The future of accounting
Last years were a major watershed in the history of the profession. Major corporate scandals rocked the world. Great bankruptcies were notorious because they had been reporting profits instead of losses.
How can you play the game if you don’t know the score? Worse, what if the scorekeeping is misleading? These were the significant questions that society has to face.
The bankruptcies were caused by liabilities that were not reported on the balance sheets of these companies. They were termed “off-balance sheet liabilities”. Something had to be done.
For several decades now, the primary criticism directed against rules-makers. The complaint has been that there are too many standards. Accounting rules have become too nit-picky and costly to implement. The quality of financial statements is only marginally enhanced by new rules. – Thus the criticism.
The government is going to have more of a role in promulgating accounting rules in the future. This is not a good thing. The Code remains complicated, invasive, and contradictory.
Another trend of recent decades has been the concentration of public accounting. The future of this trend is unclear. Elitism and the “good old boy/girl networks” will push the trend in the direction of concentration. The Internet pushes it in the opposite direction.
Today the accountant can operate on a truly global scale. Next day air, long distance telephones, video conferencing, faxes, and e-mail can partially offset the lack of a local presence. Customers who are smart will value reliability and personal attention over corporate bigness in their accountants. Computer software is reaching the limits of their potential. This may seem like you are really sticking our necks out on this one.
The small businesses packages will acquire the more of the features of the big, expensive packages. However, bookkeepers must still use judgment on the treatment of transactions. That means that accountants must still manipulate the data in accounting programs. Internet banking is increasingly taking over the data entry function. That only can cover deposits and checks. Other business transactions still have to be entered in by hand.
Many public accounting firms are turning to consulting as their revenue generators of the future. Many predict the demise of the staples of public accounting – write up work and tax return preparation. Unfortunately for the public but fortunately for the accountants, increasing complexity of accounting rules and tax laws will increase demand for public accountant’s help.
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Last, accountants are going to be increasingly affected by the trends towards the paperless office. Already, tax returns can be filed on disk along with workbooks. Source documents can be scanned into such programs as Adobe Acrobat and saved on disk with the tax return file.
For all the glitz about equipment, rules, and globalization, accounting still depends on human beings. The age old qualities of reliability, caring, and honesty will remain the basis of the profession.
3. Look through the text and find the word that means the same as:
1. the number of points, goals, etc. each player or team gets in a game or competition;
2. a reason for not being satisfied;
3. a way of organizing a system, society, etc. so that only a few people have power or influence;
4. the quality of appearing very attractive, exciting and impressive, in a way that is not always genuine.
4. Which of the following sentences correspond to the text content?
1. Last years the financial situation was stable all over the world.
2. Liabilities that were not reported on the balance sheets of the companies became the reason for their bankruptcies.
3. Accounting rules are very expensive to implement.
4. The government will not announce accounting rules in the future.
5. The work of an accountant became easier nowadays.
6. The demise of the staples of public accounting is its future.
5. Answer the following questions.
1. Why is it possible to say that last years became a watershed in the history of the profession?
2. What are the main complaints of accountants?
3. What causes the concentration of public accounting and what pushes it in the opposite direction?
4. What work of an accountant can not be automated?
5. Will the bases of the profession change in future?
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