In the contemporary capitalist systems of government, the public often founds large business entities. The people who fund the large business entities are called investors. The presence of outside financing creates the relevance of accountability in the business organizations, particularly one that are listed in stock exchanges or ones that play an important role in the community. The need for accountability in large business entities creates the need for accountability and raises legal, ethical, and technological concerns in these businesses.
The need for accountability links the accounting and financial reporting of businesses to the law. The main interest of the law in this case is to protect the interests of the public from manipulations of the statements to exploit unsuspecting citizens. In addition, the law creates a platform for the alignment of all reporting processes to be as homogenous as possible (Stice & Stice, 2011). That is to say that in the accounting and financial reporting of businesses, there are often regulations to be followed to create reports that look familiar. These regulations dictate the aspects to be included in the financial reports and the things that are to be excluded. The result is uniformity in the reporting process.
The financial reporting process must also consider taxable elements in the report. For example, the turnover or the gross profit after elimination of the total expenditure are used to calculate the taxes (Stice & Stice, 2011). Therefore, in the event of dishonesty, the reporting system is often used to hide specific figures to reduce the burden of taxes on an organization.
There are cases where entities use the reporting system to entice investors. For example, in a bid to make a business organization appear more profitable that it actually is, the accounting and financial reporting of businesses uses the net income instead of the figures after all deductions to create an impression of a higher income. The law provides guidelines in usage of these criteria in the reporting process (Stice & Stice, 2011).
It is important to note that in the accounting process, the auditors and the accountants who release the report are legally accountable for the contents of the reports. The law requires these people to take a course in the law during their formal training to be able to make decisions that follow the interests of the existing legal guidelines (Stice & Stice, 2011). Therefore, regardless of the pressure from management, the accountability in the financial reporting lies with the people who prepare these reports. Therefore, when hiring an accountant or an auditor, all organizations must consider the legal competency of these people.
Application of technology is important in the accounting and financial reporting of businesses because of the potential of technology to increase the efficiency of calculations and representation in the financial documents (Kimmel & Weygandt, 2007). In addition, technology makes the process of preparation faster. Therefore, technology is an important part of the accounting and financial reporting of businesses.
The need for technical reporting raises the need for businesses to possess the necessary technology. For example, tax reports are filed using specific technology that aligns all business and makes it easier for the tax collection authorities to value the information. For example, is sales that are taxed, it is important for the tax register to keep all the information and use it in reporting.
Therefore, the technological considerations of a business are guided by the need to conform to the legal guidelines of operating the business entity as well as the needs and size of the organization, the presence of qualified workers to apply the technology in reporting is a major consideration for a business (Kimmel & Weygandt, 2007). The changing nature of technology entails the need for a business to keep up with the changes to keep up with the dynamic world of business. However, in reporting, the most important considerations are the ones that are guides by the law.
The needs of the business and the moral obligations of a business to the investors and the law dictate the ethical concerns of the accounting and financial reporting of businesses (Kimmel & Weygandt, 2007). In the contemporary business world, the social values are not important where reporting is concerned because the main issues in the operation are dictated by the existing procedures of operations and reporting.
Following this important aspect of business, the biggest ethical concern in the accounting and financial reporting of businesses is the consideration of the interests of the government in the reporting process (Kimmel & Weygandt, 2007). This is to say that all businesses have an ethical obligation to follow the interests of the law in the reporting process (Kimmel & Weygandt, 2007). For example, compliance with the reporting procedures set out by the legislature and the concerned financial regulation units is an important ethical consideration for all businesses.
Honesty is also an important ethical concern in the accounting and financial reporting of businesses. There is a tendency for businesses to manipulate the accounting systems to attract investors or to avoid paying taxes. The law has penalties that discourage these events in place (Kimmel & Weygandt, 2007). The penalties may include revoking of the business permit and heavy cash payments to the relevant authorities. However, it is an ethical issue because honesty is among the most important moral considerations.
In conclusion, in the accounting and financial reporting of businesses, businesses are obligated to take in to account a number of considerations. By far the most relevant consideration in the accounting and financial reporting of businesses is the legal concern because nit affect the other two and the context of operating a business as well as he contents of the reports.