HI6008 Project: Investigating Accounting Challenges in Global Firms

This research project aims to identify the various accounting challenges faced by global organizations, examining issues arising from the economic environment, business operations, organizational structure, differing national regulations, enterprise consolidation, and transfer pricing. It includes a literature review summarizing existing research on financial accounting components within multinational enterprises and specific challenges encountered. The research methodology section details the qualitative approach, research design, philosophy, and data collection methods employed. The primary research question investigates the impact of accounting challenges on the financial performance of global organizations, while secondary questions explore the potential of trends like green accounting and technological advancements to mitigate these challenges. The project also acknowledges research limitations and provides a framework for understanding and addressing accounting complexities in the global context. Desklib provides students with access to a variety of solved assignments and past papers.

Running head: BUSINESS RESEARCH METHODOLOGY
BUSINESS RESEARCH METHODOLOGY
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction......................................................................................................................................2
Project Objective.............................................................................................................................3
Project Scope...................................................................................................................................3
Literature review..............................................................................................................................4
Research Questions..........................................................................................................................7
Primary Question.............................................................................................................................7
Secondary Question.........................................................................................................................8
Research Design and Methodology.................................................................................................8
Research Design..............................................................................................................................8
Research Philosophy........................................................................................................................9
Research Method...........................................................................................................................10
Data collection method..................................................................................................................10
Sampling design.............................................................................................................................11
Sample size....................................................................................................................................11
Research Limitations.....................................................................................................................11
Conclusion.....................................................................................................................................13
References......................................................................................................................................14

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Introduction
The purpose of this research study is to focus on the challenges of accounting in the
global organization. Recent evidences reflect that the enterprises across FSI (financial services
industry) are facing huge challenges owing to constantly evolving complexities that has been
presented by financial accounting and regulatory requirements. Now- a- days global organization
face several challenges regarding accounting. Maintaining numerous books of accounts of
several global organizations spread across various locations and thus consolidating this for
cohesive presentation is highly difficult. Different accounting practices, accounting standards
and rules as well as regulations create challenges for the global corporations. Financial
accounting is considered as one of the important aspects of the global accounting, which is
regulated by GAAP(Generally Accepted Accounting Principles). Its basic purpose is to prepare
financial statements for external stakeholders. The organizations prepare financial statements
based on GAAP principles that are needed to be standardized (Bryman and Bell 2015). There are
few nations where rising economic development as well as enhancement of capital market has
led to the age of finance and information. This in turn led to huge change in the environment of
financial accounting and several challenges. In order to deal with all these challenges, global
organizations devote huge efforts as well as resources. Nevertheless, still now there are several
challenges that are unsolved owing to its complexities. This study provides a comprehensive
analysis of several challenges that are faced by global organizations due to financial accounting.
Furthermore, the study also reflects on the literature review on how the global organizations are
facing difficulties in financial accounting. Furthermore, the research methodology section
focuses on the methods adopted for doing this research study.

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Project Objective
The main objective of this project is to identify the challenges of accounting faced by the
global organizations. Particularly, the sub- objectives considered for this project are given below:
 To identify the accounting challenges that global enterprises face from the economic
environment.
 To examine the accounting challenges stemming from production as well as business
operations
 To identify the accounting challenges originating from organizational structure.
 To investigate how different regulations for each nation poses challenges of accounting
to the enterprise
 To recognize how consolidation of enterprises creates challenges of accounting
 To investigate how transfer pricing as well as intercompany allocations of cost creates
accounting related challenges for multinational enterprise.
Project Scope
This particular research project provides huge scope to the multinational organizations to
understand the different kinds of accounting related challenges that might affect them while
doing business in the global market. This research study will not only help the global business to
understand these challenges but also help them to mitigate these challenges occurring in their
business operations. In addition to this, this research project will also facilitate these global
enterprises to face these obstacles and avoid risk in businesses.

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Literature review
Financial accounting components in the multinational enterprises
It has been opined by Christauskas and Miseviciene (2012), financial accounting is one of
the important parts of the global organizations. By application of different financial procedures,
the enterprise obtains useful information for the decision making. It mainly plays active role in
the business operation as well as in management decisions of the enterprise. This not only
improves the financial performance of the enterprise but also benefits ordered development of
the market economy. It also aids in providing the enterprise external stakeholders involving
creditors, government authorities with proper information that indicates profitability as well as
financial position of the enterprise. It has been cited by Burks (2014) that, financial accounting
involves different accounting principles, accounting elements and other accounting practices that
is integrated by the organizations. It has been found out by some researchers that different
elements of accounting mainly encompass the enterprise financial positions and operational
performance during a specified time. In fact, the assumptions of accounting are also crucial to be
set by the multinational corporations as it serves as basis for accounting practices, process and
principles. Now- a day’s financial accounting has been largely accepted with proper accounting
conventions of the global enterprise.
Challenges of accounting in global organizations
In the present century, global organizations face numerous challenges in financial accounting
practices. These challenges that the enterprise faces are thereby discussed below:
Challenges occurring from economic environment

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Chenhall and Moers (2015) opines that traditional accounting still remains the major stream in
the multinational enterprise that suits the present economic environment. Gradual changes in the
accounting environment break the dominance and thus lead to emerge of e- accounting in future.
The introduction of e- commerce largely affects traditional accounting and thereby creates proper
environment for emerge of effectual accounting framework. In addition to this, one of the new
forms of accounting information system which is developed in internal environment such as – e-
accounting appears. It has been pointed out by few researchers that this influences various
aspects of accounting involving- identification, measurement and reporting. According to Wilson
(2014), the global organizations face challenges relating to accounting as e- commerce gets
relied on the digitization. It has been revealed by Ebrahim, Battilana and Mair (2014) that,
generally accepted accounting principles and development in capital market creates challenges in
those areas of the independent audit.
Challenges stemming from enterprise structure
In the present century, the enterprise adopts vertical hierarchy enterprise structure which
is mainly comprised by several layers. However, this separates different functions within the
organizations. Guthrie, Burritt and Evans (2015) indicates that this structure has led to bad
response to circumstances and high management cost. Moving into the globalization age has led
to new features of the enterprise structure. Moreover, specialization in work has been no longer
taken into account as guiding principle for labor division. Wilson (2014) points out that the
departments within the enterprise perform various functions. For example, sales department
takes the charge in accounting, finance and market research while the production department
might take the responsibility for direct sale and accounting. The middle management that serves
as linkage between employees and top management has been no longer important in the present

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business enterprises. However, this can create another challenge of accounting in the
organizations. Furthermore, complicated communication systems also create challenges for the
accounting managers working in these multinational enterprises. The global organizations are
however implementing effective strategies as well as actions for dealing with these challenges. it
has been stated by Bryman and Bell (2015) that, improvement in organization’s accounting
management has decreased the internal information sharing cost, which in turn resulted to
collapse of hierarchy.
Challenges from business production and operation
Rapidly increasing information technology sector has been taking over information
sector’s place as the biggest industry. In this industrial age, global enterprises are becoming
production centric, which means that internal control system covers mainly the production
procedure. According to Burks (2015), in the present information technology age, the
organizations mainly pays attention to R&D, market research and internal communication. Burks
(2015) elaborates that measures of financial accounting have advanced in all countries which has
organized trade over the years. As trade turns out to be worldwide as well as difficult, the
procedure of financial accounting becomes highly complex in business enterprise (InstaReM
Insights - An Expat and Remittance Journal 2018). Furthermore, the enterprises which have
subsidiaries mainly faces several challenges in financial reporting.
Challenges of various local regulations for every nation
Zaleha Abdul Rasid, Ruhana Isa and Khairuzzaman Wan Ismail (2014) opines that
GAAP especially varies across different countries. For example, IFRS, SFRS are not considered
as universally accepted reporting standard. As regulations relating to legal matters and

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accounting varies across the nations, this affects accounting as well as profitability of the global
organizations. With rising complex business realities, changes in these accounting regulations
occur. This in turn poses challenges to the enterprise operating across the globe.
Challenges stemming from consolidation of enterprises
Haynes (2017) cites that accounts of each enterprise is required to be highly maintained
according to nation’s rules and accounting standards. Therefore, provided continuous
fluctuations in currency rates, it has been vital to assure that proper foreign exchange rates are
used for assessing and converting respective nations amounts into reporting currency.
Challenges of transfer pricing and cost allocations
Transfer pricing refers to the fixing of product prices between the enterprises and within
the group of enterprises. For example, if one subsidiary sells products to the parent organization,
the consideration for products paid by this parent organization to subsidiary is transfer pricing.
Proper accounting from transfer pricing perspective and cost allocations has been desirable for
global organizations who are involved in financial transactions with other subsidiaries (Wilson
2015). Moreover, different laws relating to transfer pricing has been creating accounting
challenge for the global organizations.
Research Questions
Primary Question
The primary question of this research is given below-

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 Whether challenges of accounting impact the financial performance of the global
organizations?
Secondary Question
There are more than one secondary question, which are explained below-
 Whether certain trends in accounting such as green accounting, accounting harmonization
and advancement in technology can mitigate the challenge of accounting in
organizations?
 Do present trends in global management accounting can address challenges of
accounting?
 Will these challenges of accounting in multinational organizations continue in future?
Research Design and Methodology
This section provides an overview on the different tools that will be used in order to
complete this specific research study such as- research paradigm, research method, research
design and method of data collection (Bryman and Bell 2015). For this particular research study,
qualitative method has been used for identifying the challenges of accounting in the global
organizations.
Research Design
Research design aids to appraise those variables that are going to be used in research
study. Research design is classified into three broad types involving- explanatory, exploratory
and descriptive (Marczyk, DeMatteo and Festinger, 2017).

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Exploratory research design facilitates to investigate the situation for fulfilling the
objectives of this research study. It includes- interviews, group design that the researcher
integrates for obtaining accurate correct results of study.
Explanatory design depicts the attempt of relating with human thoughts for understanding
cause and effect of situation. It mainly interrelates those factors that occur in collective way.
Descriptive design reflects on respondent’s attitude in appropriate way. The research
basically endeavors to assess additional information collected for this specific research study.
For this research, descriptive research design will be implemented for investigating the
challenges of accounting in global corporations. This research design will be used since it aids to
explain as well as validate research findings. Moreover , exploratory and explanatory research
design will not be used since it utilizes modest samples that are not selected based on chance.
Research Philosophy
Research philosophy aids the researcher to categorize research principle by using various
aspects of this research study. Research approach is mainly of three kinds such as- positivism,
interpretivism, pragmatism.
Positivism philosophy explains about technique of data collection and positive facts
which has been taken from empirical facts. It takes into account concepts for conducting
hypothesis testing while doing this study (Hair et al. 2015).
Interpretivism philosophy indicates type of social approach that relies on social science.
The researcher adopts this by implementing qualitative research.

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For this research study, positivism philosophy will be implemented by the researcher in
order to identify the challenges of accounting in organizations.
Research Method
Research method is generally of two kinds- deductive and inductive. Deductive method
mainly involves developing and testing the hypothesis on the basis of existing theories. Inductive
method signifies investigation of new theories and working with wider generalizations.
For this research study, deductive method will be implemented in order to investigate
several challenges of accounting in global enterprises. Moreover, this method will help to
determine hypothesis by using present theories (Sekaran and Bougie 2016).
Data collection method
Data can be collected by suing two methods- primary and secondary. Primary data is
usually obtained from observations as well as surveys while secondary data is gathered from
internet and newspapers. Primary data has been categorized into qualitative and quantitative.
Quantitative data are analyzed by using statistical inferences. The process that will be used for
gathering quantitative data collection mainly – surveys and experiments. On the other hand,
qualitative data indicates the objects which are categorized based on characteristics and
properties. The methods that are used for collecting qualitative data involve- archival materials,
interviews.
For this research study, primary data will be conducted in order to investigate the
challenges of accounting that organization faces. This data collection method is used as it highly
reliable than secondary data. Moreover, qualitative data has been used for this study for

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obtaining accurate outcome of this research. Interview of employees and managers of
organizations will be used in order to gather qualitative data for this research study (Eriksson and
Kovalainen 2015).
Sampling design
It refers to sampling technique which includes components of the population in a large
sample. There are various methods used for sampling design such as- random sampling,
stratified and cluster sampling (Zikmund 2013). For this research study, simple random sampling
will be used since samples are randomly selected from huge population. This means employees
will be offered equal opportunity to be selected from sample.
Sample size
It determines act of selecting respondents for involving in statistical sample. It is a vital;
attribute for making conclusion about the interviewees. In this case, interview of 50 employees
and managers will be taken for doing this research.
Research Limitations
This particular research study has certain limitations, which are given below-
 The interview taken to the employees of few organizations were really tough for the
researcher.
 It was difficult to select employees from large population
Time Schedule
Activities in 1st week 2nd week 3rd week 4th week 5th and 6th 7th week

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Research week
Selecting research
study
Developing this
research plan
Literature review
Research
Methodology
Primary data
collection
Findings and
analysis using
primary data
Initial Draft
Conclusion and
recommendations
Final Submission

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Conclusion
It is vital to understand patterns of the accounting development. In this present century,
the enterprises are facing difficulties in grasping trends of accounting. For the past few years,
these accounting challenges are adversely influencing the financial performance of the global
organizations. In order to mitigate these challenges, the enterprises are adopting new strategies
and introducing new practices. The accounting managers are also integrating new technologies
for avoiding any type of risk occurring in their business operations.

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References
Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
Burks, J.J., 2015. Accounting errors in nonprofit organizations. Accounting Horizons, 29(2),
pp.341-361.
Chenhall, R.H. and Moers, F., 2015. The role of innovation in the evolution of management
accounting and its integration into management control. Accounting, Organizations and
Society, 47, pp.1-13.
Christauskas, C. and Miseviciene, R., 2012. Cloud–computing based accounting for small to
medium sized business. Engineering Economics, 23(1), pp.14-21.
Ebrahim, A., Battilana, J. and Mair, J., 2014. The governance of social enterprises: Mission drift
and accountability challenges in hybrid organizations. Research in Organizational Behavior, 34,
pp.81-100.
Eriksson, P. and Kovalainen, A., 2015. Qualitative methods in business research: A practical
guide to social research. Sage.
Guthrie, J., Burritt, R. and Evans, E., 2012. Challenges for accounting pathways in Australia in
2012: an introduction. Emerging pathways for the next generation of accountants, 9.
Hair Jr, J.F., Wolfinbarger, M., Money, A.H., Samouel, P. and Page, M.J., 2015. Essentials of
business research methods. Routledge.
Haynes, K., 2017. Accounting as gendering and gendered: A review of 25 years of critical
accounting research on gender. Critical Perspectives on Accounting, 43, pp.110-124.
Hoque, Z., 2018. Methodological issues in accounting research. Spiramus Press Ltd.

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InstaReM Insights - An Expat and Remittance Journal. (2018). 4 Biggest Accounting Challenges
Faced By The Global Companies. [online] Available at: https://www.instarem.com/blog/4-
biggest-accounting-challenges-faced-by-the-global-companies/ [Accessed 23 May 2018].
Marczyk, G., DeMatteo, D. and Festinger, D., 2017. Essentials of research design and
methodology. John Wiley.
Sekaran, U. and Bougie, R., 2016. Research methods for business: A skill building approach.
John Wiley & Sons
Wilson, J., 2014. Essentials of business research: A guide to doing your research project. Sage.
Zaleha Abdul Rasid, S., Ruhana Isa, C. and Khairuzzaman Wan Ismail, W., 2014. Management
accounting systems, enterprise risk management and organizational performance in financial
institutions. Asian Review of Accounting, 22(2), pp.128-144.
Zikmund, W.G., Babin, B.J., Carr, J.C. and Griffin, M., 2013. Business research methods.
Cengage Learning.