School of Accounting and Finance

Writing Assignment
AF2108 - Financial Accounting
Semester 1, 2011/2012
Due Date: 23:59, 11 November 2011
Title of the Chosen Article:

Accounting Improvement: How Fast, How Far?

Honour Declaration
I declare that the work in this assignment is completely my own work. No part of this
assignment is taken from other peoples work without giving them credit. All references have
been clearly cited.
I understand that an infringement of this declaration leaves me subject to disciplinary action by
The Hong Kong Polytechnic University.
TANG, Siu Hung Victor
Student Name

Victor Tang
Signature

10520732D
Student Number

LEC001/Friday
Lecture Number / Week Date

Dr. Sunny Sun

Name of Lecturer

Tut002
Tutorial Number

Dr. Sunny Sun

Name of Tutor

AF2108 Financial Accounting

Accounting Improvement: How Fast, How Far?

Individual Writing Assignment

TANG, Siu Hung Victor 10520732d

Summary

Accounting is a complex system, everyone realizes that it is a system which record and
report the performance of a company in a partiular period of time and can reflect the
financial status and value of a company, our accounting system ought to be comparability
and fairness enough to report fact. Unfortunately, our world never perfect, so that it is
needed to improve comparability for accounting system in order to reflect true and
accurate information of companies. From this, many controversies arise from the
improvement progress of our accounting system. The most important questions are that
how fast and how far the system should be improved.
Some views proposed that our accounting system should be uniformity, which means a
uniform accounting principle shoud be imposed for all kinds of business. For each kind of
transaction, there have only one prescribed accounting treatment, so that financial
performance for all kind of business can be easily revealed by a single true figure The
net income. On the other hand, the opposite view disagree and they think that every
enterprise has their own business nature, scale, organization structure and management
culture, they do have different business goals and needs; there is no point to neglect their
particular needs. In addition they suggested that acccouunting system should be flexible,
and provide a certain degree of freedom for each of the business on reporting their
financial report.
The writer suggested that the development of our accounting system should not be too
fast and too far and there have no accounting standards are absolute right or wrong,
neither uniformity nor flexible, but it depend on accountants use which methods to
prepare the companies financial report. To illustrate this, the writer has proposed a
hypothetic example called accounting magic. The accounting magic assumes that
there have two companies with the same structure and operation. The only different is
their transactions treatment with regards to different business goal. Although two
companies are identical and their transaction handling methods are legal and ethical, the
result shown that two companies have a totally different net income and tax payment. The
example provides us with an important message: As different practice in preparing
accounting report can cause different outcome, this is the reason for a continuous changes
and development is essential to set up a comparable and consistent accounting system.
Finally, the writer suggested the developing progress should be continuously and should
conduct by the cooperation among government, professional accountants and their
association. It is not possible to set up a uniform accounting practices only rely on
government regulation. Both of them have their own separated roles: Professional
accountants and their association can serve in the roles of advisory and regulatory;
Government can serve in the roles of enforcement, legislation and providing education to
the public.

Feedback

Our business world is changing from time to time; nowadays enterprises structure and
their management become much more complex than ever. There has no complete
accounting system can be ensured the benefit and be satisfied by all party in our rapid
changing business world. An improvement on accounting system is required to conduct
continuously in order to meet the business needs. It is unrealistic to expect and chase that
compete comparative accounting system will ever be accomplished. In my point of view,
I agree with the writer that the progress of accounting improvement should not be either
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AF2108 Financial Accounting

Accounting Improvement: How Fast, How Far?

Individual Writing Assignment

TANG, Siu Hung Victor 10520732d

too fast or too far, but should be considered on raisng the standards of both interity and
competence of people responsible for financial accounting and reporting without losing
the sight of the underlying objectives of making the accounting system as the fairest and
the most useful way to showing the performance of companies for users from all segment
of the public. Moreover, I think changing of our accounting system is not a must but must
be carefully considered and should be made purposefully. Changes are take place only
when necessary and should be focused on narrowing the areas of difference in accounting
practices adopted by different business parties.
In my opinion, although a perfect accounting system will never appear, there is much
room for our existing accounting system to improve. With regards to the current
accounting problem, I would like to propose some possible suggestions on it: Firstly, in
order to balance the public interests and to seek for the gerneral acccptence of the
accounting system, I think connection and communication among government,
accounting professionals, institution and accountant associations should be strengthened,
it aimed to collect more information, demands, opinions, suggestions and also advices on
the changing of accounting system and to establish new accounting rules and adjust
existing accounting principle for business. Secondly, a greater participation or
involvement from all sectors of the business (such as investors, shareholders, company
owners, independent accountants and other interested user of financial report) in
determining the accounting principles and standards should be obtained. Thirdly, the
government should promote the importance of business ethic and encourage corporate
social resopnsibility on accounting treatment in all business industries through education
and legistlation. In addition, accountant professions should always exercise care,
vigilance and caution on their profession conduct in order to prepare fair, true and
readable accounting reports for the public. Fourthly, accounting professional societies and
principle board should developed and reviewed the accounting principles and objectives
regularly by persuasing and demonstrating in formulation and the acceptance of
accounting principles in order to have an appropriate adjustment on current accounting
principles. Besides, the most important thing is to narrow the conflict arise from the area
of difference in using different accounting practices. Moreover, I think practical research
can be the most effective and ideally way to acclerate the evoluntionary processes of
developing accounting principles. From this, it is suggested that accounting professions
and business management can be jouintly cooperated with universities and institutions to
conduct some practical researching on developing accounting principles in order to put
theoritical knowledge into solid practical solution into our current accounting problems.
At the same time, research projects should be conducted continouly to educate the public
and the users of financial statement on the usefulness, meaning and also the limitation of
using accounting reports. Finally, goverment and regulatory bodies should impose strict
uniform regulations on company management in order to plug the loopholes in existing
business law and to prevent inaccurate and inconsistent financial report due to different
handling methods or treatment of accounting items in different companies management
culture.
In conclusion, although some interests and benefits may need to sacrifice during the
changing and improving process of accounting system, I do emphasis that a continuous
improvement and changes is an essential factor to derive a consistent and comparable
accounting principle. It is also the building block of a fair and equitable business
environment. Finally, I would like to suggest that accounting improvement require all
aspects of cooperation and efforts: For corporate side, every corporate management has
their primary responsibility to give a fair and accurate presentation on their company
performance (i.e. accounting report). In addition they are also responsible to provide and
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AF2108 Financial Accounting

Accounting Improvement: How Fast, How Far?

Individual Writing Assignment

TANG, Siu Hung Victor 10520732d

disclose a more informative and authoritative accounting report for the public. For
government and accounting professional side, they are responsible to treat accounting as
the safeguard of economic stability. They are also responsible for educating the public the
significance of accounts, the limitation of account and also the value of account.
(1226words)

References
1. Accountancy. (2011, September 10). In Wikipedia, The Free Encyclopedia.
Retrieved 13:52, November 11, 2011, from http://en.wikipedia.org/w/index.php?
title=Accountancy&oldid=459945474
2. American Institute of Certified Public Accountants. (2011, October 27). In
Wikipedia, The Free Encyclopedia. Retrieved 14:53, November 1, 2011, from
http://en.wikipedia.org/w/index.php?
title=American_Institute_of_Certified_Public_Accountants&oldid=457708472
3. Certified Public Accountant. (2011, October 28). In Wikipedia, The Free
Encyclopedia. Retrieved 18:15, November 1, 2011, from
http://en.wikipedia.org/w/index.php?
title=Certified_Public_Accountant&oldid=454837136
4. International Financial Reporting Standards. (2011, August 7). In Wikipedia,
The Free Encyclopedia. Retrieved 20:56, November 2, 2011, from
http://en.wikipedia.org/w/index.php?
title=International_Financial_Reporting_Standards&oldid=459442677
5. Generally accepted accounting principles. (2011, May 11). In Wikipedia, The
Free Encyclopedia. Retrieved 12:57, November 2, 2011, from
http://en.wikipedia.org/w/index.php?
title=Generally_accepted_accounting_principles&oldid=460070111

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