The Role of Modern Accounting Practices in Businesses, Financial Stability, and Sustainable Development
During Digital Era and Artificial Intelligence Applications
Summary
Excerpt
Table Of Contents
- Cover
- Title
- Copyright
- About the author
- About the book
- This eBook can be cited
- Table of Contents
- List of Abbreviations
- Introduction
- The Role of Accounting in Different Businesses
- Why Do We Need an Accounting System?
- Role of Accounting for Project-Based Companies
- Construction Accounting
- Details of the Project-Based Accounting
- Reporting for the Management
- Role of Accounting for Product-Based Companies
- Role of Management Accountants in Cost Handling for NPD (New Product Development)
- Target Costing Method
- Other Cost Management Techniques
- Activity Based Costing
- Parallel Costing Methods
- Application of Modularity in Cost Management
- Role of Management Accounting in New Product Development Strategies
- Managing Uncertainty and Implementing Strategies in the Company
- Role of Accounting in Different Sectors
- Conclusion
- Financial Reporting
- Classification of the Users and the Accountant’s Role
- Reporting Methodology for the Internal Users
- Cash Flow-Based Statements
- Reporting Methodology for the External Users
- Accounting Standards’ Requirement for the External Users
- Income Statements
- Accrual and Historic Cost Convention in Accounting
- Balance Sheets
- Financial Reporting from Economic Aspect
- Practical Examples Related to the Financial Reporting
- Conclusion
- Financial Stability
- Introduction
- Financial Crisis
- The Credit Crisis of 1772
- The Great Depression of 1929–39
- The OPEC Oil Price Shock of 1973
- The Asian Crisis of 1997
- The Financial Crisis 2007–08
- Financial Instability and Its Sources
- Macroeconomic Sources of Vulnerability
- Instability
- Inflation
- Liberalization
- Design Failure of Macroeconomic Policies.
- Features of Financial Stability
- Key Principles of Defining Financial Stability
- Definition of Financial System Stability
- Practical Impact of Financial Stability
- Developmental Policies of Financial Stability
- Public Policy and Financial Stability
- Preventive Measures
- Law
- Official Agencies and Their Rules and Regulations
- Market Conventions
- Official Information Supply
- Physical Infrastructure and Financial Framework
- Remedial Measures
- Liquidity Support
- Solvency Support
- Conclusion
- Role of Accounting in Financial Stability
- Introduction
- Criteria for Accounting Standards to Maintain Financial Stability
- Criterion 1: Dependency on Principle Based Accounting Standards
- Criterion 2: Usage of Reliable and Relevant Figures
- Criterion 3: Analysis of Allocation and Magnitude of Risks
- Criterion 4: Comparable Financial Statements
- Criterion 5: Presentation of Clear and Understandable Financial Statements
- Criterion 6: Analysis of Financial Situation of Banks
- Criterion 7: Adaptive Accounting Rules and Sound Risk Management
- Risk Management System
- Criterion 8: Predictive Analysis of Risks
- Financial Bubbles
- Criterion 9: Evasion from Negative and Encouragement of Positive Externalities
- Accounting and Audits
- IFRS Accounting Standards and Financial Stability
- IFRS Accounting Standards and Financial Stability
- Financial Stability and IFRS
- Financial Stability and IFRS 17
- Financial Stability and Prudential Regulators
- Financial Stability and International Organizations
- Financial Stability Board (FSB)
- Examples relevant to Financial Stability
- Conclusion
- Bankruptcy and Insolvency
- Bankruptcy
- Insolvency
- Examples of Insolvency
- Act of Insolvency
- Offer of Settlement
- Inability to Pay the Debts in Written Form
- Evading from Debt Payment
- Unable to Satisfy a judgment
- Benefiting One Creditor over Others
- Not Proceeding with Sequestration after Notice is Published
- Sale of Your Business
- Hiding Assets
- Factors Leading to Insolvency
- Bankruptcy Vs Insolvency
- Types of Bankruptcy
- Chapter 7
- Chapter 13
- Chapter 11
- Chapter 12
- Eligibility for Bankruptcy
- Chapter 7 (Liquidation Bankruptcy) Vs Chapter 13 (Reorganization Bankruptcy)
- Advantages and Disadvantages of Bankruptcy
- Effect of Bankruptcy on Investors
- History of Bankruptcy
- In Ancient World
- Roman Law of Bankruptcy
- Lex Poetelia Papiria
- Late Republic and Early Empire Laws
- Using Property of Debtor for Repayment of Debts
- Portion of Debtor’s Property
- Whole of Debtor’s Property
- Justinian’s Legislature
- Bankruptcy in Middle Ages
- Origin and Evolution of Bankruptcy
- Conclusion
- Accounting for the Sustainable Development
- Definition and Description of Sustainable Development
- UN 2030 Agenda for Sustainable Development
- Sustainable Economic Development
- Role of Accounting in Sustainable Development
- Sustainable Reporting
- Role and Responsibilities of Accounting Profession in Sustainable Development
- Quality Education
- Gender Equality
- Decency in Work Patterns and Economic Growth
- Other Sustainable Development Goals Associated with the Accounting
- SGD 9 Industry, Innovation, and Infrastructure
- Practical Examples Related to the Sustainable Development
- Conclusion
- Modern Technology and Accounting
- Introduction
- Accounting and Information Technology
- Information Technology
- Impact of Information Technology on Accounting
- Advantages of Computerized Accounting System
- Improved Functionality
- Improved Accuracy
- Faster Processing
- Improved Reporting
- Modern Tools in Accounting
- E-Business, Intranet and Internet
- Data Life Cycle
- Cloud Computing
- Software Solutions
- Enterprise Resource Planning (ERP)
- Role of ERP in Accounting
- Customer Relationship Management (CRM)
- CRM for Accounting
- Artificial Intelligence (AI) and Machine Learning (ML)
- AI for Auditing and Assurance
- Artificial Intelligence Application in other Sub-Domains of Accounting
- Practical Examples Related to the Use of Modern Tools in Accounting
- Conclusion
- Conclusion
- References
- Appendix
- Lists
1 Introduction
The accounting profession plays a diverse role in society to ensure the efficient utilization of economic resources. Keeping in view the sustainable development goals and changes in the businesses in the fourth era of industrialization. The traditional role of the accountant from bookkeeping has been evolved to more diverse and more impactful. Accountants around the globe provide their services and implement useful cost control strategies in product and project-based firms. The role of the accountants in strategic decisions related to the new product development is important for the success of the product. In the first chapter, the role of the accountant and accounting profession has been explained in detail. A case study related to the premium auto group has also been added to demonstrate the role of management accountants in the decision-making process.
One of the key responsibilities of accountants working in businesses and industries is to generate financial statements. The financial statements serve the needs of internal and external users. There are some regulatory requirements related to the financial statements. Based on the financial statements, the investors decide about the investment decisions whether it would be the value for the resource to invest in this company or not. The financial statements should be able to provide information that is used in the calculation of the financial ratios. The financial ratios can be used to evaluate the performance of the firms. In Chapter 3, the financial statement of BMW has been presented to practically show the parameters included in the financial statements. A case study has also been included to make the readers aware of the information presented in the financial statements.
Financial stability is defined as the ability to expedite and strengthen economic processes, manage risks and nullify shocks. Processes to achieve financial stability must ensure that all transactions and financial activity must satisfy the monetary economy. Financial stability is associated with the careful utilization of resources and intelligent investment decisions. In Chapter 4, the financial crisis of different times has been discussed. The Credit Crisis of 1772, The Great Depression of 1929, The Asian Crisis of 1997, and the Global financial crisis of 2007–2008 has been discussed in detail. Instability, Inflation, Liberalization, and Design failures of the Macroeconomic policies are the Macroeconomic sources of vulnerability. These sources have been discussed in detail in Chapter 4. The preventive measures related to financial instability have also been discussed in Chapter 4.
In Chapter 5, the role of the accountant in achieving financial stability has been described. The financial reports provide accurate and meaningful information about the performance of the businesses and firms. Through efficient usage and analysis of the financial statements and reports, accountants can assess the risks, and formulate the methods to minimize the impacts of spillovers and avoid stressful situations. The ECB (European Central Bank) and Basel Committee on Banking Supervision coordinated with each other and came to a decision point about amendments of IAS39 regarding the importance of financial stability. The Banking Supervision Committee (BSC) of the European System of Central Banks (ESCB) thoroughly studied and analyzed that accounting standards are worthy to establish and maintain financial stability. The IFRS Accounting Standards related to financial stability have been discussed in Chapter 5. The financial stability board is an international organization that analyzes, monitor and make recommendations about maintaining financial stability internationally. Several countries are part of this board. The boards design practical measures for ensuring financial stability at the international level. At the end of the chapter, a case study has been included to demonstrate the role of long-term organizational investors on financial stability. Another case study related to the role of financial inclusion, governance quality, and its impact on financial stability has also been added.
In Chapter 6 different aspects of Bankruptcy and Insolvency have been explored. Several types of bankruptcy that are identified in the form of chapters, and explanation of different bankruptcy filing codes have been explained for the readers. A summary of the bankruptcy prediction and bankruptcy probability has been provided in the chapter to provide awareness about the different techniques and models used for bankruptcy prediction. A condition in which a person or company’s total liabilities exceeds total assets than they become insolvent. Difference between bankruptcy and insolvency has been explained as well.
Sustainable development is a concept that is associated with the careful utilization of resources in such a way that these resources including the opportunity remains available for the future generations. Sustainable development can be defined in multiple ways. As per the definition of sustainable development from Oxford Languages, “conductance of economic activities without the depletion of natural resources”. In the seventeenth session of the United Nations General Assembly, a resolution named “Transforming our world: the 2030 Agenda for Sustainable Development” was adopted on 25th September 2015 (United Nations, 2015). The detailed agenda of the sustainable development 2030 was published and is also available at the website of the United Nations sustainable development goals. In the agenda, 17 sustainable development goals and 169 targets were declared (United Nations, 2015). There are three main dimensions of sustainable development. These dimensions are economic, social, and environmental. The sustainable developmental practices need to be incorporated in all of these dimensions simultaneously. The concept of sustainable economic development has been discussed in detail in Chapter 7. After the approval and adoption of the sustainable development agenda in 2015 and 2016 respectively, IFAC has identified eight goals that the accounting profession and the professionals can focus on and contribute significantly to the implementation of the new sustainable development agenda of United Nations 2030. Some of these goals have been discussed in Chapter 7.
Details
- Pages
- 232
- Year
- 2023
- ISBN (PDF)
- 9783631894330
- ISBN (ePUB)
- 9783631894347
- ISBN (Softcover)
- 9783631894255
- DOI
- 10.3726/b20454
- Language
- English
- Publication date
- 2023 (July)
- Keywords
- Role of accounting in different businesses Financial reporting Cost handling for new product development
- Published
- Berlin, Bern, Bruxelles, New York, Oxford, Warszawa, Wien, 2023. 232 pp., 34 fig. b/w.
Biographical notes
Ibrahim Mert (Author)
Ibrahim Mert is a lecturer in the field of accounting and works as assistant professor at Istanbul Aydin University, Istanbul, Turkey. He has taught his students Financial Accounting I and II, Introduction to Accounting, Management (Managerial) Accounting, Cost Accounting, and Financial Analysis.
