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The Evolution of Accounting in the Future: Challenges and Opportunities

Accounting is a social science that must adapt to societal needs. New technologies and media bring both challenges and opportunities. The governance model of firms needs reevaluation, focusing on human capital ownership rights. The new economy requires accounting to address wealth creation dynamics and intellectual capital. The introduction of new technologies in information delivery prompts accountants to rethink their roles. Accounting faces challenges like globalisation and weak conceptual bases but has historically responded well.

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The Evolution of Accounting in the Future: Challenges and Opportunities

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  1. Chapter 18 Future Reporting

  2. Future Reporting • Accounting is a social science • i.e., it should and can respond to the needs of society • Advent of new technologies and media will prompt change and evolution • Offer both challenges and opportunities • In fact, accounting is well-equipped to respond in proactive manner Financial Information Analysis

  3. Governance of the Firm • Existing model has shareholder capitalism focus • Deficiencies in shareholder value paradigm: • Relatively poor performance over recent years; • Frauds, earnings management; • ‘Financialisation’ of corporate activity; • Economy v. Society • Ownership rights of Human Capital • Role of accounting/accountants? Financial Information Analysis

  4. New Economy • Nature of ‘new economy’ suggests changes in dynamics of wealth-creation • As leading arbiter of wealth measurement, accounting must address this • Challenges/Opportunities • accounting-specific issues • intellectual capital and intangibles • new forms of delivery • changes in governance models • emphasis on teams, knowledge flows, etc Financial Information Analysis

  5. New forms of delivery • New technologies and media offer new means of gathering/disseminating info. • e.g., should accounting information be available real-time on internet to all? • eXtensible Business Reporting Language • accounting-led solution to information demands • will democratise information access • Challenge accountants and auditors to: • rethink nature of roles • explore new possibilities • respect claims of others, e.g. risk managers Financial Information Analysis

  6. Summary • Accounting facing variety of challenges: • legacy of previous mistakes/difficulties • globalisation • new technologies and media • weak theoretical/conceptual base • Next decade will test capacity to respond • History teaches that it will respond well Financial Information Analysis

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