FA COURSEWORK
Content
Table of content
1.0- Question 1
…………………………………………………………………………….
Page (1-4)
1. A- accounting concepts
………………………………………………………………….. Page 1
1. A.1- accrual concept
……………………………………………………………………….. Page 1
1. A.2- consistency
concept…………………………………………………………………. Page 1
1. A.3- going concern concept
……………………………………………………………. Page 2
1. A.4- accrual concept
………………………………………………………………………… Page 2
1. B- benefits of financial information to users
…………………………………..…Page 3
2.0Question 2
………………………………………………………………….………… Page
(4-9)
2. A- definition of accounting ethics
…………………………………………………... Page 4
2. B- importance of ethics to survival
…………………………………………………. Page 5
2. C- components of stakeholders
……………………………………………………… Page 8
2. D- importance of public interest
……………………………………………………. Page 9
3.0- references
………………………………………………………………………………...
Page 10
1.0- Question 1:
1. A- Accounting concepts:
Accounting concepts are the fundamental rules of accounting
which should be followed in the process of preparing accounts
and financial statements.
Accounting concepts can be refer to as generally accepted
accounting principles (GAAP) these principles and concepts are
standardized rules set by international standard boards and
commissions in order to standardize the process of preparing
accounts and statements worldwide.
There are four essential accounting concepts which are accrual,
consistency, going concern, and prudence.
1. A.1- First: accrual concept:
All the business transactions are recorded upon their occurrence
regardless whether the cash is received or paid, this known as
accrual concept it’s fundamental to provide useful accounting
information.
Also, it’s important to ensure that revenue and expenses are
recognized at the correct period, irrespective of the cash flow
time.
Accrual concept helps to make the financial statements more
accurate because, it ensures that expenses match the revenue
earned.
1. A.2- Second: consistency concept:
The consistency concept means that accounting methods once
adopted, must be applied in the future periods to provide
consistent and invariable financial statement.
This concept implies that a business must maintain the same
accounting policy, unless there is a convincing reason to change.
If the business changes the policy followed in the previous
periods, a proper justification and disclosure of the nature of the
change is needed to avoid distortion of financial reports.
Why the financial reports should be consistent?
The following example demonstrates the reason.
Example 1:
If company ABC used reducing balance depreciation method for
its machinery and equipment in the last periods, but in the
current period the company’s accountants change to use straight
line depreciation method, this may lead to faulty and
contradictory data in the financial reports. Due to this,
consistency concept obligates the business to use same
accounting methods for all of the periods.
1. A.3- Third: going concern concept:
In this concept the financial statements are prepared assuming
that the business firm will continue operating in the future
maintaining its operational activities without any indications of
liquidating the firm to fulfil liabilities. The business will realize its
assets and settle its liabilities in the normal basis.
Accountants and auditors determine if the business is going
concern by look up the business ability to pay liabilities when they
fell due without the need to substantial assets sale or debts
restructuring.
Auditors determine if the business is going concern for one period
only, which means only for the current year based on the data
from financial statements.
1. A.4- Fourth: prudence concepts:
The prudence concept implies that accountants must not
overestimate the revenue and assets, nor underestimate the
expenses and liabilities. Accountants should have a professional
judgement and estimate potentials when preparing financial
statements because, prudence concept indicates that the
business entity should not recognized the asset at a higher value
than the amount expected to be earned from the business
activities. Conversely, liabilities should not be recognized at an
amount below the actual amount to be paid.
The prudence concept drive the accountant to be certain in
recognizing and recording the expenses and the liabilities of the
business when they are probable, and delay recording revenue
and assets transactions until they are certain, because what the
business firms and the stakeholders striving for is accurate and
realistic financial reports.
1. B- benefits of financial information to users:
The financial information provides the users with a valuable data
about the business such as financial position statement which
shows the business’s assets and liabilities and the statement of
comprehensive income which shows the revenues and expenses.
These various statements are crucial for the user’s decision
making needs, because it reviews the overall operational
activities of the business.
The benefits of the financial information to the various users:There are two categories of the financial information users,
internal and external.
1. B.1 First: internal users:
A- Managers: financial information helps the managers to
manage the business effectively by keeping them updated
with the business performance assessments in order to be
able to make efficient decisions.
B- Employees: employees need the financial information to
make sure that the business is a going concern and there are
no threats of losing their jobs in the near future, also the
employees benefit from the financial information by studying
the profitability of the business and the ability of the firm to
provide a good work environment and proper wages.
C- Owners “shareholders”: financial information provides the
owners with all the reports to analyse the viability and
profitability of their business, also to assess the risk and
predicted returns.
1. B.2- Second: external users:
A- Suppliers: the need to know about the liquidity and the
profitability of the business to assess the ability of the firm to
pay the debts when they fall due.
B- Government: taxation authorities need the financial
statements of the business to determine the tax that must
be paid, and also to track the business activities and
economic progress by analysing these statements.
C- Customers: financial statements provide the customers with
the necessary data to assess whether the business will be
able to meet the demands or not, also to assess the stability
of the business to make sure that the business is a constant
source of supply.
2.0- Question 2:
Accounting ethics:
2. A- What is accounting ethics?
The definition of ethics is very broad and there is no universal
consensus, but in a general sense ethics is defined as the
systematic study of conduct based on moral principles, reflective
choices, and standards of right and wrong conduct (Wheelwright,
1959). Ethical behaviour from a professional standpoint also
involves making choices based on consequences of alternative
actions. Thus, general theories of ethics can be used to explain
and understand the professional conduct that is expected of
accountants: as indicated in the following quote from the
Philosophy of Auditing:
‘’Ethical behaviour in auditing or in any other activity is no more
than a special application of the general notion of ethical conduct
devised by philosophers for men generally. Ethical conduct in
auditing draws its justification and basic nature from the general
theory of ethics. Thus we are well advised to give some attention
to the ideas and reasoning of some of the great philosophers on
this subject (Mautz & Sharaf, 1961, p. 232).
Accounting ethics is the study of values and judgements as they
apply to accounting, it is concerned with how to make moral
choices when preparing, presenting or disclosing financial
information.
It can also be defined as the practice of behaviour that prevent
any deliberate in accuracy when preparing the financial
statements.
Many parties within and out the business depend on the financial
information that prepared and presented by accountants.
Management decisions, policies, structure of the organization,
investment policies, and many other activities depend on the
reports and statements prepared by the accountants of the
business. Since so much rely on accountants to provide truthful
and accurate information, ethical practices and moral values are
crucial for any accountant to maintain the business integrity.
Accountants are often exposed to highly confidential information
and data such as the social security and bank accounts numbers
of the business’s clients. This –if ethics is not practiced- can
stimulate the accountants to play unlawful games under the
tables for their own interests, especially in the big corporates
when small inaccurate digits can be millions of dollars if
accumulated.
2. B- The importance of accounting ethics for survival:
Many business leaders and executives believe that the survival
and the success of the business depend on the effective
management only, without regarding to the ethics as one of the
survival factors, but these thoughts can be refuted. Because, the
accounting ethics if not practiced in the business can jeopardize
the reputation of the business and consequently, the existence of
the entire business may be at risk.
Business executives conduct many events such as seminars,
workshops and orientation for the new employees to demonstrate
the importance of the ethics in the business, but besides all these
reminders, those executives care more about making profits even
if these ethics have to be ignored.
The culture of the business is defined by the top executives
mentalities and behaviour, and they play the biggest role in
influencing the employee’s attitude and actions. Because what
the employees do in the business is just an emulation of their
boss’s thoughts and orders. But, sometimes the employees
themselves may have corrupted thought to practice unethical
activities for their own interest without any influence from top
manager or executive. In both situations unethical practices may
affect the survival of the business.
Example 2: for instance the managers of the business may
influence the accountants to practices unethical activities
deliberately such as overstating the revenues or understating the
expenses in order to maintain the profitability of the business.
Example3: A group of accountants may form a network to work
together within the business organization to practice unethical
activities for their own advantage such as embezzling money from
the company accounts without the knowledge of the
management.
Example 4:
Real life example about unethical accounting practices:
One of the biggest accounting scandals in the 20 th century was in
the Waste Management Company based in Huston- United States
of America. 1.7 billion dollars falls revenues were reported under
the knowledge of the top directors and they embezzled 100
million dollars. The main players in this forgery were the founder
and the CEO, top executives, and the company auditors.
The scenario: the accountants in the company influenced by the
founders and executives increased the depreciation time length
for the property, plant and equipment on the balance sheet to
create faulty allowances.
The new CEO of the company and the management team reveal
the truth after going through the company books and reports. And
to prevent this from happening again the new CEO set up a
hotline for the employees to report any dishonest behaviour.
This example shows how the accounting ethics is important for
the company survival and how unethical activities jeopardize the
reputation and the survival of the company. Also, to maintain the
business integrity ethics should be deep-rooted in the director’s
behaviour to be reflected in the employee’s actions.
2. B.1-Can ethics be an obstacle for the business survival?
For many the answer may be yes, but in reality ethics has a
crucial role in the business survival, not as many people say;
ethics and profitability cannot be retained parallel in the business.
Example5: Japan is the best example in maintaining business
ethics and morals, but at the same time retaining the profitability
and low cost production. In contrast, in the western communities
at some point ethics must be put aside to maintain the
profitability.
2. B.2-What is the role of ethics for the business survival
and performance?
The better is the integrity and impartiality of the business, the
higher is the stakeholder’s confidence and desire to invest in the
business. Because, as long as the business is a going concern
even with less profits. It’s better than uncertain business that may
be liquidated in the near future. When the business is accused of
unethical practices, the investors tend to sell their shares as soon
as possible even at lower prices to avoid total loss. This happens
because the business will be subjected to investigations and
auditing by the officials which effect the flow of the business
activities and consequently will decline the profitable
performance of the business.
2. B.3-What are the advantages and dis advantages of the
accounting ethics?
First: advantages:
A- Maintaining public faith.
B- Avoid regulatory investigations and sanctions.
C- Avoiding stock price volatility.
Second: disadvantages:
A- Reduce the business freedom to maximize profits.
B- The improvement in the work conditions such as wages,
health care, and safety may cost the business valuable time
and money.
2. C- The components of stakeholders:
Who is the stakeholder?
‘’A stakeholder in an organization is (by definition) any group or
individual who can affect or is affected by the achievement of the
organization's objectives’’
R. Edward Freeman (1984) Strategic Management: A Stakeholder
Approach.
Stakeholder is any one that has an interest in an enterprise or
business organization. Stakeholder can be a person, group, or
organization that effect or affected by the actions and activities of
an organization.
There are primary stakeholders of the business who are:
customers, suppliers, investors and employees. As the theory
indicates stakeholder is any one effect or affected by the business
including government agencies, directors, owners ‘shareholders’,
and even the communities that surround the business or the
resources.
Numerous stakeholders come with various negative issues
because a single change in the policy of the business may be in
the advantage of one stakeholder, but it can also be a
disadvantage for others. So, fair business practices are essential
to equality between the stakeholders.
2.D- Importance of public interest:
Why stakeholder’s public interest must be protected?
The pursuit of the public interest makes most lists of
characteristics of professions. Acting
in the public
interest
is described as the fundamental characteristic of the accounting
profession.
The first paragraph of the Code of Ethics for Professional
Accountants issued by the International Federation of Accountants
(IFAC, 2013) states: ‘‘A distinguishing mark of the
accountancy profession is its acceptance of the responsibility to
act in the public interest. Therefore, a professional
accountant’s responsibility is not exclusively to satisfy the needs
of an individual client or employer.’
The public interest is defined in the policy position paper ‘A
definition of the public interest’ in 2012 (IFAC, 2012).which
published by The International Federation
of Accountants
(IFAC). In this paper public interest is defined as ‘‘the net benefits
derived for, and procedural rigor employed
on behalf of,
all society in relation to any action, decision or policy’’
Some stakeholders may not participate in the business activities,
but still they have concern about the outcome of the business
activities. And in order to maintain the equality in distributing the
outcomes of the business among the entire stakeholder even the
external ones, some elements need to be applied.
Many business firms and organization are adapting new effective
methods to protect and enhance the stakeholder’s interest. It’s a
process of engaging in various dialogues seeking understanding
and solutions for issues of mutual concern to improve the firm’s
decision making and accountability, and also to share risks and
benefits evenly.
One of those methods is stakeholder’s engagement and
management, its needed when there is a change initiative, a
programme or project, of which can have impact on both internal
and\or eternal stakeholders. The components of this method are
identification, analysis, communication and engagement which
need to be follow thoroughly to achieve the best outcomes of
which all the stakeholders can better off.
3.0- References
1. A- accounting concepts, (2010 – 2013) accountingsimplified.com, retrieved from (http://accountingsimplified.com/financial-accounting/accounting-concepts-andprinciples/ )
1. B- importance of accounting concepts to users, (1999-2014)
ehow.com, retrieved from
(http://www.ehow.com/facts_5597720_importance-accountinginformation.html )
2. A- definition of accounting ethics, Wikipedia.org, retrieved from
(http://en.wikipedia.org/wiki/Accounting_ethics )
2. B- importance of accounting ethics, (1999-2014) ehow.com,
retrieved from (http://www.ehow.com/how-does_4571925_whyethics-important-accounting.html )
Only the ethical survive, (2014) scu.edu, retrieved from
(http://www.scu.edu/ethics/publications/iie/v10n2/ethicalsurv.html )
Examples, unethical practices and accounting scandals,
accounting-degree.org, retrieved from (http://www.accountingdegree.org/scandals/ )
2. C- & 2. D- Components of stakeholders,(2014) slideshare.net,
retrieved from
(http://www.slideshare.net/accountsdirect/stakeholderengagement-and-management )
1.0- Question 1
…………………………………………………………………………….
Page (1-4)
1. A- accounting concepts
………………………………………………………………….. Page 1
1. A.1- accrual concept
……………………………………………………………………….. Page 1
1. A.2- consistency
concept…………………………………………………………………. Page 1
1. A.3- going concern concept
……………………………………………………………. Page 2
1. A.4- accrual concept
………………………………………………………………………… Page 2
1. B- benefits of financial information to users
…………………………………..…Page 3
2.0Question 2
………………………………………………………………….………… Page
(4-9)
2. A- definition of accounting ethics
…………………………………………………... Page 4
2. B- importance of ethics to survival
…………………………………………………. Page 5
2. C- components of stakeholders
……………………………………………………… Page 8
2. D- importance of public interest
……………………………………………………. Page 9
3.0- references
………………………………………………………………………………...
Page 10
1.0- Question 1:
1. A- Accounting concepts:
Accounting concepts are the fundamental rules of accounting
which should be followed in the process of preparing accounts
and financial statements.
Accounting concepts can be refer to as generally accepted
accounting principles (GAAP) these principles and concepts are
standardized rules set by international standard boards and
commissions in order to standardize the process of preparing
accounts and statements worldwide.
There are four essential accounting concepts which are accrual,
consistency, going concern, and prudence.
1. A.1- First: accrual concept:
All the business transactions are recorded upon their occurrence
regardless whether the cash is received or paid, this known as
accrual concept it’s fundamental to provide useful accounting
information.
Also, it’s important to ensure that revenue and expenses are
recognized at the correct period, irrespective of the cash flow
time.
Accrual concept helps to make the financial statements more
accurate because, it ensures that expenses match the revenue
earned.
1. A.2- Second: consistency concept:
The consistency concept means that accounting methods once
adopted, must be applied in the future periods to provide
consistent and invariable financial statement.
This concept implies that a business must maintain the same
accounting policy, unless there is a convincing reason to change.
If the business changes the policy followed in the previous
periods, a proper justification and disclosure of the nature of the
change is needed to avoid distortion of financial reports.
Why the financial reports should be consistent?
The following example demonstrates the reason.
Example 1:
If company ABC used reducing balance depreciation method for
its machinery and equipment in the last periods, but in the
current period the company’s accountants change to use straight
line depreciation method, this may lead to faulty and
contradictory data in the financial reports. Due to this,
consistency concept obligates the business to use same
accounting methods for all of the periods.
1. A.3- Third: going concern concept:
In this concept the financial statements are prepared assuming
that the business firm will continue operating in the future
maintaining its operational activities without any indications of
liquidating the firm to fulfil liabilities. The business will realize its
assets and settle its liabilities in the normal basis.
Accountants and auditors determine if the business is going
concern by look up the business ability to pay liabilities when they
fell due without the need to substantial assets sale or debts
restructuring.
Auditors determine if the business is going concern for one period
only, which means only for the current year based on the data
from financial statements.
1. A.4- Fourth: prudence concepts:
The prudence concept implies that accountants must not
overestimate the revenue and assets, nor underestimate the
expenses and liabilities. Accountants should have a professional
judgement and estimate potentials when preparing financial
statements because, prudence concept indicates that the
business entity should not recognized the asset at a higher value
than the amount expected to be earned from the business
activities. Conversely, liabilities should not be recognized at an
amount below the actual amount to be paid.
The prudence concept drive the accountant to be certain in
recognizing and recording the expenses and the liabilities of the
business when they are probable, and delay recording revenue
and assets transactions until they are certain, because what the
business firms and the stakeholders striving for is accurate and
realistic financial reports.
1. B- benefits of financial information to users:
The financial information provides the users with a valuable data
about the business such as financial position statement which
shows the business’s assets and liabilities and the statement of
comprehensive income which shows the revenues and expenses.
These various statements are crucial for the user’s decision
making needs, because it reviews the overall operational
activities of the business.
The benefits of the financial information to the various users:There are two categories of the financial information users,
internal and external.
1. B.1 First: internal users:
A- Managers: financial information helps the managers to
manage the business effectively by keeping them updated
with the business performance assessments in order to be
able to make efficient decisions.
B- Employees: employees need the financial information to
make sure that the business is a going concern and there are
no threats of losing their jobs in the near future, also the
employees benefit from the financial information by studying
the profitability of the business and the ability of the firm to
provide a good work environment and proper wages.
C- Owners “shareholders”: financial information provides the
owners with all the reports to analyse the viability and
profitability of their business, also to assess the risk and
predicted returns.
1. B.2- Second: external users:
A- Suppliers: the need to know about the liquidity and the
profitability of the business to assess the ability of the firm to
pay the debts when they fall due.
B- Government: taxation authorities need the financial
statements of the business to determine the tax that must
be paid, and also to track the business activities and
economic progress by analysing these statements.
C- Customers: financial statements provide the customers with
the necessary data to assess whether the business will be
able to meet the demands or not, also to assess the stability
of the business to make sure that the business is a constant
source of supply.
2.0- Question 2:
Accounting ethics:
2. A- What is accounting ethics?
The definition of ethics is very broad and there is no universal
consensus, but in a general sense ethics is defined as the
systematic study of conduct based on moral principles, reflective
choices, and standards of right and wrong conduct (Wheelwright,
1959). Ethical behaviour from a professional standpoint also
involves making choices based on consequences of alternative
actions. Thus, general theories of ethics can be used to explain
and understand the professional conduct that is expected of
accountants: as indicated in the following quote from the
Philosophy of Auditing:
‘’Ethical behaviour in auditing or in any other activity is no more
than a special application of the general notion of ethical conduct
devised by philosophers for men generally. Ethical conduct in
auditing draws its justification and basic nature from the general
theory of ethics. Thus we are well advised to give some attention
to the ideas and reasoning of some of the great philosophers on
this subject (Mautz & Sharaf, 1961, p. 232).
Accounting ethics is the study of values and judgements as they
apply to accounting, it is concerned with how to make moral
choices when preparing, presenting or disclosing financial
information.
It can also be defined as the practice of behaviour that prevent
any deliberate in accuracy when preparing the financial
statements.
Many parties within and out the business depend on the financial
information that prepared and presented by accountants.
Management decisions, policies, structure of the organization,
investment policies, and many other activities depend on the
reports and statements prepared by the accountants of the
business. Since so much rely on accountants to provide truthful
and accurate information, ethical practices and moral values are
crucial for any accountant to maintain the business integrity.
Accountants are often exposed to highly confidential information
and data such as the social security and bank accounts numbers
of the business’s clients. This –if ethics is not practiced- can
stimulate the accountants to play unlawful games under the
tables for their own interests, especially in the big corporates
when small inaccurate digits can be millions of dollars if
accumulated.
2. B- The importance of accounting ethics for survival:
Many business leaders and executives believe that the survival
and the success of the business depend on the effective
management only, without regarding to the ethics as one of the
survival factors, but these thoughts can be refuted. Because, the
accounting ethics if not practiced in the business can jeopardize
the reputation of the business and consequently, the existence of
the entire business may be at risk.
Business executives conduct many events such as seminars,
workshops and orientation for the new employees to demonstrate
the importance of the ethics in the business, but besides all these
reminders, those executives care more about making profits even
if these ethics have to be ignored.
The culture of the business is defined by the top executives
mentalities and behaviour, and they play the biggest role in
influencing the employee’s attitude and actions. Because what
the employees do in the business is just an emulation of their
boss’s thoughts and orders. But, sometimes the employees
themselves may have corrupted thought to practice unethical
activities for their own interest without any influence from top
manager or executive. In both situations unethical practices may
affect the survival of the business.
Example 2: for instance the managers of the business may
influence the accountants to practices unethical activities
deliberately such as overstating the revenues or understating the
expenses in order to maintain the profitability of the business.
Example3: A group of accountants may form a network to work
together within the business organization to practice unethical
activities for their own advantage such as embezzling money from
the company accounts without the knowledge of the
management.
Example 4:
Real life example about unethical accounting practices:
One of the biggest accounting scandals in the 20 th century was in
the Waste Management Company based in Huston- United States
of America. 1.7 billion dollars falls revenues were reported under
the knowledge of the top directors and they embezzled 100
million dollars. The main players in this forgery were the founder
and the CEO, top executives, and the company auditors.
The scenario: the accountants in the company influenced by the
founders and executives increased the depreciation time length
for the property, plant and equipment on the balance sheet to
create faulty allowances.
The new CEO of the company and the management team reveal
the truth after going through the company books and reports. And
to prevent this from happening again the new CEO set up a
hotline for the employees to report any dishonest behaviour.
This example shows how the accounting ethics is important for
the company survival and how unethical activities jeopardize the
reputation and the survival of the company. Also, to maintain the
business integrity ethics should be deep-rooted in the director’s
behaviour to be reflected in the employee’s actions.
2. B.1-Can ethics be an obstacle for the business survival?
For many the answer may be yes, but in reality ethics has a
crucial role in the business survival, not as many people say;
ethics and profitability cannot be retained parallel in the business.
Example5: Japan is the best example in maintaining business
ethics and morals, but at the same time retaining the profitability
and low cost production. In contrast, in the western communities
at some point ethics must be put aside to maintain the
profitability.
2. B.2-What is the role of ethics for the business survival
and performance?
The better is the integrity and impartiality of the business, the
higher is the stakeholder’s confidence and desire to invest in the
business. Because, as long as the business is a going concern
even with less profits. It’s better than uncertain business that may
be liquidated in the near future. When the business is accused of
unethical practices, the investors tend to sell their shares as soon
as possible even at lower prices to avoid total loss. This happens
because the business will be subjected to investigations and
auditing by the officials which effect the flow of the business
activities and consequently will decline the profitable
performance of the business.
2. B.3-What are the advantages and dis advantages of the
accounting ethics?
First: advantages:
A- Maintaining public faith.
B- Avoid regulatory investigations and sanctions.
C- Avoiding stock price volatility.
Second: disadvantages:
A- Reduce the business freedom to maximize profits.
B- The improvement in the work conditions such as wages,
health care, and safety may cost the business valuable time
and money.
2. C- The components of stakeholders:
Who is the stakeholder?
‘’A stakeholder in an organization is (by definition) any group or
individual who can affect or is affected by the achievement of the
organization's objectives’’
R. Edward Freeman (1984) Strategic Management: A Stakeholder
Approach.
Stakeholder is any one that has an interest in an enterprise or
business organization. Stakeholder can be a person, group, or
organization that effect or affected by the actions and activities of
an organization.
There are primary stakeholders of the business who are:
customers, suppliers, investors and employees. As the theory
indicates stakeholder is any one effect or affected by the business
including government agencies, directors, owners ‘shareholders’,
and even the communities that surround the business or the
resources.
Numerous stakeholders come with various negative issues
because a single change in the policy of the business may be in
the advantage of one stakeholder, but it can also be a
disadvantage for others. So, fair business practices are essential
to equality between the stakeholders.
2.D- Importance of public interest:
Why stakeholder’s public interest must be protected?
The pursuit of the public interest makes most lists of
characteristics of professions. Acting
in the public
interest
is described as the fundamental characteristic of the accounting
profession.
The first paragraph of the Code of Ethics for Professional
Accountants issued by the International Federation of Accountants
(IFAC, 2013) states: ‘‘A distinguishing mark of the
accountancy profession is its acceptance of the responsibility to
act in the public interest. Therefore, a professional
accountant’s responsibility is not exclusively to satisfy the needs
of an individual client or employer.’
The public interest is defined in the policy position paper ‘A
definition of the public interest’ in 2012 (IFAC, 2012).which
published by The International Federation
of Accountants
(IFAC). In this paper public interest is defined as ‘‘the net benefits
derived for, and procedural rigor employed
on behalf of,
all society in relation to any action, decision or policy’’
Some stakeholders may not participate in the business activities,
but still they have concern about the outcome of the business
activities. And in order to maintain the equality in distributing the
outcomes of the business among the entire stakeholder even the
external ones, some elements need to be applied.
Many business firms and organization are adapting new effective
methods to protect and enhance the stakeholder’s interest. It’s a
process of engaging in various dialogues seeking understanding
and solutions for issues of mutual concern to improve the firm’s
decision making and accountability, and also to share risks and
benefits evenly.
One of those methods is stakeholder’s engagement and
management, its needed when there is a change initiative, a
programme or project, of which can have impact on both internal
and\or eternal stakeholders. The components of this method are
identification, analysis, communication and engagement which
need to be follow thoroughly to achieve the best outcomes of
which all the stakeholders can better off.
3.0- References
1. A- accounting concepts, (2010 – 2013) accountingsimplified.com, retrieved from (http://accountingsimplified.com/financial-accounting/accounting-concepts-andprinciples/ )
1. B- importance of accounting concepts to users, (1999-2014)
ehow.com, retrieved from
(http://www.ehow.com/facts_5597720_importance-accountinginformation.html )
2. A- definition of accounting ethics, Wikipedia.org, retrieved from
(http://en.wikipedia.org/wiki/Accounting_ethics )
2. B- importance of accounting ethics, (1999-2014) ehow.com,
retrieved from (http://www.ehow.com/how-does_4571925_whyethics-important-accounting.html )
Only the ethical survive, (2014) scu.edu, retrieved from
(http://www.scu.edu/ethics/publications/iie/v10n2/ethicalsurv.html )
Examples, unethical practices and accounting scandals,
accounting-degree.org, retrieved from (http://www.accountingdegree.org/scandals/ )
2. C- & 2. D- Components of stakeholders,(2014) slideshare.net,
retrieved from
(http://www.slideshare.net/accountsdirect/stakeholderengagement-and-management )
