This book, ‘Contemporary Financial
Accounting and Reporting
for Management’ has been conceptualized, developed and written as is
appropriate for the current scenario and the perspectives which the subject
of ‘financial accounting’ consists of. While the basic method of financial accounting has not changed, the environments within which the domains of
Financial Accounting operate have
been undergoing dynamic changes. Some concepts such as, ‘fair value accounting’ even though old, are
gaining renewed and higher impetus.
Business entities have on an increasing scale been becoming
global and crossing
boundaries resulting in requirement of compliance with different financial reporting
frameworks. With more than 120
nations across the world directing
/ supporting harmonization of financial reporting
standards with IFRS, need for convergence has been increasingly felt and accepted.
Indian Government is just to announce the effective date of implementation of Ind AS – the equivalent of IFRS. ‘Financial
Ac- counting’ is becoming
more of a multi-responsibility centre
than having just remained as a cost centre.
The role of ‘accounting’ in creating value
addition to the business entity
in terms of reliable financial reporting and management
reporting is being recognized from an appropriate perspective. Accounting, which was once carried out only at the location
of the business premises has matured
to be ‘virtually portable’ accompanied by favorable and unfavorable outcomes.
One of the favorable outcomes is ‘human resources development’ in the ‘sourcing destination’, basically on account
of opportunities to acquire knowledge of different financial reporting
frameworks such as national ac- counting frameworks, IFRS, US GAAP etc. On the other side, the important
outcome is increasing threats to availability and integrity of data and thereby resulting
in negative impact on reliability of financial reporting
of a business entity (eg: Enron and erstwhile Satyam Computers).
If one looks at practicing accountants and
managers, a transformation is taking place in terms of the need on their part
to update the extent of the knowledge both horizontally as well as vertically. In terms of vertical perspective, they
need to learn new reporting requirements of frameworks such as Ind AS, IFRS, US GAAP, Companies Act 2013 etc. Horizontally, the accountants need to learn/update spreadsheet skills including that of financial modeling and other computer based interactive skills. Besides, the new developments with respect to reporting requirements expect the people charged with
governance of business entities to play a better and higher proactive role,
necessitating the members of the Board of Directors of Companies, more so in
the case of companies listed in stock exchanges to understand their increasing
responsibility, at the macro level.
The ‘new generation’ investing community such as IT Professionals is venturing into capital markets, many of whom do not get adequate opportunity to learn about concepts of financial accounting and financial accounting
& reporting practices of business entities.
Scope of financial
accounting & reporting
does not end with just preparation of financial statements. A cycle of financial reporting gets completed only when financial statements are approved by the
shareholders, subsequent to consideration of reports of the Auditors
and interpretation of relationships
between various elements
of financial statements, albeit to a limited extent by the management takes place. I felt that there is a need
to explain the process of financial reporting.
Accounting for taxes has been traditionally
kept out of discussion in most of the books on financial accounting. However, the author strongly believes that a
manager and members charged with governance
need to know implications of accounting policies
on tax liability of a business at least from the
point of a bird’s eye view.
It is in the above scenario that Graduate /
Post Graduate Students of Management Programme or of Accounting & Finance are learning the subject of financial accounting and reporting. They need to learn
state of the scenario of ‘financial
accounting and reporting’ to equip themselves to be future managers.
Financial Accounting and reporting process of an entity cannot be studied in isolation
without com- prehending the accounting information system of a business entity. A recent Indian Accounting Scam, involving a software company
is an example of how the
Accounting Information Systems
can be manipulated to produce ‘coherent
misrepresentation’ of financial
information in aid of fraudulent
re- porting practices. A standard book normally does not include
a discussion on ‘accounting information systems’.
Thus, the author felt that there is a vacuum
with respect to a comprehensive book that covers afore- said aspects of financial accounting and reporting in the contemporary scenario. It is the result of this need, the book ‘Contemporary Financial Accounting and Reporting for Management – a holistic
perspective’, encompassing
conceptual, technical, technological, managerial, regulatory, governance, compliance and analytical aspects of financial accounting and reporting has been conceptualized, developed and written on the basis of his experience in the fields of financial
accounting & reporting, financial management and information systems as a practitioner both in industry and as an in- dependent practitioner, as an academician in leading business
schools such as National Institute of Industrial Engineering (NITIE, Mumbai),
St. Francis Institute of Management and Research, Mumbai and Mumbai University, as a resource person for valuation
course of the Institute of Chartered
Accountants of India and as a corporate
trainer in the areas of financial reporting standards and financial modeling, cumulatively for more
than quarter of a century.
Methodology
followed in Development of the book
The subject of ‘financial accounting and reporting’ basically is concerned with the process
of financial and other
relevant information delivery. It consists of four important parts. In the order of importance,
one may list them as: concepts, process, contents and structure. Extent of
quality of contents of financial statements depends to a large extent the effectiveness of the governance of accounting and reporting
process such as preparation, validation, authentication, attestation (audits)
and approval of financial statements, even though the minimal structure
and level of contents are decided by financial reporting standards, respective laws governing an entity or other
generally accepted accounting practices. It also goes without saying that
clarity of understanding with respect to basic concepts of accounting and of
characteristics of financial elements
qualifying for recognition, measurement, presentation, de-recognition and
disclosure is of fundamental importance.
This book has given appropriate coverage of all those parts of the subject. Appropriate references to reporting standards
such as IFRS, Ind AS, Existing AS and requirements of Companies Act 2013 have been
provided to render as much practical perspectives as possible to the subject.
Besides, illustrative areas of application of spreadsheet on a day today basis as well as with reference to financial modeling
in preparation of projected financial
statements have been explained in the book. In order to make the
reader stay ahead, terminologies as are relevant
to contemporary financial
accounting and reporting have been explained elaborately. In order to enable easier and in-depth understanding
of the subject, various aids including the following have been provided.
Modular approach
has been followed in relation to preparation and maintenance of ledgers
Insets providing descriptive explanations of
concepts Simple illustrations explaining individual concepts Elaborate
illustrations based on published accounts Exercises
Live Cases
Illustrative Spread Sheet application with the help of Micro Soft Excel
Illustrative VBA Programming for Micro Soft Excel
Web based learning resources