Accounting can be defined as the analysis, collections and communication of economic information. But social perspective is very important in order to understand the role and importance of accounts in the society. People stay together in an environment by maintaining relationships with each other. A society can be reviewed by dividing it into various sectors or areas. Different types of areas could be economic, social, organizational and political. Communication between these areas is very important to maintain the efficiency. This communication is effectively provided by the accounting information.
Many important purposes are served by the accounting information like helping people to allocate their resources by taking informed decisions. Hence this information has vast impact on the society in the broader sense. The national coal board case satisfyingly explains this point as the closing of the coal pits had a great impact on jobs, electricity and taxes. Accounting is constructed socially as depicted in many scholars work and it is more art than science. Its structure, characteristics and practices play important role to make it legitimate in present scenario.
It is quite important as it follows few rules, requires negligible theoretical knowledge as compared to other professions. A stewardship role has been played by accounting as explained in much research paper. It depicted accounting as the extension of the personal memory of the owner. But business practices and society is changing day by day. There has been an increase in the complex transactions because of the expansion of global business and e commerce which in turns lead to inconsistency in its accounting principles. So, this paper will critically evaluate the structures, role and characteristics of accountancy to justify its legitimacy in present scenario.
Role and Structures of Accountancy Profession that make it Legitimate
Apart from these the main job of an accountant which makes them legitimate in a company is to devise a corporate strategy, help in reduction of expenditures, mitigation of risks and improvement of top line. Professional accountants are the people who represent the owner’s interest. The shareholders can also be termed as the owners. The roles performed by them normally include- chief executive appointment, governing the organization, devising the compensation of the management. The professional accountants are the chief financial accountants and they have a deep insight of the financial health of the company.
The financial health of a company is affected by various factors such as the strategy that drives the business and the analyzed reports relating to the financial information. The same as the internal auditors, the professional accountants make sure that the internal control processes, governance and risk management is under control for a company. The areas of enhancement are also taken into consideration by the finance professionals. The professional accountants in the public sector are responsible to shape the financial policies which have a great impact on the lives of many. They also play an important role in guiding the next generation accountants by spreading knowledge, ethics and skills.