Exploring the Accounting Challenges in Global Organizations Today

This essay examines the multifaceted challenges encountered by global organizations in the realm of accounting, drawing upon a comprehensive literature review. It highlights the significant impact of the global financial crisis and the imperative of adopting international accounting standards. The analysis delves into the technological advancements reshaping the accounting profession, emphasizing the critical need for adaptability and ethical conduct among accountants. Furthermore, the essay addresses specific hurdles such as the implementation of International Financial Reporting Standards (IFRS), the influence of legal and political factors, and the advent of real-time reporting. It also explores the role of universities in shaping professional accountants and the transformative effects of digitization on accounting information. The discussion extends to issues in multinational organizations, including transfer pricing, and the growing importance of environmental accounting, providing a holistic view of the evolving landscape of accounting in a globalized world. Desklib offers this document along with a suite of AI based tools to help students succeed.

Running head: CHALLENGES OF ACCOUNTING IN GLOBAL ORGANIZATIONS
Challenges of accounting in global organizations
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1CHALLENGES OF ACCOUNTING IN GLOBAL ORGANIZATIONS
Table of Contents
Introduction......................................................................................................................................2
Literature Review............................................................................................................................2
Analysis:..........................................................................................................................................4
Conclusion:......................................................................................................................................6
References list:.................................................................................................................................8

2CHALLENGES OF ACCOUNTING IN GLOBAL ORGANIZATIONS
Introduction:
The current paper examines the challenges faced by global organizations by reviewing
literature and there are significant implications on accounting due to current economic and
financial crisis both for research community and in practice. The fundamental objective of this
paper is to discuss and analyze the changes that are encountered in the research literature by
accountants and accounting as a whole at global level. Accounting development was mainly in
response to social, economic and political pressures. In addition to this, there are many factors
that have influenced transformation and practice in accounting knowledge such as ad hoc
influences related to period of economic decline, wars and disputes of labor. The rules of
accounting came under a lot of criticism attributable from credit crisis (Al-Rousan 2015). The
analysis of literature review regarding the challenges faced by accountants have been done with
several aspects such as global financial crisis, adoption of accounting standards, regulations and
rules at organizational levels.
Literature Review:
A literature review is an evaluation of report of information that is found in literature in
relation to topic of selected area. Such review helps in describing that summarizes that is
clarified and evaluated by literature. The purpose of literature review is to identify the gaps in
literature regarding the accounting challenges at global level. Reviewing of literature
comparative analysis and views presented by different authors regarding the topic concerned.
Research on accounting lagged behind the burgeoning world of accounting practice it is
perceived that accounting research will lack behind the world of accounting practice and the
reason is attributable to the fact that there has not been any development in theoretical capability
for interpreting and analyzing the relationship between accounting and macro environment and
political environment in which it operates (Apostolou et al. 2015).
Analysis:
The accounting profession is reorganizing, constantly changing and standing in front of
many challenges attributed from modern world. Every single aspect of modern world is being
defined with the technological revolution. Specialized software and technology is regarded as an

3CHALLENGES OF ACCOUNTING IN GLOBAL ORGANIZATIONS
integral part of accounting profession. The automation of various functions by technology is
making transactions a low complex task. There is difficulty in segregating important duties due
to increase in efficiency that has resulted in increasing risk of fraud and compromising of
internal controls (Cimaglobal.com 2018). In today’s conditions of globalization, an accountant is
required to posses’ adaptability that is a crucial feature and skills. Accounting today can become
a truly international and comprehensive service due to knowledge and application of
international accounting standards in association with the experience and skills of accounting
professionals. Accounting standards contributes by way of increase accounting professional
quality by possessing right skills. Moreover, the importance of accountants is underscored by
what is attached to ethics. It is imperative that accountants should strictly follow ethical
principles and failure to follow such principles can have adverse impact on auditing professions
(Dumay et al. 2016). Therefore, it is required to incorporate ethical guidelines into the formal
continuing education and training of accounting professions.
The analysis of literature review regarding the challenges faced by accountants is done
by selecting several articles and journals and considering views of different authors.
One paper on accounting issue that is presented in an article is about challenges faced by
organizational level in implementation of International financial reporting standards. In this
particular paper, the existing literature is complemented by offering qualitative alternatives for
considering transition to IFRS. The main objective of this research work was to focus on
exploring organizational challenges when transitioning to IFRS by accountants of reporting
entities. The considerable challenges faced in transition of the standards are mainly attributable
to the difference in IFRS and national accounting standards. Knowledge and education was
found to be issue that was involved in the adoption of IFRS by European Union as depicted by
evidence from literature review (Brusca et al. 2016). Very few accountants at the time had
practical experience required by the standard. In addition to this, many fundamental changes
were brought into the skills and background of auditors and accountants due to implementation
of principal based approach to IFRS.
Accountants also faced challenges in terms of transition to principle based to rule based
accounting. Furthermore, the requirement of accounting in preparation of financial statements for
engaging with other business functions has the implication of lack of support from senior

4CHALLENGES OF ACCOUNTING IN GLOBAL ORGANIZATIONS
management. It would be difficult for accountant to create support across the business and elicit
necessary information when the importance of transition process is not acknowledged by
management. The reason organization was not prepared to transition process of standard is
because such process was considered as accountants problem and they often lack training and
education. Reporting entities that are yet to adopt IFRS will have comparatively less challenges
in findings accountants with required experience and knowledge of the standard (Busco and
Quattrone 2015). However, the challenges faced by business at wider level such as those related
to executive support, system and knowledge support may remain. It has been suggested by
findings that the organizational context of transition to the standard is still under researched.
An article on threats and challenges to accounting professions presented by department
of accounting practices in Nigeria presents the views and perception of many accounting
professions in the field of accounting in Nigeria. It has been found that development of
organization is affected by the challenges and threats faced by such professions and they can be
obstacle in overall development. The article presents several challenges faced by accounting
profession such as tax and legal factors, corruption and politics and differences in accounting
practices (Trigo et al. 2014). Development of accounting profession is directly impacted by the
legal system of different countries because accounting is dependent upon the legislative
requirements that is determined by government and enforcing such requirements (Ball et al.
2014). The laws and legislative requirements of different countries contain detail that specifies
the procedures and comprehensive rules of accounting. For example, the development of
accounting practice is influenced by income tax laws of different countries. Moreover, the
practice of accounting profession is constrained by political environment that is uncertain and
pursuing personal gains and short term orientation sacrificing the legality (Massaro et al. 2014).
The differences in accounting standard of different countries have also constraint the
development of accounting profession. Accounting framework of US is based on GAAP while
UK has sought of adopting IFRS. Some countries have their local GAAP that is influenced by
local standards while some other countries have adopted IFRS. This difference in reporting
standard makes it difficult for accounting professions and makes it a subject of severe criticism.
With the extensive collapse of corporate such as financial statement fraud of Cadbury Plc and
Enron of United states of America, the accounting profession have been criticized. Development

5CHALLENGES OF ACCOUNTING IN GLOBAL ORGANIZATIONS
of accounting practice is likely to be frustrated in countries where corruption is prevalent leading
to weak process of accountability (Www3.kau.se 2018).
Another article extracted by science.direct.com presented by Antonio Trigo and Fernando
Belfo depicts the challenge faced in real time reporting in relation to accounting information
system. Substantive acceleration in the assessment, business measurement and process of
decisions are some of the characteristics of new economy that is regarded as real time reporting.
The implementation of such real time reporting is faced with some challenges. Some accounting
challenge faced in light of real time reporting are mobile devices, business process management,
business intelligence, cloud computing, enterprise application integration and enterprise
architecture. Selection of best visual option for representation of data is one of the important
implications of business intelligence. Representation of large amount of data on single screen is
main challenge faced now days. Some serious challenge is represented by some accounting
activities facing special concerns. Technological issues forms the main basis of success of
implementation of an accounting information system (Galliers and Leidner 2014). However, in
order to provide answers to accounting challenge faced by real time reporting, it is required to
take into account new technological solutions. This is so because technological answers would
partially helps in addressing the real time reporting challenge of implementation of accounting
information system. Such technological answers might involve monitoring of business activities,
business process management, mobile devices, business intelligence, integration of enterprise
applications enterprise architecture, and cloud computing (Ceulemans et al. 2015). However,
some of the issues pertaining to real time reporting require conducting of a more detailed
research that would consider some more practical considerations regarding their implementation.
In an article titled “challenges and success in implementing international standards by
Peter wong. In most countries, preparation of financial statement is in compliance with the
national regulations and laws and they are required to be audited according to the generally
accepted standards of auditing. Some of the concerns that are examined in this particular article
are cost of compliance with IFRS and the associated benefits, complexity and length of
international standards, international application inconsistent application and lack of accounting
firm presentation on the international standards setting board. It has been ascertained that the
individual national approaches are not viewed as efficient and they pose a risk to international

6CHALLENGES OF ACCOUNTING IN GLOBAL ORGANIZATIONS
convergence. Existence of alternative approaches would lead to compromising of consistency
and comparability of the reports and working of accountants (Ro.uow.edu.au 2018).
Another article extracted from science.direct.com regarding the Australian perception of
role of universities and practice in professional accountant’s education. In this particular paper,
the respective responsibilities and roles of professional accountants gas been addressed. Issues
pertaining to such profession are explored by reviewing literature in accounting and other
profession concerning the role of employers in development of skills of professionals and
technical and non technical knowledge particular accounting practitioners. It has been suggested
by the findings from literature review university based education failed to recognize the
opportunity cost associated with generation of accounting degrees and changes that have
occurred in responsibilities and roles of accounting practitioners (Steconomiceuoradea.ro 2018).
An article of digitization and accounting information transformation extracted from
tandfonline.com discusses about the information, understanding of data and knowledge
relationships. Development in accounting knowledge is examined in terms of cost and
organizational structures, outsourcing, digitization and cloud computation. It is required by
organization to be sensitized to different types of knowledge and challenges in application and
creation of knowledge. The article points to points to the complexities presented by Big data in
relation to management of accounting information, financing function and making specific
functions. In addition to this, the change in structure of costs is affected by the development in
utilization of information, data and knowledge (Parida et al. 2015). It can be concluded from the
analysis of this particular article that a range of information literacy challenges is created by the
possibilities for digitally enabled business along with generation of new possibilities for
providers of accounting information.
In an article titled “Accounting in global environment” it has been found that accounting
for multinational organization is involved in issues of management accounting that particularly
concentrated around the costing procedures. This can be explained with the help of an example
that foreign corporations are allowed to carry out their operations in developing country where
such benefits are derived from operations in terms of taxes and employment. Many global
organizations were criticized due to their loading cost of their operations in developing country
and such issue is regarded as issue of transfer pricing (Oaji.net 2018).

7CHALLENGES OF ACCOUNTING IN GLOBAL ORGANIZATIONS
A paper on the new challenge of accounting system related to environmental accounting
was extracted from semantic.scholar.org helps in exploring the tendencies and roots of
environmental accounting development. The paper has examined the challenges faced by
accounting system generated by environmental activities. It has been ascertained that the
accounting system is not well equipped with providing sufficient information about organization
environmental activities. Interpretation of environmental accounting is done at different levels
due to the fact that environmental problems are becoming a global issue (Unctad.org 2018). This
area also incorporates the accounting reactions into the sustainable development. A new
accounting system have been developed that would help in providing solutions to the new
challenges faced by sustainable development. In today’s world, pressure on environmental
accounting is increasing so that they are able to integrate every day accounting activities. The
existing system of record keeping comes with role of integrating social matters and financial
impact of environment (Knorringa and Nadvi 2016). It has been found that environmental
management tool within the environmental financial accounting plays a very crucial role in
informing external stakeholders.
Identified gaps in literature review:
The objective of this paper was to make comparative analysis of the literature review
presented in different articles regarding the challenges faced by accounting in global
organizations. It was ascertained by literature review that there is considerable volume of
qualitative and quantitative research in relation to the impact of implementation of reporting
standards on accounting. However, the actual process of adoption of such standards by reporting
entities and how it has changed the accounting profession has not been researched widely.
Furthermore, it has been found that previous research paper did not conduct exhaustive literature
review and going through the research work available concerning several aspects of the given
topic, it is indicated that there exist some gap in the study of accounting challenges faced by
global organizations (Guthrie and Parker 2014). Nevertheless, information is available on aspect
of accounting issues regarding the adoption of international standards in different countries.
Most of the research works have shown the studies that are related to the adoption of IFRS by
reporting entities in different countries and the challenges that are faced by accounting
profession with reference to this. The challenges faced by global organizations due to adoption

8CHALLENGES OF ACCOUNTING IN GLOBAL ORGANIZATIONS
of international reporting standards have been analyzed. There have been extensive efforts on
reviewing the available literature for gaining proper insight into the IFRS implication on
accounting profession. It is essential to throw some light on the critical aspect of accounting
issues faced by reporting entities at global level in relation to adoption of technological system.
Different authors who have contributed to the given research topic have agreed point on the
research practice gap is that the academics focus on journal article in which their research
findings are published and the accounting professional seeks immediate solutions to their own
problems (Ceulemans et al. 2015).
Conclusion:
From the analysis of the given topic, it has been found that accounting profession faces
several challenges in carrying out accounting tasks at the global level. Accounting standards of
different countries and international accounting standards have considerable implications on the
accounting profession as the accountants are faced with the challenges of treating various books
of accounts. However, it is required to further develop the literature review so that insight
information is gained on the practice of accounting profession and the challenges faced. It is
required by researcher to have a better understanding into the differences and similarities for
professional accountants between qualification and educational system of selected countries. In
order to continuously improve the auditing practice and corporate practices, the competences of
professional accountants should be strengthened that is regarded as central elements in alobal
efforts.

9CHALLENGES OF ACCOUNTING IN GLOBAL ORGANIZATIONS
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