Accounting Theory: Effective Communication in Accounting

This essay on accounting theory examines the crucial role of communication within the accounting profession. It highlights how effective communication is fundamental for accountants, facilitating the transformation of information to stakeholders, including shareholders, investors, creditors, and government bodies. The essay emphasizes the importance of clear and succinct communication for coordination, control, and decision-making within organizations. It explores how accountants must communicate financial data meaningfully to various users, focusing on the preparation of financial reports like balance sheets and income statements, and the need for communication with government units and banks. The essay also discusses the evolution of the accountant's role, emphasizing the need for interpersonal skills and effective communication, both written and oral, to convey financial information. The essay concludes by underscoring the importance of communication skills and the need for collaboration between instructors, practitioners, and communication specialists to develop relevant communication skills for accounting programs. The essay also provides a detailed list of references to support the arguments.

Running head: ACCOUNTING THEORY
Accounting Theory
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Introductions:
Communication is regarded as the core activity in the profession of accounting as
communications facilitates transformation of interest from one person to another person or a
combination of both and to shareholders or stakeholders of the organizations. Effective
communications form the important aspects of the business dealings with employees and
outsiders such as vendors and clients (Wilson, Gray and Hamilton 2016). Accounting forms
an inherent part of any business and goods communications is considered as the vital in
performance of business activities. Significant financial tasks in the form of preparation of
budget and reporting, payment of bill, payroll and recording of income should be presented
appropriately to the management and others to be regarded as useful and meaningful.
Discussion:
The function of communication is to make sure that each member of the organization
knows what is anticipated. Good communications is considered to be critical in ensuring
coordination and control of each individuals, group and departments (Wilson, Gray and
Hamilton 2016). The profession of accountancy must understand clear and succinct
communications along with the significances of poor communications. Better
communications make sure that individuals understand what they anticipate, that the correct
person obtains the correct information and ensure appropriate coordination inside the
organizations. It makes sure that the control of the organization plans and procedures and the
instructions provided by the management to the staff are understood.
In the modern world accountants are faced with the complex situations. They are not
only burdened with the responsibility of measuring economic data but they also have to
shoulder the responsibility of communicating the data in a meaningful manner to the various
users or receivers of the accounting information (Gaviria, Arango and Valencia 2015). These

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users are generally investors, creditors, government, management and others within the
business organization. All these users need accounting information since this information are
important in decision-making processes.
The most noteworthy use of the accounting facts is to communicate significant
evidence that allows the organisation to undertake good decisions (Wilson 2016). In order to
make the information real, accounting information should be meaningful and must be
understood otherwise it is simply the list of facts having no actual meaning. Several business
makes the use of the templates for interior reports in order to communicate information in a
matter, which is conversant and simple to use by the organisation. For instance, financial
departments might obtain actual versus budgeted forecast reports each month as using this
similar format might help in understanding and analysis.
Other vital users of the accounting information are the investors as they are the one
that wants to know and understand the how the business is performing financially. Generally,
such kind of accounting information is communicated with the help of the standard reports
generally in the balance sheets and income statements, accumulated by using generally
accepted accounting principles (Apostolou et al. 2015). A balance sheet represents the assets,
including cash, liabilities and owner’s equity. An income statement on the other hand
represents income and expenditure of the business during a specified period of time. Both
such statement are combined each month that allows the comparison and analysis from the
investors point of view. A large number of investors would want to see whether cash flow
statements having information regarding inflow and outflow of the money.
An important consideration regarding the communication of accounting information
is that such information should be communicated correctly to the government units at the
time of levies (Lawson et al. 2015). For instance, taxes require sales and makes the use of tax

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on specific substances with accounting evidence should be obtainable under an assured
manner to be significant. Alternative example of government communications is the yearly
tax return with interior revenue service as under such circumstances evidence is following the
specific rules and regulations.
Banks on the other hand, might want to be appraised regarding the monetary situation
of the companies, by establishing communication of accounting substances forming as the
main concern in several companies. In the case of the bank loans, there can be episodic
reports that makes the use of the accounting information (Rebele and Pierre 2015). Banks are
generally involved in the cash flows and might need distinctive reporting in case of a
company’s position of liquidity together with both the short-term books receivables and
payables. All this kind of material should be conversed to the bank clearly or else the
business might not obtain loan.
One of the best example of promoting effective communication for any form of
accounting information is to do the same in writing and in a report format in accordance with
the description on the left hand side of the pages. This helps in effective transformation of
accounting commination with summarized version of information to facilitate better
understanding for the financial users of the information.
The significance of communication in accounting is considered as the language of the
business, there are large number of people that consider accounting as the number however
accounting is more than just the number (Dickfos, Cameron and Hodgson 2014). Business is
changing and so are the belief regarding the descriptions along with the associated skills
necessary to perform the jobs. An important consideration in this regard has been bought
forward which states the stereotypical role of the accountant is merely characterised as the
introverted persons. As numbers should be replaced with the understanding that current,

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accounting professionals is necessary to possess the interpersonal skills to help with the
decision-making procedure across all the areas of functions regarding the accounting
principles and decisions.
The accountant of current era, particularly under the realms of the managerial
accounting are required to communicate their ideas and financial information to others in the
company of many where non-accountants and non-financial people are tactful and effective.
Management accountant are required to be now a better communicator (Deegan 2013). The
Practical analysis of the management accountant sought after in determining the methods
involved in the changing roles of the accountants. There are circumstances when the
accountants and the management will be able to communicate better regarding the changes
and results and the information relating to the financial statements.
Additionally, effective communication helps in providing accurate information in the
form of various notes. In order to administer such situations, the accountant and the manager
are required to develop the effective communication skills both verbally and in written
manner (Lawson et al. 2016). this will additionally help in enabling communication amid the
international users of the financial instrument along with the companies that seek to publish
the information.
Several studies have examined that oral communications skills is considered as the
usually graded working accountants being the further significant than the written skills of
communications. According to several studies that have distinguished amid the formal and
informal communications skills. As stated by Jack, Davison and Craig (2013), there has been
an evidence where the accountants as more significant than the formal skills of oral
communications regard oral communications skills. Similarly, informal writing skills is

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placed on the higher side in the list of important practicing accountants than the formal
writing skills.
According to Wilson (2016), professionals of accounting must be able to present,
converse and report their opinions with the help written and spoken communications.
Although the readings have unswervingly addressed the communications skills required by
the working accountants however, the general conclusions are regarded as uncertain. There is
certain agreement that states that the practicing accountants regard informal oral and written
skills of communications as the most noteworthy.
Several research has revealed some of the contrasting views among the instructors and
secretarial practitioners regarding how the communications skills must be prioritized. As
stated by Slack (2014), it has been reported based on the survey that the opinions of the
commercial communications instructors and bookkeeping practitioners are carefully
associated. However, the opinions of the practitioners have deviated from what was stated in
the survey. The deviation states a greater requirement for cooperation among the accounting
professionals and the specialist of communications so that an improvement can be made level
of communications for the graduate’s accountants.
The significance of communication skills regarding accountants have been measured
and conversed for more than half a century. Nevertheless, several elementary queries
continue to be unanswered or remains unsettled. One of the prime reason surrounding the
queries is the weakness in the classifications of communications skills considered in the
previous studies. In addition to this, a large number of the current skills of communication
researched is out-dated with slender in possibility and is restricted to terrestrial research. One
of the important challenge for the secretarial instructors is to make sure that the transferable
is aligning with the most regularly achieved task of communication in bookkeeping.

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To attain this, there must be a collaboration among the instructors, practitioners and in
specific communication specialist to recognize the pertinent skills of communications that is
required to be implemented in the accounting programs. As stated by Ahadiat and Martin
(2016) educators that are involved in the incorporation of the communication skills in the
accounting agendas must ascertain the lessons in providing necessary, movable abilities for
the practicing professionals. Greater degree of teamwork among the secretarial profession,
accounting instructors and communication specialist is considered to be critical, assuming the
viewpoint that has been detected amongst the three groups. As cited by Wilson (2016),
detailed technical proficiency would always form the part of the accounting success however
accountants that develops the skills of strong communications will have greater chances of
success.
As understood, practicing accountants seem to consider the significance of the
informal communication skills greater than the formal skills of communication. Burns and
Needles (2014), have placed greater amount of importance for accountants having the
aptitude to communicate the nonconcrete ideas to the audience with non-accountant’s
backgrounds in the casual settings. Instructors on the other hand, have placed formal
communication skills over the informal skills of communications. This suggest a
disconnection and suggests that programs of accounting may not be placing emphasis or
arranging the abilities of communications that is considered very critical to the occupation.
As such, the difference amid the formal and informal communication skills should be
evidently recognised and agreed. Facts on the comparative implication of formal versus the
informal communications skills across both the oral and written dimensions and underlying
the attributes along with the components, which supports these, must be defined with the help
of carefully designed research studies.

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Conclusion:
On arriving at the conclusion, the study has reviewed the current literature and has
identified the numerous skills concerning the knowledge gaps. It lay down the substance for
forthcoming investigators that are interested in discovering the abilities of the
communications by the accountants. By more specifically recognising the wants and
anticipations of practicing accountants, educators of accounting will be better capable of
targeting particular communication skills and components through which the design of the
accounting program and innovation educations. The study has conclusively placed greater
amount on the formal communication with greater amount of emphasis must be placed on the
informal communication.

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Reference List:
Ahadiat, N. and Martin, R.M., 2016. Necessary attributes, preparations, and skills for the
selection and promotion of accounting professionals. Journal of Accounting and
Finance, 16(1), p.11.
Apostolou, B., Dorminey, J.W., Hassell, J.M. and Rebele, J.E., 2015. Accounting education
literature review (2013–2014). Journal of Accounting Education, 33(2), pp.69-127.
Burns, J.O. and Needles, B.E. eds., 2014. Accounting Education for the 21st Century: The
global challenges. Elsevier.
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Dickfos, J., Cameron, C. and Hodgson, C., 2014. Blended learning: making an impact on
assessment and self-reflection in accounting education. Education+ Training, 56(2/3),
pp.190-207.
Gaviria, D., Arango, J. and Valencia, A., 2015. Reflections about the use of information and
communication technologies in accounting education. Procedia-Social and Behavioral
Sciences, 176, pp.992-997.
Jack, L., Davison, J. and Craig, R. eds., 2013. The Routledge companion to accounting
communication. Routledge.
Lawson, R.A., Blocher, E.J., Brewer, P.C., Morris, J.T., Stocks, K.D., Sorensen, J.E., Stout,
D.E. and Wouters, M.J., 2015. Thoughts on competency integration in accounting
education. Issues in Accounting Education, 30(3), pp.149-171.
Lawson, R.A., Pincus, K.S., Sorensen, J., Stocks, K. and Stout, D.E., 2016. Managing the
Curricular-Change Process: Implementing Competency-Based Accounting Education.

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Rebele, J.E. and Pierre, E.K.S., 2015. Stagnation in accounting education research. Journal
of Accounting Education, 33(2), pp.128-137.
Slack, R., 2014. The Routledge companion to accounting communication.
Wilson, R.M. ed., 2016. Researching Accounting Education: Australian Contributions.
Routledge.
Wilson, R.M. ed., 2016. Researching Accounting Education: Australian Contributions.
Routledge.
Wilson, R.M., Gray, F.E. and Hamilton, L. eds., 2016. Communication in Accounting
Education. Routledge.