1. INTRODUCTION
Accounting has advanced as human beings have advanced and because the ideas of the accounting topic are immediately coined out from its most elementary precept of conservatism, it’s not tough to see why the type of accounting at each cut-off date has a direct hyperlink with the age. As man has developed from a primitive age to a contemporary interdependence age, dwelling has superior from being subsistent as a hunter-gatherer to a data pushed globalised world idea of ‘effectiveness turning to greatness’ and all together with this evolution, self accounting with the abacus has developed by way of stewardship accounting to monetary accounting and now managerial accounting; which has a concentrate on choice making.
The Financial Accounting Standards Board (FASB) of the US which typically standardised and strengthened the globally adopted Generally Accepted Accounting Principles (GAAP) took vital strides within the yr 2012 to return along with the International Accounting Standards Board (IASB) in a fashion termed as ‘International Convergence’. Such a convergence is predicted to progressively harmonise the GAAPs and the IFRS till they change into one and the identical in a bid to stream line company/firm studies right into a uniform course of globally.
1.1 Statement of the Problem
There is not any absolute certainty as to what the long run holds for the Accounting Profession. It thus appears nevertheless, that the long run age which undoubtedly can be one in all scientific development, would transfer man from greatness to one thing worthier for the time. Spiritualism, Environmentalism and Developmentalism could possibly be key elements sooner or later age. This paper is to search out out if Accounting itself can be extra of a actuality offering correct options to monetary issues the place man’s capability to worth pure capital pretty would give rise to a big asset on the steadiness sheet in distinction to the commercial age when even man himself was thought to be labour and never being thought-about as necessary because the machines he operated.
2. LITERATURE REVIEW
This paper was approached from a content material evaluation view level – each conceptual and relational. A content material evaluation is “a research technique for the objective, systematic, and quantitative description of manifest content of communications” – (Berelson, 52). The conceptual evaluation was merely to look at the presence of the issue, i.e. whether or not there’s a stronger presence of optimistic or unfavorable phrases used with respect to the particular argument whereas the relational evaluation constructed on the conceptual evaluation by inspecting the relationships amongst ideas. As with different types of inquiry, preliminary decisions with regard to what’s being studied decided the potential for this specific paper.
2.1 Evolution of Accounting Theory
According to investopedia.com, Accounting Theory within the mild of its evolution could be outlined because the evaluation of each historic foundations of accounting observe in addition to the way in which by which accounting practices are verified and added to the examine and software of economic ideas. Accounting as a self-discipline is believed to have existed because the 15th Century. From that point to now companies and economies have continued to evolve enormously. Accounting idea should adapt to new methods of doing enterprise, new technological requirements and gaps which can be found in reporting mechanisms therefore, it’s a repeatedly evolving topic. As skilled accounting organisations assist corporations interpret and use accounting requirements, so do the Accounting Standards Board assist regularly create extra environment friendly sensible purposes of accounting idea. Accounting is the muse of environment friendly and efficient enterprise administration and clever managerial choice making, with out which companies and commerce world-wide would function blindly and fatally. It is due to this fact essential to hyperlink the way it has advanced to its future function.
2.2 The Origin of Accounting
Luca Pacioli wrote a Maths e-book in 1494 (ehow) that consisted of a chapter on the arithmetic of enterprise. As this e-book is considered first official e-book on accounting, Luca Pacioli has severally been thought to be ‘the daddy of accounting’. In his Maths e-book, Pacioli defined that the profitable service provider wanted Three issues: adequate money or credit score; an accounting system that may inform him how he’s doing; and a great e-book keeper to function it. Pacioli’s idea nonetheless holds right now, it included each journals and ledgers and it’s believed to have popularised the usage of the double entry accounting that had been in place because the late 1300s.
2.2.1 The First Change in Accounting
During the despair of 1772, the Accounting occupation went past e-book retaining to price accounting. The idea and the thought have been remodeled into a technique figuring out whether or not a enterprise is working effectively or utilizing an extra of labour and assets. The new idea of price accounting allowed a skilled book-keeper or an accountant to make use of the e-book stored to extract monetary studies to indicate the effectivity represented by such knowledge. This new concept led to the survival of companies in the course of the despair; enterprise that will in any other case have failed with out an clever administration choice making knowledgeable by a price accounting breakthrough.
2.2.2 The American Revolution/ British Courts Influence
The finish of the American Revolution noticed the primary United States (US) governmental accounting system being created in 1789 and it was established to account for and handle the treasury of the US. The double entry observe and idea have been adopted. The British courts dominated that they wanted skilled accountants to make monetary info in relation to court docket instances. Chartered accounting our bodies/ ideas have been launched in Britain (and within the US specifically, the Certified Public Accountant – CPA). In 1887, the primary standardised examination emerged with Frank Broaker changing into US’s first CPA.
2.3 Modern Cost Accounting
This was first established by General Motors (GM) Company in 1923 and it developed strategies that helped reduce its prices and streamlined operations and this remained related for over 50 years. The new accounting strategies developed included return on funding, return on fairness and GM’s versatile/adjustable price range idea.
2.4 Accounting Concepts and Conventions
This was established in US between 1936 and 1938 by the Committee on Accounting Procedure (CAP) thereby standardising Accounting practices for all corporations all through the US. In 1953, the Generally Accepted Accounting Principles (GAAP) was up to date to new requirements, CAP grew to become Accounting Principles Board (APB) in 1959 and later in 1973, APB (having suffered from poor administration) was changed by Financial Accounting Standards Board (FASB) with better powers and opinion for its skilled stance.
2.5 International Financial Reporting Standards
FASB issued nearly 200 pronouncements between 1973 and 2009 thereby establishing the muse of Accounting Standards in use presently and is now making present strikes to harmonise all accounting ideas of GAAP with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB). It is broadly believed that growth of accounting occupation in any nation and across the globe is a combined effort of each accounting theoreticians and practising accountants. Thus, the framework of accounting is a concord of efforts whereby skilled accounting our bodies are normally within the lead of a path to regulation and standardisation of points regarding accounting.
2.6 The Nigerian Scenario
In Nigeria, the case shouldn’t be completely different from what has already been mentioned. Most of the nation’s accounting requirements (ideas and conventions) have been inherited from the British colonial masters. And as a result of the world has certainly change into a big world village with globalised accounting our bodies supervising and ensuring that each one member nations are abreast with present Generally Accepted Accounting Principles, Nigeria has additionally tagged alongside making a number of public sector and personal sector reforms the newest and well-known of which embody the approval by the Federal Government in July 2010 to undertake International Public Sector Accounting Standards (IPSAS) for the general public sector and the International Financial Reporting Standards (IFRS) for the non-public sector as a acutely aware effort to make sure a uniform chart of reporting system all through the nation by each the general public sector and personal sector.
2.7 International Convergence of Accounting Standards
This idea is each a purpose and a path taken to achieve such a purpose. The FASB believed that the last word purpose of convergence is a single set of high-quality, worldwide accounting requirements that, corporations world-wide would use for each home and cross-border monetary reporting. To this finish, acutely aware efforts are being made by the FASB and the IASB to collectively get rid of the variations between the ‘GAAP’ and the ‘IFRS’. One such acutely aware effort was made on the April fifth 2012 when an replace report was submitted to the Financial Stability Board Plenary on Accounting Convergence. The ever growing demand by world capital markets pushed by buyers’ want for high-quality internationally comparable monetary info is on account of the usefulness it’s anticipated to instantly present for choice making and thereafter correct options to downside fixing. The IASB was established 1st April 2001 as successor to International Accounting Standards Committee (IASC) and on March 1st 2001 the IASB, which is an impartial accounting standard-setter primarily based in London, England assumed the obligations for Accounting Standardisation. The IASB is chargeable for issuing many accounting requirements and pronouncements generally known as the International Financial Reporting Standards (IFRS).
3. PRESENTATION OF FINDINGS
To give a pictorial view to this paper, two (2) illustrations are used to make displays (interpretations) of the findings. Illustration.1 traces the Evolution of Accounting; its ideas, roles, ideas, professionalism, standardisation and internationalisation. Illustration.2 on the one hand relates Accounting evolution with Human evolution and then again it broadens the understanding of the reader on the subject of the subject material. The reader (person) of this paper simply discovers a past-present-future view of the Role of Accounting and it purports to postulate lastly what the way forward for Accounting might (or ought to) be. Self Accounting shouldn’t be a terminology discovered within the literature of Accounting however is used right here to depict any primitive Accounting system which was maintained by merchants lengthy earlier than double-entry. Self Accounting, thus, was the previous of Accounting when the function of Accounting was merely to have information of Incomes and Expenses, present Liabilities and never essentially displaying Assets and income as distinguished from the private or non-public earnings/estates of a dealer. Assets at occasions may need been recorded as bills. These are assumable as a result of most companies operated (and nonetheless function) as sole-ownerships. The Present function of Accounting encompasses; stewardship, monetary reporting and managerial choice making. These three present the nexus of what Accounting is right now. The stewardship facet is so referred to as a result of wealthy retailers in Europe and the Americas at the moment skilled their slaves to render book-keeping companies. So the retailers themselves didn’t should do the duties. Financial Accounting was developed to present commonplace to monetary reporting particularly for the customers of such studies who’re largely to the companies involved. Managerial Accounting advanced to offer information that will support the choice making means of the managers and house owners of companies. Generally all three roles of accounting as at current help stakeholders to make good judgments relating to their dealings with companies. These stakeholders could or ‘could not’ have rights to obtain the studies so mentioned. The stakeholders embody; collectors and authorities (having rights to obtain solely monetary studies); the shareholders, buyers and administration (who make use of each the monetary studies and the managerial studies); the worker and the administration workforce (who’re the customers of all of the studies: book-keeping, monetary studies and managerial studies); and the rivals, resident group and clients – who shouldn’t have rights to obtain such studies however are in a position to retrieve monetary studies (annual studies) to help their choices with regards any enterprise of curiosity to them.
Having correct information (studies) assist good choice making however typically dangerous interpretation and judgment of the studies and their recorded outcomes could result in dangerous choices taken. The three roles of accounting presently have been the bed-rock with which accounting standardisation of ideas and procedures have advanced to this point. The Emerging Role (Future) of Accounting then have to be anticipated with eager readiness on the subject of what ought to be possible. Illustration.2 would do justice to this idea.
Illustration.1- The Evolution of Accounting within the US (1300 – 2014)
Stewardship (prior 1300)
-Slaves skilled to render primary book-keeping
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Double Entry (1300)
-Introduction of Double Entry ideas
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Book-keeping improved (1494)
-Financial Reporting begins
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Cost Accounting (1772)
-Managerial Accounting for Decision Making begins
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Double Entry (1789)
-Principle of Conservatism totally adopted
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Professionalism (1850)
-Concepts/Chartered our bodies launched
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AICPA fashioned in US (1887)
-Providing requirements and operational pointers
-Certification course of begins
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Qualifying Exams (1897)
-First standardised exams launched
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Cost Accounting Revamped (1923)
-Modern price accounting strategies developed by General Motors Company and remained related past 1973
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Concepts and Conventions (1936)
-Conservatism expanded into different ideas and conventions
-US Committee on Accounting Procedure (CAP) establishes commonplace accounting practices
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CAP Evolves (1953)
-New requirements of GAAP totally established
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CAP additional evolves (1959)
-CAP turns into APB (Accounting Principles Board)
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APB evolves (1973)
-Due to poor administration and incapability to Accounting idea as desired, APB is changed by FASB
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FASB established (1973)
-Financial Accounting Standards Board replaces APB and makes over 200 pronouncements as much as 2009
-The basis of accounting Standards everywhere in the world additional strengthened
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Influence from the England (2001)
-IASB established as an impartial ‘International Accounting Standards-Setter’ primarily based in London, England
-IASB assumes obligations from IASC on March 1st 2001
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FASB and the International Convergence (2012-2014)
-GAAP (established by the FASB) is being thought-about for merger into the IFRS (established by the IASB)
3.1 Reality Accounting versus the Future Role of Accounting?
What is Reality Accounting and what then ought to Reality Accounting embody? Wikipedia.com defines actuality because the totality of all issues, constructions (precise and conceptual), occasions (previous or current) and phenomena whether or not observable or not. Reality is thus seen as a time period that hyperlinks ideologies to world views or a part of them (conceptual frameworks). Reality Accounting is near ‘Fair Value Accounting’, which is each a foundation and idea of accounting. And it appears to be remodeling into the Future Role of Accounting. In Financial Accounting, it’s simply seen that accounting displays company and financial realities as they’re, although it is not uncommon sense to know that accounting can not adequately replicate actuality significantly in relation to the technical limitation of double-entry bookkeeping and Fair Value Accounting. As a part of the adjustments emanating from Reality Accounting, a brand new idea of ‘Natural Capital’ has surfaced. At the Rio+20 Summit on Sustainable Development organised by the United Nations Conference for Sustainable Development (UNCSD), which occurred in Brazil on 20-22 June 2012. At the Conference, a Natural Capital declaration was made such that Natural capital is now understood to be comprising of all Earth’s pure property (soil, air, water, wildlife) and the ecosystem companies ensuing from them, which make human life potential. It estimated that ecosystem items and companies from pure capital are price trillions of US {dollars} per yr and represent meals, fibre, water, well being, vitality, local weather safety and different important companies for everybody.
3.2 The Concept of Natural Capital
Neither the companies, nor the inventory of Natural Capital that gives them, are adequately valued in comparison with social and monetary capital regardless of being elementary to all that exists. The day by day use of Natural Capital stays grossly undetected inside our monetary system. There is due to this fact the necessity to use Natural Capital in a fashion that’s sustainable. All stakeholders, together with the non-public sector and governments should start to understand and account for the usage of Natural Capital and recognise the true price of its financial development in addition to sustaining human wellbeing now and sooner or later.
3.3 Natural Capital Framework
Natural Capital although handled as a free good however have to be seen as a part of a world pool of wealth for which governments should act now and correctly to create a framework that shall regulate, reward or tax the non-public sector for its use. Reliable coverage frameworks that may report the worth, use and depletion of pure capital have to be the intent of any authorities desirous of creating a great begin with this new accounting phenomenon. Deeper financial affect is given to accounting underneath Reality Accounting since all which can be thought to be actual are solely really actual of their consequence and never of their bodily. Therefore the worth of Natural Capital as an illustration can be the worth ascertained after contemplating numerous elements that give rise to such valuation. These elements embody the scale, presence of mineral assets, location, different pure assets, presence of plant and animal life and so forth.
Illustration.2- The Emerging Role (Future) of Accounting
HUMAN AGE………….HUMAN EVOLUTION…………………………….ACCOUNTING EVOLUTION
Primitive age………..Hunter – gatherer……………………………..Self Accounting (Independence)……(Subsistent dwelling)……………………………..(Abacus) ↓ Colonial age…………Colonialisation…………………………………Stewardship Accounting (Dependent age)…..(Being environment friendly)……………………………….(Book-keeping) ↓ Modern Age………….Technology pushed by Industrialisation…….Financial Accounting (Independence)…….(Being efficient)………………………………(Financial Reporting) ↓ Modern Age………….Technology pushed by Knowledge…………..Management Accounting (Interdependence)…(From effectiveness to greatness)…………(Decision making) ?↓ The Future Age………Technology pushed by developments……..Reality Accounting? (Efficiency…………….Environmentalism?…………………………..(Not as a instrument for choice primarily based on……………..Developmentalism?………………………….making however offering Interdependence……Spiritualism?…………………………………..correct options to …………………………(From greatness to what?)………………….monetary issues)
4.zero CONCLUSION
As man seeks better heights in a contemporary world stuffed with scientific and analysis discoveries, Accountants should ponder what the rising function of their occupation have to be. From merely offering info on the wellbeing of a enterprise to monetary reporting as a company accountability and now choice making managerial strategy for future forecasts, what then does that future maintain for accounting or how is accounting anticipated to stay skilled and related in that future which appears can be molded by environmental and developmental challenges everywhere in the globe. As correct information and studies have supported good choice making although typically dangerous interpretation and judgment of the studies and their recorded outcomes have led to dangerous choices taken, the current roles of accounting, which have fashioned the bed-rock with which accounting standardisation of ideas and procedures have advanced are actually going through evident adjustments.
Under the scope of Reality Accounting, it’s clearly noticed that ideas reminiscent of International Convergence, Natural Capital, Environmentalism, Developmentalism and Fair Value Accounting will before latter set the trail for the way forward for accounting.
This paper is to stimulate tutorial arguments for or towards the subject material as a way to deliver to the notice of accountants a couple of unconscious change that’s already happening. It is really helpful due to this fact that seasoned researchers ought to come forth with additional concepts, summaries and critiques that may enhance a transparent pathway for the way forward for accounting.
REFERENCES
1. http://www.investopedia.com (Accounting Theory)
2. http://www.eHow.com (The History of Accounting Theory)
3. Berelson, Bernard. Content Analysis in Communication Research. New York: Free Press, 1952
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