Addressing the Biggest Issue in Today's Era: Risk of Fraud

This assignment discusses the various issues that accountants face in today's modern accounting environment. The first issue discussed is the risk of fraud and data leakage when using internet and cloud computing for accounting purposes. This can result in confidential information being compromised, putting companies at risk. Another issue highlighted is the constant change in accounting policies and regulations, which can be time-consuming and costly to implement. To solve these issues, the assignment suggests training employees on the latest trends in accounting, understanding international accounting standards, harmonizing accounting standards globally, and maintaining a manual accounting system as a backup. Finally, it emphasizes the importance of staying updated with changing policies and bringing changes into notice.

INTRODUCTION
TO FINANCIAL
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Critical analysis of trends and issues in financial accounting.....................................................3
Solving standard accounting problems arising in the modern accounting environment.............7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Financial accounting is basically a specialized branch of accounting which works for
keeping a track over financial transaction of a company. With the use of standardized guidelines,
recording and summarizing of financial transaction is done, and then presentation of financial
reports such as income statement and balance sheet is done (Deegan, 2013). Moreover, financial
accounting plays an essential role in keeping a track over all the financial transaction occurs in
an organization. This helps the organization in identifying the revenues and expenses and how
much profit or loss company is experiencing. Further, this report mainly focuses upon the role of
financial accounting in World Vision Company. Furthermore, this report describes the trends and
issues in financial accounting and also it describes the solutions for standard accounting
problems which arise in the modern accounting environment. Moreover, the report analyses
these trends and issues in a critical way (Choi and Meek, 2011).
TASK
Critical analysis of trends and issues in financial accounting
As it is known that financial accounting in a firm is used for recording, summarizing and
maintaining financial transaction carried out in a company throughout the year (Weil, Schipper
and Francis, 2013). By using this technique a firm can find out the expenses it has done and how
much income it has gained. By presenting an income statement and balance sheet an
organization could come to know about its financial position. However, with change in time,
new trends in this accounting got added and the way of handling this accounting has changed
completely. Thus, latest trends have been added to this accounting according to the modern
accounting environment, whereas, this change has also brought issues along with it. Thus, this
section defines the analysis of trends and issues in financial accounting:
Trends
There are multiple trends came into accounting which has changed its face completely
and has changed the way of doing business. In the very beginning, accounting was done
manually. Then accounting was done half on computers and half manually. Later, the trend came

of doing accounting work entirely using computers and then internet got introduced which gave
new way to accounting as well. In a similar manner, latest trend have been introduced in the
market which must be adopted by the companies in order to carry out the financial work in a
more effective manner (Horngren and et.al., 2012). However, it must be analyzed that whether
the latest trend is effective for the company or not. For that aspect, critical analyses of the latest
trends have been done as follows:
1. Cloud Accounting: As it is known that cloud computing has become the basic necessity
of the company for carrying out any operations ranging from data storage to connectivity
and even for reducing business costs. Similarly, accounting is also a part of company’s
operation and thus, it is also lined up for getting into cloud. Therefore, a new trend has
been added in accounting is cloud accounting (Beatty and Liao, 2014). This is
increasingly used for working and enabling easy access to world-class infrastructure
without spending huge amount on it. However, heavy cost is involved in providing
training to the executives. As it required high end professionals who can carry out this
accounting work in an efficient manner. Moreover, this is the biggest trend which is
going around and every company has to follow this trend in order to stay ahead in the
market. Moreover, this is user-friendly software which can be cited as reason for its
surging popularity.
2. Automation: Automation in accounting is a trend which can save a great amount of time
to businesses when it comes to accounting. This trend is slowly eliminating the need of
manual data entry and helps in saving a large amount of time in production. The major
role of automation is to reduce the burden of manual bookkeeping and utilize that time in
dealing with real time accosting issues (Weygandt and et.al., 2010). However, such kind
of trends cut offs the job which is not appropriate. Moreover, automation would require a
person who would be observing it all the time and this would add extra cost to the
company.
3. Social Media Strategy: These days social media is widely used for creating a presence of
the business online. It is also used to reach a large number of people around the world.
Similarly, social media strategy is also used for accounting and is gaining popularity this
year and business owners are becoming active on social media. This trend in accounting
is very beneficial for accounting firms and also for clients who can gather information

themselves using social media (Schroeder, Clark and Cathey, 2011). There are certain
benefits of using social media strategy are that no costing is imposed, one can
communicate with millions of people, business exposure, etc. Whereas, this type of trend
can lead to the increase in website traffic. Along with that, there are high chances of
leaking confidential information due to open interactions. Moreover, fraud can also
happen if the accounting firm registered on social media could be fake.
4. Outsourcing: Latest trend have been introduced in accounting filed and that is
outsourcing of finance and accounting services. This helps the company in focusing on its
primary business rather than opening a finance department. This help the firm in cutting
down the cost and it also reduces the risk of fraud (Deegan, 2012). However, by adopting
this feature, company has to provide all the information to outsourced firm which would
be bit difficult as there are high chances of skipping any transaction which may lead to
faulty results. Moreover, there are high chances that confidential information may get
revealed in front of a competitor which is a major threat to the firm.
Issues
In every operations of a firm, some or the other issue get arise and these issue continue to
come while introducing change. Similarly, while bringing change in accounting operations and
coping up with latest trends, issues also come along. Therefore, company has to keep a track
over these issues every time in order to avoid them (4 Key Accounting Issues, 2017). However,
there are certain issues which are avoidable and some issues are unavoidable which create
hindrance while carrying out this activity in an efficient manner. Some of the latest and emerging
issues have been described as follows:
1. Continuous demand for skilled professionals: As the accounting is collaborating with
computers and internet, the demand for skilled professional has increased on a high pace.
The reason is that only skilled professionals can easily understand the functioning of
carrying out accounting using computers and cloud. Furthermore, regulatory compliance
also require skilled professionals therefore, its demand is increasing. However, the supply
of such professional is less because of continuous demand in the market (Williams,
2014). This creates a big issue for the firm. Moreover, these professionals demand high
salary and if not given they will move to another company because of high in demand

which is again an emerging issue in the market. A survey has found that 78 percent of the
company has already taken steps for the compensation of the loss of these employees
which includes enhancement of recruitment and retention programs.
2. International Accounting Differences between Countries: This is a biggest issue which
is faced by the companies working globally. As it is known that this is an era of
globalization and every company is targeting for becoming globalized. However, due to
this issue, company faces major problems (May, 2013). The reason is that, accounting is
done differently in different countries and due to which company has to face difficulty in
managing accounting of all countries together. Accounting practice is influenced with
national culture, legal system, taxation system, providers of capital and many other
influences. Due to this reason, it is becoming difficult for the firm to carry out its
accounting activities in an appropriate manner.
3. Harmonization of Accounting Standards: Harmonization of national and international
accounting standard has begun to implement. This news brings joy to the companies and
at the same time it is becoming an issue for the firms as well. The reason is that company
has to bring a huge change in its accounting procedure which becomes highly difficult for
the firm. Moreover, there is a pressure for harmonization of divergent accounting
practices from the users of financial statements and also from regulators (Hoskin, Fizzell
and Cherry, 2014). Moreover, financial analysts have enough potentiality for destroying
the international flow of capital. Further, he investors are also pressurizing for
harmonization because they desire that financial information must not only be intelligible
but comparable also. Thus, this is again a big issue which is faced by the company in the
present year.
4. Dependency on Internet: Presently, accounting is entirely dependent upon the internet.
Without it, accounting functions are not carried out. This is a major issue faced by the
company in present. It is true that internet has made the life of an accountant easier but
too much dependency is also creating problem for them. Due to certain technical reasons,
many a times, internet does not work and due to which accounting functions cannot be
carried out (Sharma and Panigrahi, 2013). Because of this, company has to face many
difficulties in their day-to-day lives. Moreover, sometimes, a huge loss could be faced by
the firm as daily task does not get fulfilled due to server loss which may get delayed and

results in loss to the company. Thus, cloud accounting could be regarded as the biggest
issue in today’s era.
5. Risk of fraud: When accounting is done using internet and cloud computing, there are
high chances of involvement of risk. The reason is that fraud could happen at any time.
There are large numbers of hackers available in the world and they can easily hack the
data available on the cloud. This may lead to the leakage of confidential information like
income statement and balance sheet of the company (Deegan, 2013). However, leakage
of such information may result in a biggest problem for the company. Along with that,
competitors might come to know about the financial status of the firm which is threating
for the company. Furthermore, fraud happens often if accounting is done using internet
because internet is not at all secured.
6. Change in Policy and Regulations: Accounting policies and regulation gets updated
every time which create problems for the company to implement them. As it requires
proper change management which add extra cost to the company and it is also a time
consuming process (Horngren and et.al., 2012). Furthermore, the employees resist for
change and in shorter span of time policies and regulations get change which create
problem in carrying out the accounting activities in a smoother way.
These are some of the issues in accounting which is emerging this year and are faced by
the accountant while carrying out functions of accounting.
Solving standard accounting problems arising in the modern accounting environment
There are several accounting issues arising in the modern standard accounting and they
are creating problem for the accountant in carrying out the accounting function in an appropriate
manner (Beatty and Liao, 2014). These issues have been listed above and to get rid of those
issues, some of the solutions have been described below. By following them, company or
accountant can avoid such issues which hinder them in carrying out the functioning of
accounting. Some of the solutions have been described as follows:
1. For the first issue which is continuous demand for skilled professionals in accounting
field a solution can be suggested. For that, a firm can provide training to other employees
who are working in finance department regarding the latest trends of accounting. This
will help the company is creating a backup in case a professional leaves the organization

due to thigh demand in market (Schroeder, Clark and Cathey, 2011). Hiring other
professional for the same post will take some time and during that time, a gap can be
filled by temporarily hiring other person on that post. By this, company will not face any
issue in carrying out its accounting activities and it will not stop my any means.
2. Second issue arising in modern market is the difference in international accounting
standard across countries. This can be avoided by the company by understanding all the
international rules and policies of accounting. By this, firm would have complete
knowledge of accounting standards of other countries as well and they can provide
training to the accountant as well (Sharma and Panigrahi, 2013). This will help the firm
in keeping a track over accounts of its branch in other countries as well. This will aid the
firm in understanding about the revenue and expenses in a better manner.
3. Third issue is the harmonization of accounting standard and this is getting implemented
in every firm at high pace. Therefore, it is necessary for the company to understand this
procedure and bring changes in their accounting work in order to stay align with the
world (Weygandt and et.al., 2010). Moreover, this will help the company in maintaining
the same accounting standard around the globe and due to this difference in accounting
standard can also be avoided. Further, to avoid the pressure of investors and other
financial analysts, it is better to adopt the harmonization soon because it is beneficial for
World Vision in a long run.
4. The fourth issue talks about high dependency on internet. To avoid this issue, company
should also maintain manual accounting side by side and for that they can hire intern to
carry out manual accounting firm (Weil, Schipper and Francis, 2013). This will not incur
high cost as well. By maintaining manual accounting will help the accountant in carry out
accounting functions even when internet server is down.
5. This is the most concerned issue because fraud is likely to happen if the company is
carrying out its working online. To avoid such risk, company can install firewall on their
cloud so that no one can excess unwantedly (May, 2013). Along with that, password
should be made using eye retina or face reading so that no one can open except the
authorized person. Along with that, company should avoid uploading income statement
and balance sheet on cloud instead they should keep a record in books.

6. A firm should remain updated regarding the changing policy and bring into the notice of
accountant so that they does not resist regarding the change.
CONCLUSION
From the above report, it has been concluded that accounting is the major function which
is to be carried out in every organization for keeping a track over its revenue and expenses and to
calculate its profit/loss. Therefore, it is important for the firm to stay updated regarding the latest
trends and issues emerging in the modern environment. Further, it is also concluded that
numerous trends have been emerged and which impacts the most to the organization. Moreover,
there are certain issues emerging in accounting world which have been solved by giving
appropriate suggestions to the World Vision Company.

REFERENCES
Journals and Books
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Choi, F.D. and Meek, G.K., 2011. International accounting. Pearson Higher Ed.
Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to
concepts, methods and uses. Cengage Learning.
Horngren, C., Harrison, W., Oliver, S., Best, P., Fraser, D. and Tan, R., 2012. Financial
accounting. Pearson Higher Education AU.
Beatty, A. and Liao, S., 2014. Financial accounting in the banking industry: A review of the
empirical literature. Journal of Accounting and Economics, 58(2), pp.339-383.
Weygandt, J.J., Kimmel, P.D., KIESO, D. and Elias, R.Z., 2010. Accounting principles. Issues in
Accounting Education, 25(1), pp.179-180.
Schroeder, R.G., Clark, M.W. and Cathey, J.M., 2011. Financial accounting theory and
analysis: text and cases. John Wiley and Sons.
Deegan, C., 2012. Australian financial accounting. McGraw-Hill Education Australia.
Williams, J., 2014. Financial accounting. McGraw-Hill Higher Education.
May, G.O., 2013. Financial accounting. Read Books Ltd.
Hoskin, R.E., Fizzell, M.R. and Cherry, D.C., 2014. Financial Accounting: a user perspective.
Wiley Global Education.
Sharma, A. and Panigrahi, P.K., 2013. A review of financial accounting fraud detection based on
data mining techniques. arXiv preprint arXiv:1309.3944.
Online

4 Key Accounting Issues. 2017. [Online]. Available Through
<https://www.accountingweb.com/aa/standards/4-key-accounting-issues-to-watch-in-2017>.
[Accessed on 15th September, 2017].