Power, Responsibility and Accountability in Accounting
The responsible use of power in decision making has always been the key to business success. People in key positions must have sufficient power to make significant business decisions in order to enhance businesses’ growth. Responsible decision making, facilitated by use of various accounting tools, enhances a business’ power. Conversely, questionable accounting and irresponsible business decisions can have catastrophic consequences. Contrasting international examples will be discussed here. Richard Branson, a well known entrepreneur, created an empire (the Virgin Group) from an idea of a better priced and better product for the market. Lehman Brothers, a firm with a historically distinguished reputation, who took irresponsible risks in pursuing increased profits and increased market penetration, eventually brought about its own demise. Within Australia, accountability is imposed on companies by the Corporations Act 2001 (Cwlth) in order to promote responsible use of power and rigorous accounting practices, and to maintain market stability.
Accounting information underpins all business decisions because it provides the information required to make responsible decisions. While opportunities for businesses to diversify their income stream can be seen as positive, some key plans need to be mapped out such as opportunity, risk, finance and social responsibility. Managers of business use vast amounts of accounting and economic data, such as product demand and price value information before undertaking new ventures. This will give some indication of how well an investment in that venture will fare. Birt et al. (2008) states that while accounting cannot be used to predicting exact outcome of a venture they can use historical information to trend past performances of other business entities. In undertaking a venture the entity would prepare budgets for personnel, marketing, property and equipment acquisitions in its budget. As part of the planning process managers need
Accounting information underpins all business decisions because it provides the information required to make responsible decisions. While opportunities for businesses to diversify their income stream can be seen as positive, some key plans need to be mapped out such as opportunity, risk, finance and social responsibility. Managers of business use vast amounts of accounting and economic data, such as product demand and price value information before undertaking new ventures. This will give some indication of how well an investment in that venture will fare. Birt et al. (2008) states that while accounting cannot be used to predicting exact outcome of a venture they can use historical information to trend past performances of other business entities. In undertaking a venture the entity would prepare budgets for personnel, marketing, property and equipment acquisitions in its budget. As part of the planning process managers need