Business Organizations Face of Problems †Myassignmenthelp.Com

Question: What Is The Business Organizations Face Of Problems? Answer: Introduction Nowadays, accounting has become a very tough subject for the businesses. Business organizations face lot of problems to perform accounting practices and develop accounting standards for the businesses. They recruit accountants to overcome all these problems and issue in an effective manner. Along with this, accountants adopt and implement conceptual frameworks issues by the IASB (International Accounting Standards Board) and AASB (Australian Accounting Standards Board) to perform accounting practices in a more accurate manner. These conceptual frameworks play an important role in the application of accounting standards within organizations. Apart from this, this research paper is valuable to portray examples of where accountants are able to exercise judgment in the application of accounting standards. The paper is beneficial to describe that accountants are able to exercise judgment in the application of accounting standards. Accountants Judgments in the Application of Accounting Standards In current, accountants highly contribute in the application of accounting standards within the business organizations. With the help of these accounting standards, they only want to ensure that all the accounting practices of businesses are going in the right directions (Australian Government. 2016). Along with this, the comprehensiveness of accounting standards is only identified by the framework identified by the AASB (Australian Accounting Standards Board) and IASB (International Accounting Standards Board). These accounting standards are essential for the financial reporting of the businesses. Moreover, according to the framework issued by AASB, accountants are required to exercise as a minimum three kinds of judgments in the applications of accounting standards. Accountants mainly exercise semantic, pragmatic, institutional judgments in the application of accounting standards within business organizations. These judgments are important to fulfill all the conditions of framework and to resolve all the issues related to accounting practices of the organizations (Dennis, 2015). On the other hand, there are lots of examples that portray that where accountants are competent to implement judgments in the application of accounting standards. For case, the first example is related to the application of principles based accounting standards within organizations. Principles-based accounting standards offer accountants with guidelines which have need of the application of professional judgment within organizations (Van Beest, 2009). Professional judgment is essential to develop unbiased financial reporting for the businesses. Along with this, these principles based standards are useful in the detection of different accounting transactions in a proper manner. These standards include uncertainty expressions like influence, probable, control, etc. that have need of the exercise of professional judgments of accountants. IAS 27 consolidated and separate financial statements is a major example of the principles based accounting standards in which accountants were able to exercise semantic judgment in an effectual and a more comprehensive manner (Dai, 2010). In addition to this, the second example is the application of code of ethics where accountants are able to exercise judgment in an appropriate manner. The code of ethics develops essential principles of professional ethics for accountants of business organizations. Along with this, code of ethics offers a conceptual framework that accountants may use in the application of accounting standards in the accounting practices of business organizations (Chand and White, 2006). The code of ethics has been derived from the IESBA (International Ethics Standards Board of Accountants). The professional accountants are proficient to implement judgment in the implementation of code of ethics and accounting standards as well. They ensure that these codes of ethics are fully in compliance with the principles and guidelines of accounting framework issued by the AASB and IASB. Moreover, they also ensure that they do not implement an appropriate code of ethic in their judgments. All the code of ethics and accounting standards are able to meet the requirements of the IESBA and AASB in a proper manner. Accountants use the conceptual framework in the implementation of code of ethics; so they can recognize threats those may create troubles in the application of accounting standards (Heidhues and Patel, 2011). In this way, the application of code of ethics is the major example where accountants put judgments and establish fundamental principles according to conceptual framework of accounting. In the same manner, the implementation of the Anglo-American Models of Corporate Governance and Financial Reporting is third example that portrays the proficiency of professional accountants to exercise judgments in an appropriate manner. The Anglo-Saxon model is also recognized as Anglo-Saxon model (Wu and Patel, 2014). Along with this, the accountants provide positive judgments on the model. This model is required to manage and control the accounting as well as financial practices of business organizations. The Anglo-Saxon model is able to meet the requirements of conceptual framework of accounting in an ethical manner. Moreover, the major characteristic of this model is that it pays its attention on the shareholders of business organizations. The professional accountants make use of the Anglo-Saxon model in the application of accounting standards. The main reason behind it is that with the help of this model they make accounting standards to meet the requirements of people of the organizations. Also, by using this model, Accountants of business firms use the concept of fair value in setting of accounting standards for businesses (Heidhues and Patel, 2012). Hence, it can be believed that, in the adoption of the Anglo-Saxon model, professional accountants are able to exercise professional judgment in an effectual and a significant manner. On the other hand, the other example where accountants are proficient to exercise judgment is the recognition of accounting auditing standards in the preparation of financial statements of the businesses (Turner, 2010). It is true that business organizations do not address particular accounting auditing standards when they prepare financial reports and financial statements of businesses. In this situation, accountants professional judgment applies the required accounting standards to improve the accuracy of financial reporting of businesses. Moreover, in this case, the framework issued by AASB provides support to the accountants professional judgments. The main reason behind it is that, prior to implementation of judgments; professional accountants are obliged to fulfill the criteria that are defined in the framework of AASB (Australian Government. 2016). In view of that, the recognition and application of accounting standards can be considered a major example where accountants are competent to apply judgment in the appliance of accounting standards. In addition to this, another example is related to the audit process of businesses where professional accountants use judgment to apply accounting standards in an appropriate manner. The professional judgment is required to the proper conduct of audit. Moreover, the accounting standards play a major role to reduce the errors and to improve the efficiency of audit process of businesses. According to the AASB framework, auditors cannot conduct audit without the application of relevant accounting auditing standards, skills, knowledge, facts, experiences, and judgments. In this situation, professional accountants suggest appropriate accounting standards and provide their judgments; so they can conduct audit in a proper and an accurate manner (Chand and White, 2006). So, this is one of the major examples that portray that accountants are proficient to use judgment in the relevance of accounting standards. Accountants to Be Able To Exercise Judgment in the Application of Accounting Standards The above analysis shows that accountants professional judgments are required in the application of appropriate accounting standards. But, it is a major subject of concern that it is appropriate for accountants to be able to exercise judgment in the application of accounting standards. I believe accountant must be able to exercise judgment in the application of accounting standards. There are numerous reasons behind it. For case, the major reason is that if accountants do not exercise judgment then the chances of errors will increase in an automatic manner. Business firms would not able to ensure that their financial reporting and financial statements are accurate (Cassar and Bezzina, 2015). Apart from this, if accountants will not be able to exercise judgment then the absence of ethical standards will be clearly visible in the accounting practices of business. On the other hand, as declared in the AASB framework, professional judgment plays a major role to understand the major conce pts of accounting that are defined in the framework. Professional judgment is a key skill for accountants; so they may adopt and implement accounting standards under a principle based accounting regimes. By considering the professional judgment, accountants provide a conceptual framework for the preparation of financial reporting and financial statements accurately (Turner, 2010). In view of that, it can be said that, it is suitable for accountants to be competent to exercise judgment in the relevance of accounting standards. Conclusion On the basis of the above study, it can be said that, professional accountants play a major role in order to exercise professional judgments in the application of accounting standards within organizations. Along with this, the absence of professional judgments may show the inaccuracy in the accounting practices, auditing process, and financial reporting of business organizations. So, business firms should consider professional judgments in the adoption and implementation of accounting standards to improve the efficiency of businesses. References Australian Government. (2016). Framework for the Preparation and Presentation of Financial Statements. Available At: https://www.aasb.gov.au/admin/file/content105/c9/Framework_07-04_COMPjun14_07-14.pdf [Accessed On: 13th May 2017] Cassar, Dr. V. and Bezzina Dr. F. (2015). ECRM2015-Proceedings of the 14th European Conference on Research Methods 2015: ECRM 2015. UK: Academic Conferences Limited. Chand, P. and White, M. (2006). The influence of culture on judgments of accountants in Fiji. Australian Accounting Review, 16(40), pp.82-88. Dai, X. (2010). Study on relative problems about the accountant professional judgment ability. International Journal of Economics and Finance, 2(3), p.72. Dennis, I. (2015). Auditing Theory. NY: Routledge. Heidhues, E. and Patel, C. (2011). IFRS and exercise of accountants professional judgments: Insights and concerns from a German perspective. Working Paper, Macquarie University. Heidhues, E. and Patel, C. (2012). Globalisation and Contextual Factors in Accounting: The Case of Germany. USA: Emerald Group Publishing. Turner, E. (2010). Addressing the challenge of professional judgment. Available At: https://www.cpacanada.ca/en/connecting-and-news/blogs/audit-quality-blog/2012/october/addressing-the-challenge-of-professional-judgment [Accessed On: 13th May 2017] Van Beest, F. (2009). Rules-based and principles-based Accounting standards and earnings management. NICE Working Paper 09-114. Wu, H. and Patel, C. (2014). Adoption of Anglo-American models of corporate governance and financial reporting in China. Australia: Emerald Group Publishing.