Introduction
New hope group is an Australian based company and has been operating from the last 60 years. The company is focused towards providing services related to coal mining, exploration, agriculture, innovative Technologies, investment, port operation and oil. Company has employed more than 600 employees and is considered to be one of the southeast Queensland largest regionally based organizations. Top level management of the company is significantly focused on skill improvement of the employees working in the organization and the company is also active from community and social responsibility perspective (NewHopeGroup, 2019).
Contemporary issues related to accounting are increasing significantly with the passage of time. One of the most significant reasons for the increase in contemporary issues related to accounting is the increase in complexity of business operations and implementation of globalization. Contemporary issues in accounting also help to analyze the relationship prevailing between accounting and different other aspects like environment, ethics, management, Industrial Relations and social responsibility. Contemporary issues in accounting can be analyzed from theoretical aspects as well as from practical aspects.
It is significantly important for the management of the New Hope Group and its accounts department to implement account policies in such a manner that contemporary issues related to accounts could be resolved. It is important that a proper accounting system should be implemented as well as an internal control system should be strong in order to improve the contemporary issues prevailing in New Hope Group. On one end, globalization has positively contributed towards the overall performance of organizations at global level and global output. At same time, globalization is also responsible for increasing the amount of complexity associated with bases operations and accounting related practices.
Different Contemporary Accounting Issues from theoretical and practical aspect:
There are different contemporary accounting issues prevailing in organizations both from theoretical aspects and practical aspects. Some of these contemporary issues include analyzing the influence of price change on the formulation of financial statement of the company, analyzing the prevailing economic as well as legal influence on social activities, explaining and analyzing the different accounting treatments associated with long term lease, ability of the management to formulate required environmental reports, explaining the treatment related to intangible assets from accounting perspective and explaining the issues related to corporate integration as well as accounting related to financial instruments. These are identified contemporary issues are significantly important from accounting perspective from theoretical aspects as well as from practical aspect (Hood, 2018).
Accounting theories include normative theory and positive theory. The following are key accounting theories covering different areas and concepts of modern and traditional accounting systems.
Normative Theory
Normative theory provides detailed prescription about what a company or accounts department should do rather than what they actually do in the organization. Some common examples of normative theories are Conceptual Framework Accounting and Continuously Contemporary Accounting. Normative theory has some limitations as it is unable to provide information about currently employed practices.
Positive Theory
Positive theory is the contrast theory of normative theory. Positive theory has been presented after the 1970s with the purpose of providing understanding about particular phenomena. The theory provides an overview of currently employed accounting practices in the organization. According to this theory accounts (individuals) are highly motivated and self-interested in wealth maximization.
Implementing this theory in New Hope group we can say that employees working in the accounts department are eager to increase the wealth of the company. Basically, wealth maximization is a modern approach against profit maximization. Employees are aligned with the corporate mission of the company. Organizational mission is to ensure long term growth and sustainability in the market. Considering this employees are concerned to increase wealth as wealth maximization can provide more benefits than the profit maximization (Watts & Zimmerman, 1990).
Internal Control System
Another significant contemporary issue related to accounting is the relationship between the accounting system implemented in the organization and internal control system prevailing in the organization. It is important that at internal control system implemented in the New Hope Group should be strong enough to make sure that there are proper accounting related internal checks and balances in order to reduce the cases related to potential violations and frauds. Accounting system clearly suggest that strong implementation of internal control system will help the New Hope Group and management to reduce frauds and errors and it will help the organization to present true and fair financial statements to the stakeholders of the company (New Hope Group Australia, 2018). In most cases, financial statements and financial reporting does not provide appropriate information regarding the internal control system implemented in the organization. In order to improve the level of internal control system reporting, it is important that rules and regulations should be formulated related to disclosure of internal control system implemented in the organization in order to make sure that the stakeholders and shareholders of the company are provided with appropriate information regarding the internal control system implemented in the organization. This will help the management to subtly improve their internal control system on frequent basis and will be beneficial for the corporate governance and business environment of the New Hope Group as well (Qiong & Jianjun, 2018).
Accounting Measurement and Estimation
Another significant contemporary issue related to accounting theory and practice is related to accounting measurement and estimation. According to the financial accounting standard board, there should be reasonable utilization of estimation technique by the accountant working in the New Hope Group in order to make sure that the utilized Estimation and accounting measurement is according to the requirement of international financial reporting standards (New Hope Group, 2016).
Changes in Tax System
It is important to understand that continuous changes in tax system are also responsible for influencing the accounting practice in any organization. Constant changes related to recruitment and retaining of staff working in the organization is responsible for influencing the accounting practices as well. Technology utilization and implementation is also responsible for influencing the accounting practices in organization (Henderson, et al., 2015). These changes are responsible for formulating significant number of challenges for the accounts department or accounting firms in order to implement accounts-related practices. It is the primary responsibility of the management to make sure that they overcome contemporary issues in Accounting in order to make their financial and non-financial reporting more accurate for decision makers and stakeholders (Sheedy, 2018).
Access to Financial data
Another significant contemporary accounting issue is availability of financial reports and data. Most of the organizations are facing issues related to availability of their financial data because they do not have access to their accounting software and system everywhere (Jones & Ratnatunga, 2012). Some of the organizations are following cloud-based systems which helps them to have access to their financial reports and financial data related to business 24/7. It is important that accounts related employees working in the organization should have access to financial and non-financial data of the organization 24/7 in order to make sure that the employees are always ready to provide relevant information to clients and customers accordingly (Badiyani, 2013).
Financial Position Issues:
The financial position of the company is shown from the graphs plotted with the help of their financial information. The company’s Return on Assets and Return on Equity for the company has declined significantly in the last 10 years. The company has shown some improvement, but it is still not enough.
This is also visible in the profitability ratios that have been computed for the company. The company gross margin has improved in recent years however the net margin has stopped lower.
This is also visible in the efficiency ratios of the company. The company inventory is converted into sales lower number of days than the last two years however there is still room for improvement.
The inventory turnover of the company has improved over the last three years however it still needs to improve significantly.
The total asset turnover of the company shows how less the company is earning as compared to its assets. This shows that the company is not using its assets efficiently (Morningstar.com, 2019).
Recommendations to Solve Contemporary Accounting Issues
In order to tackle the contemporary issues related to change in tax system, it is important that accountants working, and organizations specifically public Accountants must be updated regarding the text changes and this can be made possible by continuous training of public accountants. This training can be conducted by utilizing platforms like seminars and events related to change in accounting practices so that public Accountants good keep them updated regarding changing dynamic business environment.
Technology plays a significant role in improving accounting practices. It is highly recommended that management should continuously improve their Technology standards to create opportunities related to accounting practices and to resolve the challenges and issues related to accounting practices. Successful deployment of the latest technology will help the management of the New Hope Group to resolve the contemporary accounting issues related to technology and will help the organization to serve the clients in a more effective and efficient manner.
Another significant technique which can be implemented in order to resolve contemporary accounting issues is to continuously grow and improve the accounting practices. It also important for the accounts department to make sure that they sustain their accounting practices. With implementation of sustained accounting practices, the accounts department is able to formulate a better guideline regarding the critical path from accounting perspective. This helps the management to achieve is formulated goals and objectives in a more clear and transparent manner.
It is also important for the management to make sure that they implement slight changes continuously to improve the accounting system prevailing in the company. For instance, the communication channel between the client and organization should be as simple as possible in order to remove any kind of problem and communication gap between the parties involved. It is also important to analyze the influence of behavior and conduct during the communication process between the involved parties. Small changes at workplace will significantly help to improve the communication between the client and the organization and will also positively influence the reporting of the organization for Client or related stakeholders (Sheedy, 2018).
Another significant recommendation for resolving contemporary issues related to accounting practice is implementation of integration and automation. Implementation of integration and automation will help the management to improve the accounting related operations and will also help to improve the efficiency level of the internal operations. It is important that the accounting software should be integrated with the bank in order to improve the accuracy of the financial reporting related to bank transactions and in order to reduce the chances of human error during formulation of bank related reports. This integration and automation process will help to improve the tracking related to income and expenses and will improve the analysis related to income and expenses for the New Hope Group (Watson, 2012).
One of the most significant recommendations to improve the accounting related practices is implementation of cloud-based accounting systems. With the implementation and enhancement of Technology, organizations are now increasing use related to cloud-based accounting systems. It helps the employees working in the organization to have 24/7 excess of financial as well as non-financial accounting related data as all the data is stored on cloud-based systems. It helps the management to positively improve performance level. It also helps the New Hope Group to make sure that they generate financial and related reports at any time according to the requirements of the customers and clients (Watson, 2012).
References
Badiyani, B.M., 2013. Four Critical Issues in Contemporary Accounting. Accountancy, 2(2), pp.1-2.
Henderson, S., Peirson, G., Herbohn, K. & Howieson, B., 2015. Issues in Financial Accounting. 15th ed. Pearson Higher Education AU.
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Jones, S. & Ratnatunga, J., 2012. Contemporary Issues in Sustainability Accounting, Assurance and Reporting. 1st ed. Emerald Group Publishing.
New Hope Group Australia, 2018. Corporate Governance Statement 2018. [Online] Available at: https://www.newhopegroup.com.au/files/files/20181012%20-%20Corporate%20Governance%20Statement%202018%20Final.pdf [Accessed 16 April 2019].
New Hope Group, 2016. 2016 Annual Report. [Online] Available at: https://www.newhopegroup.com.au/files/files/2016%20Annual%20Report%20New%
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NewHopeGroup, 2019. About New Hope Group. [Online] Available at: http://www.newhopegroup.com.au/content/about [Accessed 16 April 2019].
Qiong, H. & Jianjun, D., 2018. Research on Critical Issues in Contemporary Accounting. International Conference on Innovation & Management, 1(1), pp.918-22.
Sheedy, C., 2018. The top 8 issues facing accounting practices today. [Online] Available at: https://www.intheblack.com/articles/2018/04/18/top-8-accounting-issues [Accessed 16 April 2019].
Watson, S., 2012. Five Tips for Solving Small Business Accounting Problems. [Online] Available at: https://www.getapp.com/blog/solve-small-business-accounting-problems/ [Accessed 16 April 2019].
Watts, R.L. & Zimmerman, J.L., 1990. Positive Accounting Theory: A Ten-Year Perspective. The Accounting Review, 65(1), pp.131-56.
