Social Issues in Accounting, Essay Example

Those who do not deal directly with accounting may falsely believe that it is rough handling figures and producing financial reports as well as making finance-related predictions for the future. In fact, accounting is a diverse sphere that is heavily influenced by social, economic, ethical and other factors that affect the work of an accountant, his or her decisions as well as the way of making them. Multiple constraints and personal considerations also play a role, which is essential to be noted. However, the subject of the present paper is to identify the areas in which a student of an accounting course may progress as a citizen, advancing the knowledge of social issues that find their reflection in accounting and forming the ability to respond to them adequately and critically.

Responding to Risk

Mitigating and responding to risk has become a central social issue nowadays and has started worrying all organizations without exception. In classical accounting it was believed that precise reporting and forecasts can make a company successful no matter what. However, some examples including the 9/11 and Katrina disasters that touched upon the USA and ultimately destroyed hundreds of enterprises, undermining the confidence and belief in future for many others. Logically, a new area of accounting emerged as a natural response to the natural conditions and has reflected the social needs for security and relative assurance of probability of certain events.

This function is now met by accounting that has included the risk element as not an additional and optional one, but as a present-day reality and necessity that should not be overlooked. Advancing in the course of accounting, an individual has to become able to assess the necessity of risk consideration as well as to design proper tools that will individually fit the profile of the company in which he or she is employed to allocate resources adequately and to enable the company to fight the emergency that may await it in the nearest future. Such financially secured measures, though being an additional financial burden, still have an enormous potential in securing the assets of shareholders, in increasing the company’s stability and to provide popularity and a good reputation with customers. For this reason the social issue of security and responding to risk has become the central concern for the 21^st century accountant in relation to the social dimension of work.

Taxation and Allocation of Resources

It is obvious that there are no entrepreneurs in the world who would not complain of high taxes and expenses their companies suffer. In some countries it is truly so, but the state always justifies such high revenues with various social programs to which they allocate the money of taxpayers. The country provides social services, pays pensions and subsidies for vulnerable groups of population; it provides for the maintenance of public schools and hospitals, prisons etc. to make all these facilities affordable for all citizens of the country without exclusion. Those thinking that taxes are high because high-rank officials are thieves are deeply mistaken because all resources find their way to funding governmental and welfare programs.

Accountants become the mediators between dissatisfied companies and the government, seeing the true value of each company’s contribution to the state budget and the way these resources are spent. Studying at the accounting course, every student advances in understanding the basic peculiarities of the taxation system’s functioning and becomes able to identify the key areas that are underfunded or neglected. Tax revenues are essential for any democratic state to function normally and to provide welfare for its citizens; every one living in the country makes his or her own contribution by means of paying taxes, ensuring the overall well-being, which is of key importance in accounting.

Integrity and Accountability Communicated to Shareholders

Accounting has become the central source of information for investors and customers who make their personal judgments about the company’s profitability, sustainability and therefore reliability. According to the judgments they further on decide whether to leave their assets with the firm or to take them to another enterprise that will show better performance results. The accounting course teaches students to identify the spheres in which a personal attitude is applicable, and where it may harm the enterprise in any possible way. Financial reporting is a dry sphere devoid of evaluative elements; nonetheless, the same figures can look in a different way when handled by different people. Surely, living in a democracy and being a critically thinking citizen makes a person entitled to have personal opinions, thoughts and rights. However, in accounting these spheres intermingle – it often occurs that irregularities in accounting are caused not by lack of the accountant’s efficiency, but because of the administration’s will to conceal some problems and challenges the firm is currently experiencing.

It is unethical and immoral to help someone solve their problems at other people’s expense – this is what the morale and the social code of a true citizen calls to. Business scandals and financial machinations have become the most popular events discussed in the media recently; this happens because those responsible for the fraud or failure take their time to announce the results, making false reports and hiding the facts. Such a situation should be totally unacceptable for an accountant to get involved in scheming of such types and to become the accomplice in fooling the general public of his or her country.