GARCIA, TRISTAN F.

ACC535M - G03

ACCOUNTING AND THE MANAGEMENT OF BUSINESS

Question No. 1: Differences of Managerial Accounting with Financial Accounting

a. According to Brewer et al. (2016), financial accounting aims to satisfy the needs of
external stakeholders like owners, creditors, and regulatory bodies. Managerial
accounting, on the other hand, is geared towards internal users of information or
generally, the managers and decision makers of a firm (Brewer et al., 2016).

b. Financial accounting aims to report about the historical financial information of a firm
while managerial accounting focuses on reporting financial information that is relevant to
making decisions affecting the future (OSC Rice University, n.d.).

c. Financial accounting is strictly governed by generally accepted accounting principles

(GAAP) while managerial accounting is more flexible or free form in nature in
accordance with meeting its goal of meeting the ever dynamic needs of management
(OSC Rice University, n.d.)

d. Financial accounting reports on a company as a whole while managerial accounting may

report not only on the entirety of a company but even on its segments or departments
(Brewer et al., 2016).

e. Since financial accounting is usually for regulatory purposes, the reports produced by FA
usually follow a routinary schedule as set forth by the government and its other agencies
(Nuvest Management Services, 2017). The reports produced under managerial
accounting, on the other hand, focus on timeliness and, thus, are furnished as needed
by the management without following a predetermined schedule (Brewer et al., 2016).

Question No. 2: Emerging Accounting Practices that are Responsive to the New Needs of
Business and Management

a. Use of Cloud Accounting Softwares

Cloud computing, as defined by Dimitriu & Matei (2014), is the offering of “computer
hardware and software applications as services through the Internet” allowing “users to
store data and use applications through different devices located in several locations.”
This simply means that accounting softwares are now available to firms merely via the
internet. This trend is emerging since it is cheaper as compared to traditional accounting
softwares that are bought and are hosted in a server on the physical site of the company
 - both of which require huge up-front capital investment (Dimitriu & Matei, 2014). Cloud
accounting providers usually charge companies cheaper rates on a subscription basis.

Cloud accounting also answers the need for timely reports as it allows for remote data
sharing and collaboration. Users can now access, input and analyze accounting data
practically anywhere and anytime even with just their mobile devices.

b. Outsourcing the Accounting Function

While traditional companies see having its own accounting department as a non-
negotiable, outsourcing accounting duties entirely to a third party service provider has
been an emerging trend in recent years (Blueback Global, 2020). Outsourcing allows
companies, especially small ones, to focus on their expertise or main line of business
while also ensuring that their accounting needs are met by qualified service providers
(Ottawa University, 2020).

c. Data Analytics

The use of data analytics has been a key trend recently with accountants using the data
present in financial information to come out with more informed decisions (Ottawa
University, 2020). This answers the need of companies for systematic and effective
decision making.

Question No. 3: The Value of Ethics, Good Governance, and Social Responsibility in Business
and in Accounting Work

Brewer et al. (2016) sees ethics as the “lubricant that keeps the economy running.”
Businesses expect, in good faith, that other businesses will act ethically and in
accordance with good governance - that is, that they will be honest with their dealings
and are capable of veering away from illegal, dubious or corrupt business practices. If
the business world normalizes being unethical and corrupt, business will find it hard to
trust each other and the economy would not work efficiently (Brewer et al., 2016). Thus,
maintaining ethical behavior is a must for every firm in order to maintain a productive
business landscape. Since unethical behavior usually involves finances, this can be
deterred through having fairly presented financial statements, sound accounting
practices, proper check and balance (internal controls), and regular audits.

Corporate social responsibility (CSR) on the other hand, is “about how you (the
corporation) make your money, not how you spend it,” as shared in the Lasallian
Business Leadership course of De La Salle University’s Master of Business
Administration program. This definition acknowledges that the foundations of CSR are
still ethical behavior and fair business practices, and thus, it should not be confused with
mere charity or philanthropy. Thus, CSR is valuable to business and accounting in the
same way ethics is.
References

Blueback Global. (2020, February 10). 10 Accounting Trends Every Business Should

Follow in 2020 Back to Knowledge Central Feb 10, 2020 How-To , News Africa , Asia ,

Caribbean , Europe , Latin America , Middle East , North America , Oceania , US

Territories Blueback Global With the advent. Blueback Global.

https://bluebackglobal.com/ten-accounting-trends-every-business-should-follow-2020/

Brewer, P. C., Garrison, R. H., & Noreen, E. W. (2016). Introduction to Managerial

Accounting (2016th ed.). McGraw-Hill Education.

Dimitriu, O., & Matei, M. (2014). A New Paradigm for Accounting through Cloud

Computing. Procedia: Economics and Finance, 15, 840-846. Science Direct.

https://doi.org/10.1016/S2212-5671(14)00541-3

Nuvest Management Services. (2017, March 23). WHY FINANCIAL ACCOUNTING

AND MANAGEMENT ACCOUNTING ARE ESSENTIAL FOR BUSINESS. Nuvest.

https://nuvest.net/why-financial-accounting-and-management-accounting-are-essential-

for-business/

OSC Rice University. (n.d.). Principles of Accounting, Volume 2: Managerial Accounting.

OpenStax. https://opentextbc.ca/principlesofaccountingv2openstax/chapter/distinguish-

between-financial-and-managerial-accounting/

Ottawa University. (2020, October 29). 5 Key Accounting Trends for 2020. Ottawa

University. https://www.ottawa.edu/online-and-evening/blog/october-2020/5-key-

accounting-trends-for-2020