, to make financial decisions, it also helps organization to take into account different stakeholders interest like investors, suppliers, customer, etc, which automatically creates a strong bond between organization and society. There are three important accounting phenomenons’ that were discussed in Anthony Hopwood article.
Accounting as a changing phenomenon:
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English social conditions had also created a need for audit services and had produced accountants more highly skilled than any before , whereas in developing countries where there is no proper accounting system companies practices accounting in their own interest and may have excessive use of creating accounting to manipulate profit and loss, no proper audit or taxation practices.
Another reason of heterogeneous practices of accounting is social aspect where organizations are operating .It may be because of lack of education and accounting system. In growing economic such has India and China accounting practices are different than UK, Germany, US, etc it all because of organizational and social-cultural aspect.
There is also a huge gap between accounting researcher and accounting practitioner due to which there is still lack of standardization in accounting practices this is also a major reason of todays world financial crises, because when ever intellectual and researchers purpose new accounting amendment it takes lot of time to be implemented to change to organizational accounting practices, for example previously in UK companies where using UK GAAP, but after 2007 it is obligated to practice accounting under International GAAP.

New dimension of behavioural finance have been added into accounting, instead of looking simply at financial indices and the way in which markets are functioning at an aggregate level, behavioural finance has
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