Accounting for corporate accountability Essay Example | Topics and Well Written Essays - 2000 words

Accounting for corporate accountability - Essay Example Post-modern corporate business has become a powerful economic force in the industrialized world.Accounting practices are currently focused on corporate accountability, which involves the understanding of current concerns regarding responsibility and accountability to stakeholders. Post-modern business discourse is focused on the economic and social consequences of corporate practices (Elliott and Elliott, 2006). Transparency, though, must also take into account the subjective nature of gathering, analyzing and presenting data as published accounting information. The fear that corporate managers might act contrary to the interests of shareholders and not be concerned with those with whom the corporation contracts (creditors, workers and consumers) is of primary concern (Benston, 1982; Schreuder and Ramanathan, 2002). Others may be harmed by corporate actions (externalities). The ways in which social responsibility accounting can be used to measure and serve as a means of controlling e xternalities is of research interest.Revenue recognition practice is an ambiguous accounting term, in that there is to date, no internally standard definition. This complicates the process of making comparisons within and across companies. A popular characterization of the concept is that revenue recognition practices are revenues that should not be recognised by a company until it is realised or realisable and earned by the company (Elliott and Elliott, 2006; Turnover, 2001). ... The IASB requires four tests: (a) the amount of revenue can be measured reliably; (b) it is probable that the economic benefits associated with the transaction will flow to the entity: (c) the stage completion of the transaction at the reporting date can be measured reliably; and the costs incurred for the transaction and the costs to complete the transaction can be measured reliably (Leo, Hoggett, Sweeting, & Radford, 2005, p. 75).This paper aims to review the recognition revenue of iSOFT in 2006, which had a revenue recognition adjustment of 174 million due to overstating revenue for long term contracts. A change in accounting policy by the board for future recognition has been implemented in the 2006 Report. And goodwill impairment write-off has resulted in a loss for 2006 financial year. Investigation continues into these issues. A brief background of ISOFT Corporation will first be provided. Secondly, a critical review of the consequences of the change on economic and social dimensions will be presented. Finally a conclusion will synthesise the main points and show support for an internationally standard definition of revenue recognition, and for the adoption of accrual accounting methods. Background of iSOFT.iSOFT is a global leader in the supply of medical software for health care services. Over 8,000 organisations across 27 countries use iSOFT products and services; an innovative company with several target markets specializes in software design, development and solution delivery (iSOFT Annual Report, 2006). During the latter half of the 2006 financial year many changes were taking place for iSOFT, and the January trading statement, together with a related trading update issued on 28 April 2006, had a negative impact on the Group's