Although accounting is termed as process of recording, summarizing, analyzing and interpretation of the data, there is a social or societal perspective to the Accounting Process. The Accounting information has an influence on the society which affects many people. For example the accounting procedures followed by electricity companies to measure their profitability have direct effect on electricity prices. Accounting needs to be socially constructed process which will be followed considering its effect on people.
With so many changes happening in the business world the issue of subjectivity and inconsistency in the accounting techniques and procedures has come up. The emergence of ecommerce and with huge investments has made the traditional techniques to lose importance and new and customized techniques have come up.
To reduce the risk and loopholes the professional accountants have put in a lot of time and money for integrating theoretical practice in use. The Accounting theories have become circumstantial and subjective in nature which gives rise to subjectivity in the accounting.
There are several frameworks developed by regulatory authorities in few countries where they have tried to make those statements transparent. The common coverage points on those frameworks include
- Characteristics of Financial Information (Quantitative and Qualitative)
- Definition of Financial statement elements
- Measurement of the financial elements
- Objective behind Financial statement presentation
With changes in social function of the accounting the responsibility of an accountant has increased. The Process of Accounting has become more relevant and the functions of this accounting process have become more critical.