...The Evolution of the CPA Practice Introduction According to Pepe (2011), everyone understands that accounting is the mode of communication in business. It is the channel through which investors and businessmen get to understand whether their investments are worth it or not. It helps in giving the value of an investment at any given time. The contemporary accounting practice and methods are quite diverse. However, they have not been so since the beginning. According to Waweru (2010), there are numerous changes that have marked the evolution of accounting. This research paper seeks to look into the accounting evolution process. Reese and Janes (2012) indicate that accounting has changes both in terms of accounting theories, as well as application of technology in accounting. Therefore, when looking at the history and evolution of accounting, it is imperative to look at the changes that have occurred. These changes are both in theory, and the application of technology in accounting. It is also worth looking at the various accounting theories that have come up. These have to be related to the changes in technology, higher literacy levels, and more complex business operations which call for the review of accounting practices. The need to protect the interest of the public is also a chief reason why changes in the accounting practice needed to occur. This essay looks at the changes both in practice and application of technology. Evolution in Theory and Practice According to...
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...1. Evolution of management accounting practices using IFAC model. As per IFAC (1998), there are four stages of evolution of management accounting. Prakash (2013) stated that the framework is provided to explain the developement of management accounting as to promote better understanding in changes in management accounting. Four stages of evolution of the focus of management accounting are shown in the figure 1 and describes as below. Stage 1 occurs prior to 1950 where most of the companies were focusing on cost determination related to stock valuation and the allocation of overheads. Among the accounting techniques that were developed for the cost estimation were Last In First Out (LIFO) and First In First Out (FIFO). Prakash (2013) stated that cost estimation was emphasized because by estimating the cost, managers were able to control their financial position. From 1965 to 1985, companies had moved into generating information for management planning and control. This is because only valuable information can be used to make correct decisions. This stage is using such technologies as decision analysis and responsibility accounting, to help managers choose the right decision oriented towards manufacturing and internal administration rather than strategic and environmental concerns. Management accounting, as part of the management control system tended to be reactive, identifying problems and actions only when deviations from the business plan took place [ (Abdel-Kader &...
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...raised of competitive environment that must make us to check thoroughly our traditional cost accounting and management control system. The most important cost accounting text books had been developed by 1925 is explained most the entire practices employed by firm today. Looking down on for the past 60 years, there’s a huge change in management nature and competition dimensions with a few innovation in the design, implementation of cost accounting and management control system. Then, it is not only applicable but important that we understand current practices that reflect on the latest demands for planning and control information, and evolve a research strategy to meet these demands. There are five section of the evolution of management accounting, namely ‘A Summary of Historical Development in Cost Accounting’, ‘Historical Development of Managerial Control’, ‘Development since 1925 in Cost Accounting and Managing Control’, ‘New Challenges for Cost and ‘Managerial Accounting Research’ and ‘New Directions for Management Control Research’. 1. A Summary of Historical Development in Cost Accounting Thomas Johnson has been traced the development of cost accounting and management control practices in US corporations. The history of the development of US corporations in Chandler had been built by this research. During the period 1850-1925 it is very important to know the cost and management control information to support the gain business of transportation, production and distribution...
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...Evolution of Management Accounting: Contemporary Significance and Retrospection Abstract: The management accounting aim in future forecasting, planning and making decisions for the firm. It is also good at cost managing (cost accounting), improving production and management controlling, for example, the Balance Scorecard and Management Control System. What is evolution? The synonym of evolution is development which means the experiences of its past to present, also means history. Thus, it will introduce the management accounting's history of U.S and China so that we could clarify why China lag behind. Moreover, it would move forward to describe the circumstance today to emphasize the new missions of management accounting. Of course, it would make suggestions for China based on the present and past. Finally, expect the future outlook of management accounting Generally speaking, besides telling readers the main factors of influencing management accounting in China, it aim to encourage and remind readers as well as schoolmates to study the management accounting and notice the significance and potentials of management accounting. Key words: Management Accounting, Cost Accounting, Evolution of Management Accounting, Balance Scorecard, Management Control System. Contents INTRODUCTION 6 1. LITERATURE REVIEW 8 1.1 THE INFLUENCING FACTORS OF MANAGEMENT ACCOUNTING 9 1.1.1 Business size, Organizational Structure and Technology 9 1.1.2 Strategy 10 ...
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...MANAGEMENT ACCOUNTING: AN OVERVIEW Learning Objectives Distinguish between managerial & financial accounting. Understand the evolution of management accounting. Explain about the IFAC model. Understand how managers can use accounting information to implement strategies. Explain about Relevant Lost & Relevant Regained. 2 Learning Objectives Distinguish between managerial & financial accounting. Understand the evolution of management accounting. Explain about the IFAC model. Understand how managers can use accounting information to implement strategies. Explain about Relevant Lost & Relevant Regained. 3 Accounting System (accumulates financial and managerial accounting data) Managerial Accounting Information for decision making, and control of an organization’s operations. Internal Users Financial Accounting Published financial statements and other financial reports. External Users Managerial Accounting Users of information Managers within company Regulation Financial Accounting Interested outside parties Required. Must comform to Not required because for internal GAAP which is regulated by use only FASB and SEC. Basic accounting system plus Almost exclusively from the Source of Data various other sources basic accounting system Reports often focus on subunits. Reports focus on the enterprise Nature of Reports Based on a combination of in its entirety. Based on and...
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...Development in Accounting Theory * General Scientific Period (1800-1955) * Normative Period (1957-1970) * Positive Era (1970s) * Behavioral Research (1980s) Evolution of Double-Entry Book Keeping * Early History of Accounting * 4500-3600 BC -Chaldean Babylonion -Assyrian and Sumerian Egyptian -Chinese( Chao Dynasty) -Greek -Roman * 11th to 13th century -Italian Renaissance * Luca Pacioli’s Contribution * Introduction of double-entry book keeping, Dr and Cr were used for entries to secure double entry. * Three book are used: -memorandum -journal -ledger * Development of double entry * 16th Century: a few changes are made in the book-keeping techniques. * 17th Century: separate inventory accountant for different types of goods. * 18th Century: Three methods of treating fixed assets * 19th Century: depreciating property was accounted for unsold merchandise 4 reasons generally advance to explain the role of double-entry in the economic expansion: * Double-entry contributed to a new attitude toward economic life. * The acquisition was aided and propelled by systematic organisation. * It permits a separation of ownership and promotes the growth of the large joint stock company. * The new rationalism was further and enhance by systematic organization. Capitalism and Accounting * the linked between accounting and capitalism become known as the Sambart thesis or argument that the tranformstion...
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...Samuel Kaplan was born in 1940. He is an American accounting academic, and a Professor of Accounting at Carnegie-Mellon University and Arthur Lowes Dickinson Professor of Accounting at the Harvard Business School. He had wrote a journal entitled “The Evolution of Management Accounting” in 1983. The purpose of this article is to summarize the development of management accounting, including the new demands for management information, and to develop a research strategy to meet these demands i) THE EVOLUTION OF MANAGEMENT ACCOUNTING (From Robert S. Kaplan point of view) In his paperwork, he divided it into five sections. • Section 1 - Development of cost accounting practices from the early textile mills and railroads (circa 1850) through the formation of the great industrial enterprises in the U.S. and the emergence of the scientific management approach. • Section 2 - Management control innovations of the DuPont Corporation and the General Motors Corporation after its reorganization by Pierre du Pont and Alfred Sloan in 1920. • Section 3 - Development in cost accounting and managerial control form 1925 to the present. • Section 4 - Challenges from the contemporary environment that may not be met by the accounting practices developed more than 60 years ago for a substantially different competitive situation. • Section 5 - Agenda for field based research to document or develop innovative management control practices appropriate for the changing industrial environment...
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...1.0 ABSTRACT Managerial Accounting is tools for business decision making. The use of management accounting information is a key for organizational success. This essay will explain on the importance of managerial accounting process in organization to successfully carrying out the day to day as well as long term activities and goals. First, it describes how the evolution and change in managerial accounting. Second, the essay looks at the role of managerial accountants. Third, it explains several function of managerial accounting that tend to contribute the adds value to organization. 2.0 INTRODUCTION According to the Chartered Institute of Management Accountants ( CIMA ), Management Accounting is defined as the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information for both financial and operating used by management to plan, evaluate and control within an organization and to assure use of and accountability for its resources. The Institute of Management Accountants ( IMA ) defined Management Accounting is a profession that involves partnering in management decision making, devising planning and performance management system and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy. Managerial accounting applies to all types of business such as service, merchandise and manufacturing. It also applies to all forms...
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...The impact of technology on the public accounting profession By Ricardo Ruiz Bentancourt IC Member | Represents Latin America To ask oneself what impact technology has on the public accountant’s work is redundant. And the reason for this is that the development of technology has been inherent to human progress and it has affected practically all aspects of life; the accounting profession not having escaped this influence. However, if this question were to have been asked merely thirty years ago, the answer would not have been so obvious. In my opinion, the change that has had the greatest impact on this profession is, without doubt, the electronic worksheet. “Visicalc, the first worksheet would take some 20 hours of work per week for an accountant and has now been reduced to 15 minutes, allowing accountants to be more creative”1. When I first used this worksheet back in 1986, I immediately sensed the effect that it would have in my work. In particular, I had that same sensation when another important moment for my practice came about which was the wide-spread use of personal computers - the PCs. At that time, a computer was assigned to me at my job and with it, I was able to perform a series of analyses that complemented the reports issued at that time by an AS 400 from IBM. I even became an expert in Lotus 123 and was given the opportunity to give courses on this program. But this was not only a change at a personal level. Agnes Ann Pepe pointed out...
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...Business and Management Engagement Quality Review ENGAGEMENT QUALITY REVIEW Introduction Engagement quality review, also known as concurring partner review or second partner review, is not a new practice and was first mandated in 1977, but it has most recently been required by the Sarbanes-Oxley Act of 2002 for each registered public accounting firm to "provide a concurring or second partner review and approval of [each] audit report (and other related information), and concurring approval in its issuance...." It has been further clarified in the Public Company Accounting Oversight Board’s Auditing Standard No. 7 (AS No. 7), that was approved by the SEC in January 2010. Early guidance on engagement quality reviews was vague, and the practice was not standardized from firm to firm. The practice involves a second partner to review the engagement and serves as an internal check for engagement quality for the audit firm. Varying degrees of partner qualifications, involvement, responsibilities, scope, and documentation requirements existed. The first section of this paper explores the evolution of this practice in the standards and the surrounding auditing profession climate leading to the new standard, AS No. 7, adopted in 2009 by the PCAOB. In the second section, various research findings are presented and discussed. Finally, we draw conclusions on the current need for engagement quality reviews in the auditing profession based on our research. Evolution Many...
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...New Look At Management Accounting Mohammad Talha, King Fahd University of Petroleum & Minerals, Saudi Arabia John B. Raja, Multimedia University, Melaka, Malaysia A. Seetharaman, S P Jain Center of Management, Singapore ABSTRACT This paper presents a comparison of the traditional management accounting with the new approach of management accounting with the use of latest information technology and manufacturing technologies. The information and data of the research were gathered from various sources of secondary data. Many online articles and journals were available through these search engines such as Google, Infoseek, Lycos, Excites and Altavista. These articles were downloaded from Internet Websites including IFAC library, CPA online newsletters, Institute of Management Accountants, CIMA (Chartered Institute of Management Accountants), Technical Bulletin and Institute of Commercial and Financial Accountants. The modern techniques used in Management Accounting are discussed. TQM (Total Quality Management), ABC (Activity Based Costing) and BSC (Balanced score card) are some of the tools that are introduced in management accounting to keep up with the latest technology. This research highlights the emergence of new, more proactive management accounting that increasingly becomes part of the management team with the business process. The future roles and expectations of these accountants in the competitive global economy are discussed. Keywords: Management accounting, Standard...
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...The concept of Knowledge Management and its evolution The concept of Knowledge Management and its evolution The concept of Knowledge Management and its evolution The business environment of the twenty-first century is dominated by a powerful influence: the knowledge and information revolution. Knowledge is thought to be the only meaningful resource in this knowledge-based economy. The traditional factors of production have become secondary. In the current economy of increased global competition companies are using knowledge as a means to gain competitive advantage. Their ability to succeed largely depends on how well they can manage knowledge. Without a doubt, Knowledge Management (KM) has become increasingly important for all organizations. Knowledge Management is a concept and a term that arose approximately two decades ago, roughly in 1990. Quite simply one might say that it means organizing an organization’s information and knowledge holistically, but it is not the whole picture. Very early on in the KM movement, Davenport (1994) offered the still widely quoted definition: “Knowledge management is the process of capturing, distributing, and effectively using knowledge.” This definition has the virtue of being simple, stark, and to the point. A few years later, the Gartner Group created another second definition of KM, which is perhaps the most frequently cited one (Duhon, 1998): “Knowledge management is a discipline that promotes an integrated approach to identifying...
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...Relevance Lost: The Rise and Fall of Management (Boston, MA: Harvard Business School ftess, 1987) pp. 269. Given the reaction that this book has caused in the management accounting milieu, it seems destined to play an important role in the direction that teaching and research may adopt in the near future. In fact, the accounting literature is already witnessing an increasing number of articles regarding the lack of relevance of management accounting systems (MAS) in the decision making process of the firm. The book of Johnson and Kaplan (J&K) is implicitly divided into three parts. Part I—^The Rise of Management Accounting, chapters 2 through 5, provides an interesting overview of the evolution of management accounting in the United States from the 1880s through the 1920s. According to the authors, MAS were developing and adapting to management's needs, providing relevant, accurate, and timely information. Part II—The Fall of Management Accounting, chapters 6 through 9, analyses and explains the loss of relevance of MAS. Unlike some historians, J&K assert that this was not due to the fact that financial accounting unduly influenced managerial accounting, but to the prohibitive costs of implementing adequate MAS. Part III—Possible Course of Action, chapters 10 and 11, sets out what can be done to recover the relevance of MAS. Tliis review looks at the three parts in tum. The last section provides conclusions. The rise of management accounting In its early years, MAS appeared to...
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...Accounting Horizons Vol. 26, No. 1 2012 pp. 125–133 American Accounting Association DOI: 10.2308/acch-50087 COMMENTARY Some Conceptual Tensions in Financial Reporting American Accounting Association’s Financial Accounting Standards Committee (FASC) Yuri Biondi, Jonathan Glover, Karim Jamal (Chair and principal co-author), James A. Ohlson, Stephen H. Penman, Shyam Sunder (invited principal co-author), and Eiko Tsujiyama SYNOPSIS: We examine four key conceptual tensions that are at the heart of many financial reporting dilemmas: stocks versus flows, ex ante versus ex post, conventions versus economic substance, and top-down design versus bottom-up evolution as sources of accounting practice. Associated with each of these conceptual dimensions is an accounting duality; in some cases, one side (e.g., stocks) is easier to measure in a reliable manner, while the other side (e.g., flows) is easier to measure in other instances. We suggest that financial reporting would benefit from a willingness to pay attention to, and find compromise between, both sides of these tensions; forcing a choice of one over the other does not serve to improve financial reporting. Keywords: conceptual tensions; stocks-flows; ex ante-ex post; conventions-economic features; design-evolution. JEL Classification: M40. INTRODUCTION I n the developing of financial reporting, accountants have had to repeatedly deal with some basic conceptual tensions that arise due to the very nature of accounting...
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...TITLE: ROLE OF COST AND MANAGEMENT ACCOUNTANTS IN IFRS REGIME Personal Details |NAME |CMA. ARINDAM BANERJEE | |QUALIFICATION |MCOM AICWA | |RANK |Faculty Member, United Institute of Management, Allahabad | |Email |arind2001@yahoo.com | |Mobile |09794108735 | | | | |Communication Address |C/O Mr. Salil Chakroborty, | | |198 A, Sarat Bose Road, | | |Kolkata – 700029. | | | | ROLE OF COST AND MANAGEMENT ACCOUNTANTS IN IFRS REGIME ...
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