Accounting being the professional process of measurement, processing, and communication of financial information about economic entities, it serves a very critical role in ensuring the success of the bodies in question. These entities are not just businesses and corporations; accounting covers a vast area including non-profitable community-based organizations. As such, it helps in promoting the well-being and development of the society. So what exactly is the role of accounting in the world today?
The purpose of accounting, as far as financial organization is concerned, is to accumulate and report financial information on the performance, financial position, and most importantly the cash flows of the business. This information then is used to reach decisions about how to manage the company, or invest in it, or lend money to it. The point here is the fact that accounting provides the financial standing of the company as far as its assets and liabilities affect production, and ultimately its profitability. It is from which point the industry analyses its financial options geared towards boosting profitability. By recording this information in records with accounting transactions, the organization can speed check on its expenditure and able to make decisions on the cost-benefit approaches to adopt. The role of accounting, through the accountant, in this case, can be summarized as generating and/or organizing income statement, balance sheet, statement of cash flows, statement of retained earnings, and the disclosure that accompanies these statements ( Francis, Khurana, & Pereira, 2003).
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On a community level, the role of accounting in the society can be said to be collecting, analyzing and communicating economic information. It is true that the society is constituted of four main areas; the social, economic, organizational and political spheres. It is also true that for the holistic growth of the community, it is essential that these areas, as much as individuals, need to coexist by establishing relationships with each other. For this to be achieved, the spheres need to communicate effectively with each other, and that is where accounting comes in. It provides the information that facilitates this communication through its interpretation ( Burchell et al., 1980). Accounting information, in this case, serves a variety of functions including assisting users in making informed decisions, as it relates to the effective allocation of resources, which by nature are scarce. The information shared, in this case, is a potent influence in society.
However, this may not always be the situation, according to Islam (2017); the future of accounting is set to change drastically in the next few decades, affecting the manner in which it delivers its services. The first change that the profession is likely to go through is the phase of increasingly sophisticated and smart technologies to enhance their traditional ways of working. This visions a future where software systems and applications, as well as social media, will be heavily relied upon to improve collaboration, disclosure, and engagement with both stakeholders and the broader community. The good news is that this future will tremendously facilitate the role of accounting as is known in the current era. Information will be readily made available for the global world, that is, both the global society and the global community. Social media is expected to reveal more data than any corporate assurance report, probing more accountability and openness on the part of the operations, and stakeholders will use tools to interpret ‘big data,' thereby facilitating the activities of big corporations and societies. This will be a particularly crucial development because already technology is promoting the growth and expansion of communities and organizations on a global scale. It is essential, therefore, that the traditional systems of accounting operations also adapt to these changes to make sure it is not overwhelmed in the process.
References
Burchell, S., Clubb, C., Hopwood, A., Hughes, J., & Nahapiet, J. (1980). The roles of accounting in organizations and society. Accounting, organizations and society , 5 (1), 5-27.
Francis, J. R., Khurana, I. K., & Pereira, R. (2003). The role of accounting and auditing in corporate governance and the development of financial markets around the world. Asia-Pacific Journal of Accounting & Economics , 10 (1), 1-30.
Islam, M. A. (2017). Future of Accounting Profession: Three Major Changes and Implications for Teaching and Research. Business Reporting, International Federation of Accountants (IFAC) .
