International Financial Reporting Standards (IFRS): Managerial and Financial Accounting

Managerial and financial accounting
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Background
Financial information provides financial information to stakeholders’ mostly external users to facilitate evaluation of past performance. On the other hand, management accounting provides information to the managers who undertake the planning, controlling and decision making functions. Financial accounting information must then adhere to accounting standards while following the prescribed format while preparing financial statements unlike management information that may differ depending on a department needs or company’s operations. Governments, auditors and investors are interested in financial information that is verifiable. Accounting plays diverse roles in society, while international issues complicate preparation of financial statements under different jurisdictions. Accountants may choose the horizontal financial statement model to determine changes how individual items affect the financial statements. The adoption of the Sarbanes-Oxley Act resulting in improved governance and oversight of the financial reporting system.
Role of accounting in society
Technology adoption and globalization have impacted on the accounting profession. To take into account these changes there is a need to assess accurate financial information quickly and easily (Raj & Seetharaman, 2012). As such, accountants provide information to decision makers responsible for planning, implementing and executing operations in organizations. Accounting bridges the gap between the internal and external users of information. The real- time information is then necessary for all users of information who rely on financial details to make decisions (Raj & Seetharaman, 2012). For instance, the government requires financial information for taxation purposes, and the information then needs to be reliable
Accounting relates to the recording, classifying as well as summary of information on transactions with a view of facilitating decision making and control. Societies require accounting information in the planning and control of activities. This is especially for enterprises which rely on the accounting information to budget. Besides the internal use of accounting information for controlling purposes, external users of accounting information also make decisions to determine the financial position of an enterprise and this affects investor confidence. The external users also evaluate how the management has been able to control and plan activities to improve the financial situation of the enterprise or reporting entity.
Accountants record past transactions and protect the public interest through corporate reporting as they address the concerns of creditors and investors. Currently, there has been growing concern that accountants abet crime after accounting scandals involving financial malpractice. Accountants are expected to adhere to the code of ethics as they are professionally responsible for presenting financial information in a true and fair manner. As such, the financial books need to be properly recorded when the internal controls are in place. Even though, the management is tasked with maintaining a strong control system, the accounting sy...