Accounting system, role of tech and Issues of ethics, regulation and compliance

 4. Accounting system

Is a series of accounting processes with integrated controls. The aim of them is to record financial transactions and summarize them into a condensed form and create reports that can be utilized by managers to use the data for decision making.

The role of technology in modern-day accounting

In the age of technology, there are many ways to apply technology into accounting to make it easier to record financial transaction as well as storage information. Thereby creating a competitive advantage for the company, shortening the time spent on accounting activities as well as increasing accuracy.

Instead of manual accounting, companies can use software which is a high tech program that helps companies reduce the time spent on accounting processes, the financial report will be easier to complete, all they needs transfer the transaction datas to the software. In Vietnam we have some big company which provide accounting software with preeminent, complete and accurate accounting features and an e-invoice ecosystem, e-banking helps businesses save a lot of cost and time. such as Misa, Bravo, etc

Nowadays, companies use AIS (accounting information system) to collect, store, process and report financial figures and can be used by the regulators, accountants, consultants, executives, auditors,… Some examples about the AIS:

In small size companies use Intuit’s QuickBooks or Sage’s Sage 50 accounting

Mid and large size companies use Microsoft’s Dynamics GP, Sage group’s MAC 90, Oracle’s People soft.

Besides that, nowadays, Blockchain is also used to solve the accounting performance. According to Forbes (2021), Blockchain really help for accounting, with some advantages like: Making the less error transactions in data, less fraud, reducing the costs.

5. Issues of ethics, regulation and compliance:

Governments all over the globe have set accounting standards to maintain the long-term viability of the economy and the correct functioning of businesses. These standards ensure that businesses comply with the law and assist to increase financial statement transparency. GAAP and IFRS are the two most important financial statement standards.

Toward the GAAP: published by FASB, the content mainly deals with issues such as Objectivity, Consistency, Full disclosure, Matching principle, Materiality principle

IFRS: Published by IASB and applied in a large area around the world with more than 120 countries inculding Vietnam. Mainly about Clarity, Reliability, Comparability, Relevance.

These requirements must be followed by publicly traded corporations which want to publish their financial statements. Auditors are also important in ensuring that the organization follows the rules and follows to the standards.

Constraints or threats to the organisation.

Big financial reporting scandals have revealed a lack of transparency in accounting practices along with collusion with other auditing firms. As a result, confidence in accounting and auditing activities decreases and accounting and auditing activities also need many stages to check to detect the misstatement. The auditing standard AICPA seem to be believable until the scandals Enron happens and lead to the collapse of one of the big 5 accounting firms named Arthur Andersen for colluding with Enron and shredding all of documents related to Enron about manipulating the electricity in California. So, AICPA is replaced by PCAOB standard and convert from external auditing standard to internal auditing standard and the US government also enact the Sarbanes—Oxley act (2002) to help investor to avoid the fraud

Recently, Wirecard is one of the biggest accounting scandals in Germany, the Financial Times has conducted an investigation for signs of wirecard fraud. The newspaper found that Wirecard's Singapore office used fake contracts to inflate revenue. Additionally, Wirecard employees at subsidiaries in Dubai and Dublin appear to have conspired to overstate revenue and profits.

One more problem is that compliance with binding regulations is difficult for SMEs, Accounting and censorship according to the standardization process, the time is stretched along with the theories that do not match the reality of sme businesses.