The Debate Over Accounting Reforms Is Still Raging
Although there is a saying that “Old is Gold” but in the present context of the accounting standards this is fast becoming redundant. In many ways the organizations as well as the various accounting bodies are feeling as well as prophesizing that the present system of accounting is very fast becoming insufficient in dealing with the tasks like measuring and reporting the financial activity, success as well as the failure of enterprises, that includes the governments also. The term accounting reforms means the expansion of the existing accounting rules as well as procedures in order to be more accurate in their procedures as well as predictions. Some of the concepts that are currently under the scanner are like whether the actual cost of the transactions should be taken into consideration or the current market price. There is a great divide between the people who vouch for the traditional approach and the people who are in the favor of the modern approach. Both the approaches have their positives as well as their negatives. While the traditional approach is really strong as far as the reliability is concerned, it fails in the face of the events like inflation. The modern approach, although the most practiced approach does not count good as far as the reliability is concerned. Thus there is a great demand for the accounting reforms all across the globe.
It has been seen that the accounting standards have been increasingly activity based rather costing procedures because of the narrow accounting reforms within the professional management circles. The accounting industry is also in the favor of keeping the accounting standards as they are. This means that the various inadequacies like loop holed, complex, and difficult or rather impossible to be applied or audited by the laymen would continue to rule the roost.
Apart from the accounting industry even the governments have more or less played the role of stumbling blocks in carrying out various accounting reforms. If we consider an example then the best one would be the practice of the government in paying off the long term debts and thus overstate budgetary surplus and concealing operating deficits. This is very much true in the case of the alleged fraudulent practices by many of the companies.