profession has shifted progressively over the past few years as the
landscape has become more challenging.
Accountants, managers and other users of
accounting information cannot afford to overlook the major changes that have
taken place in the business organisation, business environment and broader
Financial Management author Anthony G.Puxty,
stresses that Accounting is not merely a collection of techniques, but that it
has a significant impact on society at large. So too, society impacts on
Accounting and Accountants are seen as the gatekeepers of financial markets,
who are responsible for the quality and integrity of information so that
- capital markets are efficient;
- the cost of capital is low;
- the standard of living is high;
- the investment risk is low and
- resources are allocated efficiently
The changing environment has confronted
Accounting with a number of challenges that should be recognised, accepted and
addressed promptly in order to reverse the already declining trend in its
usefulness and relevance.
Challenges accounting face:
With globalization having an escalation of
competition among businesses, to survive in this highly competitive
environment, organisations are altering the way in which they conduct their
business. They have to become customer oriented, lean, efficient and
innovative. Globalization does not only affect an organisation and its
management, but should also influence the accounting system. The latter should
support the raising of capital anywhere in the world, obtaining of listings on
foreign exchanges, co-ordination of world-wide operations and the assessment of
multinational performances as well as the measurement of productivity,
continuous innovation and responsiveness to change.
Technologies had, and will continue to have a
profound impact on the way in which information systems gather, process
and distribute information within organisations. These technologies also affect
the non-information systems that support business functions, such as design,
manufacturing and distribution. While accounting cannot play the primary role
in initiating or implementing technological innovations and organisational
change, the accounting system should provide incentives for improving
manufacturing performance and measurements to evaluate progress towards this
The technologies also affect the accounting
information system itself. Unfortunately, new technology has been used in
the latter instance simply to speed up old methods, in other words crunch
predictable numbers faster. However, technology can also be used to create
greater flexibility in the accounting information system, thus making it better
suited to the changing demands for information.
A shift in business styles
A shift is taking place in the nature of business
as the second wave, industrialization, is being replaced by the third wave,
information technology. The number of commercial and manufacturing firms is
declining and information and service-based firms are escalating. Knowledge has
changed from being a minor to a major factor of production.
accounting model was originally developed to report on business
enterprises. Later it was modified through cost accounting to accommodate
manufacturing enterprises. This modification was however less than perfect and
the result was that additional information was required for decision making.
The evolution of Accounting has been based
on a pragmatic approach. Accountants addressed problems as they were
encountered and then developed appropriate solutions.
However, accounting should become flexible
and adapt to changes in its environment. “Accounting should develop from being
a watchdog and scorekeeper to being a facilitator of change” (Turney
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