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Globalization Essay

1695 words - 7 pages

Executive summary
This research concentrates on the relation between globalization and accounting and how it affects it. The paper analyses the effects of globalization from three different sections, the effects on management accounting, the effects on the Generally Accepted Accounting Principles (GAAP), and negative and positive effects on accountants. From the GAAP perspective, the accounting principles seem to lose supremacy in the world due to the upcoming international rules for financial accounting (Cline 2010). According to management accounting, globalization seems to impose businesses to look deep into the compliance of standards. With regard to threats and opportunities resulting ...view middle of the document...

On the other hand accountants turning a blind eye to the effects of globalization might face an extremely tiresome future of their career. Bearing this in mind, the research paper will discuss the different ways globalization affects accounting.

Globalization and Management Accounting
Globalization is transforming the balance among the numerous strategies in the accounting field (Saudagaran, 2009). According to previous records, the accounting profession, worldwide appeared to be focusing on the preparation and auditing of financial statements. When mentioning Financial accounting individuals may think of Certified Public Accountants (CPAs) and other practitioners of accounting. On the other hand, in different parts of the world, management accounting discipline is a division of the accounting field (Sahi and Dua 2012). Management accounting and financial accounting are two distinct lines of work in certain regions. Management accounting, as a sub category, deals with financial and non-financial information to aid with management decisions. However, financial accounting focuses on financial data only to support both creditors’ and investors’ decisions on capital issuance (Kinney and Raiborn 2008). Management accounting initially concentrates on enhancing business performance yet not guaranteeing that the business complies with the set standards. From this perspective, it is evident that financial accounting dominates management accounting.

There are different purposes behind the practice of management accounting in relative anonymity (Kinney and Raiborn 2008). The primary reason is that a few countries, for example America, did not confer themselves to worldwide intensity (Kinney and Raiborn,

2008). In that capacity, the organizations of such countries confronted insignificant rivalry from abroad. In the 1980s, America being one of those countries that did not take into consideration worldwide competition was caught off guard by foreign companies, which had been improving competitiveness. The second purpose behind the low profile of management accounting is the less data driven style of management (Juan, 2007). A significant number of managers are more likely driven to make decisions based on personal benefits rather than analysis to maximize competitiveness.
The importance of management accounting because of globalization has resulted in economic challenges implemented by managerial shortcomings (Diaconu & Coman, 2006). It is evident that foreign companies depend mainly on management accounting to achieve their objectives in global markets. This implies that management accounting jobs need to be called in to rescue the falling foreign companies in this time of massive pressure (Diaconu & Coman 2006). Management accounting will contribute to the birth and conservation of value.

Globalization and Generally Accepted Accounting Rules
The rise of alternative standards that are at an important level, which is likely to...

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