“There is nothing permanent except change” – Heraclitus, the Greek philosopher
Commerce and trade are as old as the hills. From the barter system to the monetary system, the trade and commerce has come a long way. The businesses have been constantly evolving with the changing legal, social, economic, technological, and political environment. The external environment of business is ever dynamic which necessitates the transition in the ways in which businesses function.
Today businesses have adopted a mixed model that is alongside, the physical shops and offices they have the electronic model of business, i.e., e-commerce which covers e-tailing, e-banking, e-trading, e-auctions to name a few. The government has also adopted the e-governance easing out the burden on government offices as well as citizens wherever the information can be submitted online. Technology has been a path-breaker in the way businesses are done!
Every business enterprise and its stakeholders are interested in knowing its financial performance which puts a spotlight on the accounting profession. The significance of the accounting profession can be understood by the fact that it traces the flow of the most important asset in any organisation which is liquid cash, negligence of which may cost the organisation its own existence – The case of Satyam Computers is the best example.
Over a period of time, the fabric of commerce took different shades when apart from manufacturing, the services industry also became a prominent contributor to the world and national GDP. Thus, the accounting standards became an important parameter ensuring comparability of financial performance among diverse business groups. The standards were set so that the financial performance of every enterprise is determined following the standard accounting treatment to various business transactions thereby bringing in the element of reliability, accountability and comparability.
The accounting profession has also grown by leaps and bounds with the shifting of role from being mere book-keepers (to maintain record of transactions) to accountants (determining and reporting the profits and financial position of business) to decision-makers to strategic business mapping. With the passage of time, the scope of accounting has also enlarged to incorporate the tax accounting, human resource accounting, auditing, financial statement analysis, financial reporting, payroll accounting, management accounting, forensic accounting.
The basic concepts remaining the same, the accounting has evolved to ensure that the businesses maintain record to comply with the principle of “substance over form” in wake of various accounting scandals which shook the world. Practicing ethics in accounting has become the norm of the day and the course on “Ethics and Corporate Governance” has become an important part of todays’ curriculum.
Another important landmark in the field of accounting was shifting from physical mode of accounting to the software based accounting which simplified the book-keeping work given the volume of business transactions. The software based accounting is now the norm in businesses.
With digitalisation of accounting, the need for digital reporting arose given the globalisation of the trade and commerce. XBRL (eXtensible Business Reporting Language) – an open royalty free software specification was developed by the collaboration of accountants and technologists for the purpose of digital business reporting. It revolutionised business reporting around the world and was adopted in India way back in 2007.
The globalisation also brought in the need for a globally accepted accounting language thereby leading to acceptability of financial reporting of a corporate entity in one country across the globe. Hence, the acceptability and adoption of a single accounting standard for all the entities – International Financial Reporting Standard (IFRS) was much deliberated on across the globe. Few countries accepted IFRS as it is while many countries believed in adapting these and therefore converging the local accounting standards with the IFRS.
Thus, commerce is dynamic and equally vibrant and critical is the accounting profession! The accounting professionals are in high demand across the globe. An accounting professional today is expected not only to be conversant with the principles of the field but also to be one with ethical conduct with the readiness to adjust with new normal and embrace the change.
At Institute of Commerce, Nirma University – the specialisation course on “Accounting” prepares a student to be an accounting professional who can meet up with the global standards with the most updated curriculum prepared in consultation with industry experts thus meeting with the industry expectations. The computer lab facility where students are given practical exposure to accounting software, the corporate internships and industrial visits help the students further gain practical exposure in conjunction to the classroom case-based learning experience.
The institute is committed to serve the society and accounting profession by shaping its students to be an Accounting Professional!Author Author : Dr. Sumita Shroff Goyal, Assistant Professor - Institute of Commerce, Nirma University