Accounting is a process by which a company’s financial information is identified, measured and communicated to internal and external customers. It helps to identify the financial health of a company, thereby facilitating judging the performance of a company. Therefore, having a good accounting system is very important for effective implementation.
Globally, the business environment has changed over time. For example, business has been globalized; Multinational companies come into existence. Information technology has advanced a lot over time. All this has an effect on the accounting system. Thus, it is a prerequisite to identify the challenges of the accounting system from time to time and to address them. These challenges may be common to different countries, depending on the accounting practice, government intervention, and existing regulations for accounting practice. Let’s take a look at the challenges that the Australian accounting industry is facing.
Impact of accounting failure
There are many examples of different Australian companies, such as Alco Finance Group, HIH Insurance, etc., which have collapsed financially. It has cost the shareholders of the company billions of dollars. At the same time, it affected society as a whole by increasing the unemployment rate. Thus, the occurrence of such falls is seriously considered and the shortcomings of the accounting system, if any, are addressed. In response to this unfavorable financial crisis, in Australia, various regulatory guidelines and a professional ethics practice were introduced. Various parameters such as transparency and commitment to ethics should be the focus of the accounting system.
The five challenges facing the Australian accounting industry
Unaccounted for accountant
One of the challenges of this industry is unqualified and unqualified professionals or accountants. This can be a serious problem for the industry. There are no regulatory rules in Australia for starting a career as an accountant. For other professions such as solicitors and doctors, they must pass a qualification test and be associated with a relevant professional organization. However, in the case of accountants, anyone can start practicing as an accountant, even if he does not have sufficient qualifications as an accountant. Some businesses even seek advice from such incompetent accountants. They give bad advice due to lack of accounting skills, which adversely affects the business. This type of information can help in hiring accountants.
Another challenge is associated with financial markets. There is a highly competitive environment for different financial instruments such as convertible notes. So it becomes challenging to create such financial instruments with enhanced features to attract more investors. And, at the same time, such complex financial instruments are more difficult to deal with.
Online accounting software
The development of online software technology helps business owners to do their own business related services such as the work of an accountant. So, they like to do these things themselves. However, they do not realize that professional accountants have the skills to handle account-related matters and therefore can provide the best possible service with very little chance of making a mistake. In such a situation, the business is facing loss of crores of rupees.
The next challenge facing the accounting industry is the tendency to merge or merge two companies. If there is a problem in a company, the management starts thinking of consolidating it without trying to find the real problem. Simply merging firms will never solve the problem in advance. Sharing resources and delivering diversified products at low cost is a good approach, but to deliver it, consolidating companies is not always the final option.
Another challenge in this industry is one of the estimates made in accounting; Guess the concern going. The treatment of the available accounting data is different for the company if we take into account the notion of ongoing concern about the company without considering eliminating it in one year, two years, five years or ten years. It should be mentioned in an audit report. If the audit report is prepared, estimates the ongoing concerns for the company and, unfortunately, the company will be canceled in the near future, then in such a situation, a lawsuit can be filed against the auditors who conducted the audit.
Need for an effective accounting system
For an effective accounting system, we must first identify the challenges in this area and then address them properly. Not just business, it helps young finance students understand different accounting systems and their responses. It is very important for anyone learning accounting and finance to learn them in the right way. Otherwise students may get lower grades in accounting and screw up completely.