Accounting, accountability and organisational responsibilities Topic 1 ...
Accounting summary notes Module 1 – Accounting, accountability and organisational responsibilities Topic 1 Accounting is the provision of information about aspects of the performance (f,e,s) of, and resources held or controlled by an entity to a particular group of people with an interest or stake in the organization. Accountability is the duty to provide an account of the actions for which one is held responsible. - to undertake certain actions (or to refrain from taking actions) in accordance with the expectations of a group of stakeholders - to provide an ‘account’ of those actions to the stakeholders Accountability model Why would an entity disclose information? - to manage particular (and possibly powerful) stakeholder groups; - to comply with legal requirements; - ethical consideration To whom the accounts will be directed? Motivated by managerial reasoning - report to those who hold and exercise the greatest economic power. Motivated by ethical reasoning – report to stakeholders most affected by the actions of the org What types of disclosures? Financial, environmental and social How should info be disclosed? Reports, websites, media (p. conference), social media. Organizational objectives influence the form of accounting undertaken. Changing role of accountants – financial, now environmental and society Drivers of change for accounting = technology, globalization, stronger governance Accounting can change because of a cashless society
Topic 2 An accounting entity is an entire org, part of an org or a group of companies. An organization is a collection of people who work towards a common objective. The reach of accounting – traditionally only info about ownership and usage of resources controlled by an organization and used in creating value was reported, but now, we must consider impacts on the resources not controlled by the organization but it is up to the accountant and owners if they choose to report on them. Supply chain – network between an org and its suppliers as necessary to produce and distribute a specific good or service. Business structures Sole trader - limited life, unlimited liability, no specific accounting requirements, easy setup, absolute control, sole risk bearer and profit recipient, not a separate legal entity - must comply with tax requirements -business is not separately taxed, earnings are included in total earnings of owner -still must do accounting Partnership – limited life, unlimited liability, sharing of risk and profit, reports do not have to comply with accounting standards, easy set-up, mutual agency -often discontinues if one partner leaves Company – indefinite life, limited liability, separate legal entity, owned by shareholders, complex to form, taxed as an entity, must comply with accounting standards (depend on size), distributes dividends -do not discontinue if one shareholder leaves -owners of company are not personally liable for debts of company • Private company -pty ltd, not permitted to offer shares to public, restricted to 50 shareholders,
Topic 2 An accounting entity is an entire org, part of an org or a group of companies. An organization is a collection of people who work towards a common objective. The reach of accounting – traditionally only info about ownership and usage of resources controlled by an organization and used in creating value was reported, but now, we must consider impacts on the resources not controlled by the organization but it is up to the accountant and owners if they choose to report on them. Supply chain – network between an org and its suppliers as necessary to produce and distribute a specific good or service. Business structures Sole trader - limited life, unlimited liability, no specific accounting requirements, easy setup, absolute control, sole risk bearer and profit recipient, not a separate legal entity - must comply with tax requirements -business is not separately taxed, earnings are included in total earnings of owner -still must do accounting Partnership – limited life, unlimited liability, sharing of risk and profit, reports do not have to comply with accounting standards, easy set-up, mutual agency -often discontinues if one partner leaves Company – indefinite life, limited liability, separate legal entity, owned by shareholders, complex to form, taxed as an entity, must comply with accounting standards (depend on size), distributes dividends -do not discontinue if one shareholder leaves -owners of company are not personally liable for debts of company • Private company -pty ltd, not permitted to offer shares to public, restricted to 50 shareholders,
