Challenges Of Accounting In Global Organizations Financial Issues

Question: Discuss about theChallenges of Accounting in Global Organizations for Financial Issues. Answer: Introduction Background Information: In the current time of corporate financial environment, a serious and kinds of accounting/financial issues and challenges are faced by todays global organizations that have negative impact not only on their financial situation but also on business reputation, growth, level of revenue sale. In the same way, the accounting challenges are affecting overall business operations, strategies, and processes of organizations at the global level. Moreover, it is also important to know that, the main causes behind such challenges are up gradation in the technology, foreign laws, different accounting financial regulations and rules, complex structure of international accounting, global pricing structure etc. But, such types of accounting related issues can be handled by the global organizations by adopting most appropriate, dynamic and effective accounting practices, policies and strategies at the workplace (Salmanulfarisi, 2012). Moreover, in this research paper, a brief literature review wou ld be conducted in order to analyze and understand the Challenges of Accounting in Global Organizations. Objectives of Literature Review: There are a lot of objectives of conducting this literature review such as: To identify the various types of accounting challenges encounter by the organizations at the global/international level To analyze the main causes behind the global accounting issues or challenges To access the impact of global/international accounting challenges on the business operations, profitability, marketability and revenue level of the global organizations To suggest different types of procedures, methods, practices and techniques to handle the accounting challenges faced by global firms All these objectives would be attained through conducting literature review in order to fulfill the aims of this paper. Scope of Literature Review: This literature review has wider scopes. For example, this research would provide opportunity to the readers, students and researcher to properly and effective understand the nature of global business organizations and impact of accounting challenges on their business. Moreover, this study is also provide scope to access a serious of accounting as well as financial challenges that have negative impact on the success of the global business organizations. At the same time, the study can also be used for the further research. Literature Review According to Salmanulfarisi (2012), today, there are a lot of examples of global organizations that had faced accounting/financial issues at the international level. Moreover, it is found that, global competition and complex business environment are the two major responsible factors that created accounting challenges for the global firms. For example, the global competition had forced the multinational companies to adopt and use international accounting standard and regulations in conducting their business functions. On the other hand, it should also be noted down that, todays companies are strongly required to focus and adopt International Financial Reporting Standards (IFRS) around the world. So, using and understanding of IFRS is more complicated task for the companies and their accountants. This created challenges for the management accountants because they have to adopt such challenging and complicated international accounting standards. In the same way, due to IFRS, global comp anies are facing control issues at the workplace (Kumar, Reddy and Ramaiah, 2014). Additionally, Zeghal and Mhedhbi (2006) analyzed that; accountants are not fully trained, and prepare to use such global financial standards in conducting accounting and financial functions. But, such global accounting rules and laws helped and provided the opportunities to the global companies, their management, staff and accountants international standards to understand the importance and significance of IFRS. Moreover, in the support of Anbalagan (2011) defined that, by using IFRS, they are able to perform several global accounting and financial functions more effectively and accurately. For example, with the effective use of IFRS, accountants had increased the level of sale, profit and productivity effectively. At the same time, it is also accessed that, IFRS had also forced the international accountants to use accounting as a rules of systems and conduct accounting task in prescribe the format and content of financial statements in order to access the financial situation of the firm. Chen, Yasar and Rejesus (2008) defined that; pervasive technology is also a key factor that had created accounting challenges for the global companies. For instance, global competition had strongly forced the global organizations to adopt pervasive technology such as accounting software/packages, new and innovative technology in conducting of their accounting, auditing, and financial tasks. But the main issue for the global accountants and auditor is to learn and use such technology which they are not familiar and well-known. For instance, Pervasive technology had forced the accountants/managers of global organizations to maintain the balance among the productivity advantages and potential pitfalls (Bragg, 2011). On the other hand, Pervasive technology provided a lot of tangible and intangible benefits to the global companies and their accountants. For example, through the effective and proper use of Pervasive technology, the accountants are able to conduct various accounting functio ns such as: billing, auditing, taxation, payroll, in easier and effective manner. In addition to this, pervasive technology had provided different benefits including cloud access, electronic invoicing etc. In this way, it helped the global companies in enhancing the abilities and skills of their accountants to meet compliance requirements without any specialized skills, knowledge and experience of accountants (Zainuddin and Sulaiman, 2015). Burns and Needles (2014) found that, most of business firms are conducting their business functions and operations globally and trying to build strong workforce from multiple countries. In this situation, the accountants as well as finance managers are required to effectively and properly understand the business culture as well as business perspectives of global nations. So, they needed to well-known and familiar with the global regulations, international laws and new accounting standards. Hence, globalized economy is crating the accounting challenges for the global companies and their workforce. In contrast, globalization had played a major role in the success of global companies. For instance, globalization is helping the firms to adopt new, innovative and effective legislation and improve their accounting and financial performance at the global level. Talha, Raja and Seetharaman (2010) stated that, the changes or modification in the current business environment is also considered one of the most reasons that created several accounting, financial, and auditing related challenges for the business firms at the global level. For example, todays global organizations are required to use and accept changing business era as their work in order to survive in the global market. Overall, it can be said that, global competition as well as business complexity are the fundamental environmental forced that created various kinds of accounting challenges in the front of global business firms or multinational companies. For example, changes in the business era had also forced the global firms and their accountants to manage and control tax matters, legal matters, human resources, risk assessment, information management by using internal standards and laws of accounting. In the words of DAUDA, OMBUGADU and Umbugadu (2015), as the global business environment is characterized with the different cultural values, economic traditions, languages, social civilization, global companies are also required to use, adopt and follow different kinds of accounting principles, standards, practices in conducting their business functions related to finance, accounting and auditing. Simply, this statement indicates that, the main factor behind the accounting issues is The Emergence of New International Accounting Standards. But, such new standards helped the stakeholders of the global companies to compare and understand the financial health of the companies properly. It means through the use of new standards, global companies are able to improve their ability in the global market and gain competitive scope over the others. Hence, new rules of accounting helped the global companies to bring development and innovation within their financial and accounting functions. Bhagat, McDevitt and Baliga (2017) analyzed that, firm consolidation is also considered and known as most significant factor that is creating accounting issues for the global companies. For example, in the present time, increased costs in all the business sector, minimizing expanses overheads, increasing offerings and sharing resources are the major issues for the global companies. In order to deal with such issues, consolidation is one of the best methods used by an accountant to deal with such serious issues. Moreover, in support of Goswami (2014) analyzed that; tax compliance is also a key issue in the front of global business firms. It is because today, accounting is presenting global issues to the multinational companies. It means dissimilar taxation systems, compliance, rates, of different nations is making accounting and financial functions more complex and challenging for the global business firms. But, a company can handle and control such kinds of accounting issues or chal lenges, if it adopts best accounting standards, international accounting standards and new technology. In addition to this, Parmar (2015) analyzed that, cultural differences and gaps in the communications of the nations are also affecting the business success and operations of a global company in the market. For instance, the accountants and financial managers of the global companies are not able to communicate effectively with the others due to differences in the language, values, ideas, culture, customs and norms. This is creating issues for the global companies and their accountants in the international market environment. On the other hand, it is also accessed that, in the current time, the global companies are also facing the issues due to worldwide accounting/auditing issues, political risks, and Universal payment methods, global pricing strategy, different cost calculation, differ accounting rules etc (Gurnani, 2015). Gaps Identified and Conclusions On the basis of above analysis, and facts identified, it is concluded that, in the present time, global business firms or multinational companies are facing serious issues or challenges related to accounting, reporting, auditing, financial systems. All these challenges are mainly created and generated by the globalization. In addition to this, it is also summarized that, due to competition, globalization, changes in the business environment, most of global firms are facing accounting issues at the workplace. Moreover, all these challenges are negatively affecting the overall success and business operations of the global firms directly or indirectly. In addition to this, it can also be summarized that, in order to effectively deal and manage such accounting challenges or issues, global organizations must adopt and implement best financial and accounting principles, standards, rules, and regulations. Moreover, all these should be used by the accountants and auditors of the global compa nies in order to avoid such accounting challenges. References Bragg, S.M. (2011). The New CFO Financial Leadership Manual. USA: John Wiley Sons. Parmar, B. (2015). Ethical Issues in Accounting Finance. INDIAN JOURNAL OF RESEARCH, 4(5), pp, 309-311. Goswami, M. (2014). Corporate Environmental Accounting: the issue, its practices and challenges: A study on Indian corporate accounting practices. IOSR Journal of Business and Management (IOSR-JBM), 16(5), pp, 36-42. DAUDA, I.A., OMBUGADU, B.A. and Umbugadu, S. (2015). Threats and Challenges to Accounting Profession: A Draw Back to the Development of Accounting Practices in Nigeria. 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