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Effects of Globalization on Accounting Concepts

  • Haiyan Lin

Increasing global business competitiveness.

Globalization leads to more opportunity and hazards, as well as more competition and customers for most countries and organisations. Business need to improve their competitiveness. To understand product differentiation and cost controlling or provide better products to customers, deliver responsiveness are almost all of companies' goal.

To realize business competitiveness goal led organisation for taking new management accounting systems and techniques such as Activity-based cost systems and Activity-based budgeting systems. Activity-based cost system is more accurate to calculate the cost of goods, services, customers and other activity within company and also shareholder prices, as well as business budgeting. Activity-based budgeting is also more correct strategy to forecast firm's future costs and better standard to compare real costs. (Langfiled-Smith, 2012)

Raising global mobility of labour

Globalization is also elevating freedom of labour all around the globe. Organisations especially as IT companies have more shortage in IT skill. So they are really more possible to recruit worker from other countries.

The famous case in New Zealand is Wellington's "TAKE IT A WOLRD OF TECH TALENT TO WELLINGTON" plan. Federal support Wellington's company to recruit world high tech talents which pay 100 candidates' flight tickets and accommodation when candidates come to interview using their potential employers in Wellington.

Increasing pressures for accountability, relating moral and governance issues.

Management accounting use techniques such as inventory management and time management to understand accountability. The inventory management is effective method to reduce dealer costs, processing costs and production costs. Just-in-time beliefs is important inventory methods using in developing, Toyota is famous example.

Profession ethical codes have to be put on accountant. As management accountants, they have obligation to themselves, their fellow workers and their company to check out high criteria of ethical codes.

Increasing knowing of sustainability issues, especially climate change.

Environment became worse when financial is developing fast. The best serious environment issue is global warming. So for ecological global developing, many businesses make an effort to use environment friendly materials or lowering CO2 emission and use of various other scarce source of information such as normal water.

Example: both Australia and New Zealand reduce or reduce greenhouse gas emission no more than 1990 levels. (Langfiled-Smith, 2012)

Conclusion: Business environment changes continuality in the foreseeable future, management accounting should be adjust, improve and develop new techniques, composition and systems all the time.

  • Uses of information

Management accounting: the users are internal users such as managers and employees in any way levels. Professionals need management accounting information to make strategies and decisions.

Financial accounting: the users are exterior such as shareholders, lenders, bank, stock market, and government firms. Banks use financial statements to choose whether to provide loan to the business enterprise; potential shareholders use financial claims to consider whether to invest in the business.

  • Regulations

Management accounting: there are no exterior guidelines or accounting standard. Professionals generate information for the intended purpose of their management.

Financial accounting: there are accounting criteria and corporation regulations to regulate the content of external financial accounts such IFRS.

  • Source of data

Management accounting: the resources are come from both external and internal, as well as financial and non-financial data. The inner data is from physical and operational data from development systems. Exterior data is from market, customer and economic database.

Financial accounting: data almost from inner- organisation's core transaction-based accounting system.

  • Nature of the information

Management accounting: subjective; relevant; timely; recent, current and future-oriented; offered for all those level to fulfill professionals' needs.

Financial accounting: not timely; not always relevant; past; reliable; highly aggregated. (Langfiled-Smith, 2012)

Issues of level of privacy and ownership in the non-public information industry.

How to safeguard employees or customers level of privacy is important issue for the business. Business need to consider if to uncover employees or customer's information to the unrelated get-togethers.

For example: loan provider send their customer's information to guidelines as policies wanted but there was no permitted from their customer. The result was standard bank was sued by their customer.

Issues of computer security refer to exactness and confidentiality.

Computer security systems are try to prevent fraud and other unauthorised users to gain access to the protected confidential database. However, the bigger security system still can lead to other problems such as used to spy on reputable users.

For example: the secure computer system for Unitec, all students and staffs have their own account name and password to gain access to to online Portal. It is far more convenient for his or her work and study. Online Website has their private information such phone number, home address and passport copy. That is why portal need to separate student and personnel login to safeguard student private information from unauthorised person.

The ownership of property. What can business or individual own?

Laws are made to protect privileges of ownership for properties, such as software.

The question is whether individual and company should be restricted for using or usage of this Intellectual property.

For example: the laws of copyright protect those people who developed software from being copied. However, there is question whether copyright right or wrong, because many people imagine there may be more harm than good to own copyright laws. The issue is whether need to pay if to see or touch softcopy. The goal of copyright laws is to encourage producing new software or arts, but in fact copyright may have opposite impact.

Issues of equity access affecting culture, economic position and safeness.

Example: if documents are ready in one language and poor translated. Individual and organisation need to acquire technology equipment based on their economic capacity. And the access of equity also need to consider safeness of women that are pregnant or the minors.

Environmental issues.

It is simple to printing because of computer and printing device, however, print large amount of paper will cause disappear of tre

Strategies:

Sarbanes-Oxley Work (SOX) and Section 406 require company to acquire ethical code applied to CEO, CFO and controller.

Section 406 require moral codes:

  • The process to deal with conflict of interests.
  • To provide full, fair, exact, understandable and well-timed disclosure in documents and financial records.
  • Legal compliance: require employees to follow government's laws, regulations.
  • Organisation's mechanism to article permit prompt honest violations.
  • Accountability: the ethic method should effectively do something when ethic violation appear.

1) Strategic planning

Strategic planning is long-term planning usually for three to five years, extensive range and made by senior administrator. Strategic planning is including corporate and business and business strategy decisions commercial strategy decisions are about the types of businesses or marketplaces. Business strategy decisions are about how precisely the businesses to understand their unique market. (Langfiled-Smith, 2012)

2) Operational planning

Operational planning is short-term planning, more details and small range than proper planning and created by under senior professionals. The main goal for functional planning is to create information process to complete their perspective.

3) Linkage between proper and operational planning

Operational planning is process to make proper planning become a reality. Every goal on operational planning should web page link a number of strategic planning, otherwise, there is no meaning of operational planning, and company will waste materials their time and resources. For example, if a processing want to create second factory, their workers will spend more time in what it isn't priority for his or her second factory when there is no tactical planning.

References

A. Hall, J. (2016). Accounting Information Systems. Bostan, MA, USA: Cengage Learning.

Langfiled-Smith, K. (2012). Management Accounting: information for creating and taking care of value. Sydney, NSW 2113, Australia: Rosemary Noble.

McDonnell, S. (n. d. ). links between strategic and operational plans. Retrieved from Azcentral: http://yourbusiness. azcentral. com/links-between-strategic-operational-plans-25572. html

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