IMPACT OF MORE ACCOUNTING INFORMATION Essay Example | Topics and Well Written Essays - 3000 words

IMPACT OF MORE ACCOUNTING INFORMATION - Essay Example The impact of more accounting information will be discussed in relation to the users of the financial statements such as the shareholders, suppliers, customers and creditors. Likewise, the impact of more accounting information when used by the competitors (Molloy and Molloy, 1996) or employees will also be discussed. Considerations of future situations tend to affect conventional accounting, although using elements of the future forms an essential component of the accounting structure. The financial standard of decision relevancy of accounting (Weston and Brigham, 1993), generally agreed to be a primary factor that gives societal value to accounting, may be weakened by the search for a more trustworthy accounting procedure. One of the best techniques in accounting would be to incorporate aspects of future values without leaving too many degrees of freedom for manipulating the data. The aim is thus to keep accounting credible, and yet predictable and even if more accounting informatio n becomes available, all aspects of the information will have to be considered, before any final conclusion is drawn on the advantages or disadvantages of the accounting information. ... The financial statements are audited by external auditors (Whittington and Pany, 1995) either chartered accountants or certified public accountants in order to give credibility to the statements. All companies are required to give financial statements to its shareholders, suppliers, creditors, employees, managers, board of directors, government regulating bodies and the like in order to ensure that the company does not violate any corporate laws and that they remain accountable to their stakeholders and financiers. The financial statements are important tools for decision making and determine company management policies and thus accounting forms the basis of any corporate management decision making. There have been arguments on incorporating additional estimates or forecasts of the future into financial statements and providing estimates of future cash flows. This may in turn be considered alongside some sensational corporate scandals, for companies located in the US, which have been focused on reducing the power of managers which could engage in fraudulent behavior and accounting manipulation of assets, liabilities and capital. A more reliable and validated or trustworthy figures on the balance sheet is expected and income statement accounts have been implemented by new and more complicated monitoring and inspection processes. As to how far this can be achieved can be studied by using market values in accounting reports. The Generally Accepted Accounting Principles (GAAPs) in a number of countries contain elements of the market values of assets and liabilities. To illustrate, International Accounting Standards (IAS), U.K., and U.S. GAAPs require financial investments that are not long-term investments,