Public and Private Sector Accounting Essay Example for Free

Public and Private Sector Accounting Essay Accounting, known by and large to be a skilled, remunerative, but rather dry profession, has a long and fascinating history. In existence practically from the dawn of civilization, in one form or the other, accounting activity has been integral to some of the most important phases of history. Responsible for the invention of writing, accountants have over the ages, (because of their organic and fundamental association with the processes of trade, business, industry, governance, and taxation), been involved in monarchy and empire expansion, the process of colonisation, the industrial revolution, the World Wars, scientific progress, globalisation, and the spread of neo liberal economics across the world. Confucius, as a government official, was responsible for accounting, and much of what we know about the daily lives of ancient peoples comes from accounting records, such as inventories and sales records, found at archaeological sites. Accounting evolution has followed dissimilar routes in different countries and states and has been extensively shaped by the immediate and larger environment. Japan’s accounting processes, for example, which were significantly shaped by western influences, are very dissimilar from that of neighbouring China and have played an important role in the country’s far more rapid advancement in business, industry and international trade in the 19th and 20th centuries. Accounting policies and procedures in the modern day have, in somewhat similar fashion, evolved rather differently for private sector businesses and public sector corporations, being shaped and constructed by the unlike needs of the two sectors, the dissimilar nature of their income and expenditure streams, the different control processes under which they operate, and their diverse reporting requirements. Recent years have however witnessed significant rethinking in and rerouting of the functioning of public enterprises; the steadily increasing application of neo-liberal economic principles and greater accountability for the commercial and financial success of public sector corporations, leading to increasing convergence between the accounting policies and practices of the public with that of the private sector. This essay attempts to investigate the reasons for the differences in their historical evolution, and the current worldwide efforts to bring about greater convergence between the two accounting methods. Commentary and Discussion Historical Overview of Evolution of Accounting Whilst the extent of involvement of accounting activity in historical life across cultures is becoming clearer with the progress of archaeological work, the accounting profession has historically chosen to adopt a low profile, there being very few pioneers who can be identified with major accounting developments. The most important historical name to arise, in this connection, is that of Luca Pacioli, who in 1494 wrote a book on mathematics, in which he discussed the concept of double entry book keeping. The chapter on practical mathematics addressed mathematics in business. He said that the successful merchant needs three things: sufficient cash or credit, an accounting system that can tell him how he’s doing, and good bookkeeper to operate it. His accounting system consisted of journals and ledgers. It rested on the invention of double-entry bookkeeping. Debits were on the left side because that’ s what â€Å"debit† meant, â€Å"the left†. The numbers on the right were named â€Å"credits†. If everything was done right, then the bookkeeper could do a trial balance (â€Å"summa summarium†). Add up all the debits and then add up all the credits, he said. If everything had been done right, the totals should match. If not, â€Å"that would indicate a mistake in your Ledger, which mistake you will have to look for diligently with the industry and intelligence God gave you. † He wrote† It is difficult to overestimate the importance of double entry bookkeeping. Simple and adequate for the needs of business, it caught on immediately with Italian merchants, was central to their success, and contributed towards the impetus that led to the emergence of the Renaissance. Whilst the conceptualisation and implementation of the double entry system of bookkeeping in the 15th century was the first major watershed in the development of modern day accounting theory, the following centuries were also witness to a number of major developments in Europe and Asia in the area of business recording and accounting, many of which contributed to the development of modern day accounting principles and policies. Notwithstanding Pacioli’s seminal contribution to accounting methodology, a number of other renaissance forces also helped in giving body and shape to the discipline; key factors among these being the concept of private property, capital, widespread commerce, money, the use of credit, the development of arithmetic, and the growing use of writing for recording transactions. Although many of these factors did exist in ancient times, they were not found together, until the Middle-Ages, in a form and strength necessary to push for the innovation of double entry. Accounting rules, policies and practices evolved over time in response to the needs of businesses and to a range of developments. The emergence of the Industrial Revolution in the 18th century led accountants to devise accounting methods for finding the cost of production; large scale production of goods in the United States led to the formulation of cost accounting procedures, the arrival of income tax laws saw substantial modifications in the practice of keeping accounting records, and the great depression of the early decades of the 20th century led to the introduction of standards, the establishment of accounting principles and accounting frameworks. Josiah Wedgwood, the famous potter, contributed significantly to cost accounting by studying his books, manufacturing cost structure, overhead, and market structure to avoid bankruptcy during the recession. He became an accounting pioneer and his firm survives even today. Accountancy practices in recent years have been repeatedly scrutinised, modified and clarified through the setting up of accounting standards, the establishment of auditor responsibilities and the enactment of laws for appropriate disclosure. The reputation of the accounting profession has been severely tarnished by corporate scams and frauds like Enron, which has led to the questioning of accounting methods and principles, as well the integrity of the accounting profession. Accounting systems and practices, whilst developing side by side all over the world have followed distinctly different routes, being influenced by institutional and cultural factors. Institutional factors like legal systems, taxation laws, financing norms and methods, credit availability and stock exchange requirements, which have been markedly different for Anglo-Saxon, European, Central Asian, and East Asian environments have shaped the development of accounting systems accordingly. Researchers like Hofstede and Gray have theorised that cultural differences have also played a significant role in the establishment of different accounting systems in different countries. Gray took up Hofstede’s cultural hypotheses and linked them to the development of accounting systems in a meaningful way, stating that cultural or societal values permeated through organisational and occupational subcultures, and vice versa, though obviously the degree of integration differed from place to place. â€Å"Accounting systems and practices can influence and reinforce societal values† Development of Accounting Methods in the Public and Private Sectors The power of various influences to shape the development of accounting systems and methodologies is also evident in the shaping of accounting norms for the public sector and their significant differences from those adopted by or enforced upon the private sector; the public sector, basically implying corporations whose ownership vested with governments, and whose control was accordingly decided by government diktat. Whilst governments had until the 1930s focussed mainly on the controlling of law and order, defence, foreign policy, and similar other areas, the end of the Second World War saw them taking a far greater interest in business and commercial affairs, as well as in infrastructural sectors. Whilst some of these developments were due to the influence of socialist thought and the example set by socialist states, (where all businesses were controlled by the government), they were also influenced by the widespread disenchantment with the capitalist way of governance after the great depression of the 1930s. The huge task of nation building after the devastation caused by World War II made it necessary for governments to actually contribute to infrastructure building, nursing of revived industries, and setting up of new businesses. In the UK, activities like mining and railways were controlled by the government. In Italy the state owned IRI (Institute for Industrial Reconstruction) owned companies engaged in mining, steel, airlines, banking, telephones, and automobile manufacture, and in India the government, apart from controlling all infrastructural activity also controlled the majority of heavy business investment and activity. Substantial governmental control over infrastructural and commercial activity, in addition to its existing control over governmental departments, led to the evolution of a significantly different form of accounting than what was followed by the private sector. The most important of these differences concerned the mode of booking expenditures and incomes, which in the private sector worked on the accrual basis, even whilst the public sector chose to stay with the older method of recording them only after they had been realised in cash or kind. The cash basis of accounting, which records income or expenditure transactions only after such transactions have resulted in the physical receipt or payment of cash, constituted the commonly followed way of accounting for all enterprises, until the adoption of the accrual way of accounting by businesses, changed commonly held accounting perspectives. The cash system records accounting events when they become tangible, e. g. , when a customer’s check arrives, when a shipped product reaches the customer, or when money for a business-related expense is removed from the bank. Cash accounting registers income when money arrives and registers expenses when money goes out of the business. Even today the cash accounting method is a more familiar accounting method because of its use by most individuals in tracking of personal finances. Under this method, one’s income is taxable when it is received, and expenses are deductible when they are paid. Cash accounting remains a straightforward and easily understood method of record-keeping for tax purposes. The accrual method on the other hand approaches accounting events in real time. A sale is registered as soon as a customer receives a consignment even though the actual payment could come much later. Similarly an expense is recorded as soon as the event occurs and a liability recorded as soon as an event occur, whether it is purchase of material, use of services like water or electricity and use of employed or contracted labor, even though such transactions do not involve the simultaneous exchange of money. Over time most private sector businesses, apart from those controlled by small individuals or which were small in size, chose to switch over to the accrual system, forced as much by pressure from regulatory bodies and lending institutions, as by their desire to reflect more logical and realistic business and accounting outcomes. Most tax systems stipulate the compulsory use of accrual systems for private businesses after they achieve a certain size or adopt specified legal structures like those of privately owned or joint stock companies. Most public sector organisations, across the world, however chose to remain with the cash based system of accounting. Such decisions grew out of certain specific circumstances. Governments are essentially different in their nature from businesses, the information required for better understanding and assessment of the financial operations of government organisations extending beyond the reporting of surpluses and deficits. Governments, unlike the private sector, whilst required to run their operations efficiently, are required to provide goods and services to the public, which in some cases becomes more important than making profits. The measurement of surpluses or deficits is in many cases not the primary indicator of the performance of government working. In many countries the public sector continues to retain a separate and different approach from the private sector. Their services are often provided free at the point of use and there is little or no direct link between the cost of these and government income, which is mainly in the form of taxation. The government, in many cases, decides upon the amount of grants required for specific public sector organisations through the formulation of budgets and provides the same on a periodic basis; many such organisations preferring to call their financial statements â€Å"receipt and expenditure† rather than profit and loss statements. The accounting policies of public sector organisations are also shaped by their different reporting requirements. Private sector organisations, especially those that are legally structured as joint stock companies need to provide a true and fair description of their financial performance for the benefit of their shareholders, the tax authorities, and other stakeholders. Even smaller organisations need to necessarily satisfy the requirements of tax departments and their owners, and their accountants routinely adopt the accrual system for recording transactions and preparing statements. Reporting requirements for government controlled organizations is significantly different. Comparison of actual disbursals and expenses with those budgeted is a routine requirement, a need that is more conveniently filled through the use of cash accounting records. The managements of such organisations also have to report on specific information needs of various bodies, including supervisory government departments, parliamentary bodies, and the governmental auditors. Conclusion Recent years have seen extensive debate in public sector accounting and the changes made in many countries for shifting from the cash to the accrual basis of accounting. Public sector working has been influenced during the last three decades by the concepts of New Public Management, (NPM), which expressly calls for enhancement of the efficiency, effectiveness, and accountability of public service delivery through the implementation of a wide range of changes that include deregulation, decentralisation, outsourcing, substitution of input control by output control, result orientation, responsibility assignment and introduction and implementation of private sector management techniques. Whilst the adoption of the accrual system of accounting will lead to the production of more logical and more accurate financial statements, the convergence process will need extensive retraining and education not just of public sector accountants but also of public sector auditors and the users of these financial statements. Such lack of familiarity may lead to inaccuracies in the preparation of financial statements and will need to be addressed through appropriate training and skills upgradation of the concerned people. With the aim of public sector reforms being the dismantling of bureaucracy and more efficient use of resources, increased managerial autonomy and discretion is being accompanied by an emphasis on more extensive accounting practices. Again with accounting playing a key role in NPM implementation and in public sector reforms, the need for greater convergence between public and private sector accounting is being increasingly evidenced. Significant accounting reforms are taking place in many countries, more specifically in the United States, the UK, and West and Nordic Europe. Many public sector companies are changing their accounting policies to institutionalise accrual accounting for budgetary and external financial reporting purposes in order to provide useful information about liabilities, debt, usage of assets, and the cost of public services Whilst change is coming about slowly in public sector accounting, the issue is still being debated vigorously in many countries. The International Federation of Accountants (IFAC) formulated the â€Å"Guideline for Governmental Financial Reporting† in 1998 to help public sector units at all levels to prepare their financial reports on the basis of accruals. The IFAC Guideline, along with the International Accounting Standards (IAS) followed by the private sector, make the basis for the International Public sector Accounting Standards (IPSAS) developed by the Public sector Committee (PSC) of IFAC.

Michael Faraday Essay -- biographies biography bio

Michael Faraday could be labeled the "underdog of modern science". The son of a poor blacksmith, Faraday was no stranger to hard work, which was perhaps the exact opposite of many of his contemporaries, who came from wealthy backgrounds and studied science as a sort of extracurricular activity. Although Faraday was unsuccessful when it came to money, he was very successful in the field of science, namely electric science. One of his most important discoveries is that of electro-magnetic induction. It was this experiment, and others of the like, that brought about the discoveries of Maxwell, Rutherford, and Einstein, and elevated Faraday from the son of a poor blacksmith, to a great man of modern science. A Book Binder Michael Faraday was born in the year 1791 in Newington, Surrey England. His parents were poor, and in 1796 his father moved the family to London in search of better work as a blacksmith. His father was a sickly man, and because of this Michael found work at the age of 13 as an errand boy for a local bookbinder. Mr. Riebau, the owner of the bookbinding shop, hired the boy to deliver books and newsletters to his patrons. During breaks, Riebau encouraged Michael to read books and to study. As Faraday grew older, he began attending local lectures held by John Tatum. At the lectures he took shorthand notes, and later rewrote the notes in more depth. While attending Tatum's lectures, Faraday became increasingly interested in chemistry as well as electricity. It was through these lectures that Faraday learned most of what he knew about electricity, galvanism, hydrostatics, optics and geology (Williams). In 1813, at the age of 21, Faraday became a lab assistant at the Royal Institute in Londo... ...was attached to the disk as well as the galvanometer. As the crank was rotated, Faraday noticed that the needle on the galvanometer moved. Moreover, the needle remained in that condition when the crank was rotated at a constant speed. This device Faraday named the Electric Dynamo (Williams). Works Cited Agassi, Joseph. Faraday as a Natural Philospher. Chicago, IL: The University of Chicago Press, 1971. Hart, Ivor B. â€Å"Electrical Science.† The Great Physicists. Freeport, NY: Books For Libraries Press, 1970. Hecht, Eugene. Physics: Algebra / Trig. Pacific Grove, CA: Thomson Learning, 2003. Segre, Kaplan, Schiff and Teller. Great Men of Physics: The Humanistic Element in Scientific Work. Los Angeles, CA: Tinnon-Brown, Inc., Book Publishers, 1969. Williams, L. Pearce. Michael Faraday. New York, NY: Basic Books, Inc., Second Printing.

Management of Hazardous Wastes

Everday we hear more bad news about our planet. Reports tell us that wildlife and forests are disappearing at an alarming rate. Newscasts give the latest word on how quickly earth is losing its protective shirld and warming up. Newspapers lament the pollution of our air, water, and soil. What can we do in the face of such widespread gloom? In fact, we do not have to feel helpless. We can each learn practical ways to better our environment. For example, saving and recycling newspapers has a number of positive results. First, recycling newspaper saves trees. The average American consumes about 120 pounds of newsprint a year-enough to use up one tree. That means close to 250 million trees each year are destroyed for paper in this country alone. If we recycled only one-tenth of our newpaper, we would save 25 million trees a year. Second, making new paper from old paper uses up much less energy than making paper from trees. Finally, this process also reduces the air pollution of paper-making by 95 percent. Another earth saving habit is â€Å"precycling† waste. This means buying food and other products packaged only in materials that will decay naturally or that can be recycled. The idea is to prevent unrecyclable materials from even entering the home. For instance, 60 of the 190 pounds of plastic-especially styrofoam-each American uses a year are thrown out as soon as packages are opened. Be kind to your planet by buying eggs, fast food, and other products in cardboard instead of styrofoam cartons. Buy beverages in glass or aluminum containers instead of plastic ones. Buy in bulk to reduce the amount of packaging, you will save money too. Finally, when you can, buy products whose packing shows the â€Å"recycled† logo. Materials that have been recycled once can be recycled again. Wise management of hazardous household wastes is yet another way of taking action for the planet. Hazardous wastes include paint, old car batteries, oven and drain cleaners, mothballs, floor and furniture polish, pesticides, and even toilet bowl cleaners. First of all, we should store hazardous materials properly by keeping them in their original containers, making sure they are clearly labeled, and keeping them in a cool, dry place that is out of the reach of children. Second, we can reduce our use of these products by buying only what we need and by sharing anything that might be left over. Third, we should take great care in disposing of hazardous wastes. Certain wastes such as old car batteries and motor oil can be refined and reused, and in some cities can be turned in for special burning. However, local authorities have to be contacted because disposal practices vary so much from place to place. These personal actions may not seem important. At the very least, though, they can relieve some of the helplessness we all feel when faced with the threats of global disaster. If carried out on a larger scale by millions of individuals, they could greatly improve our environment and lives.

Hills Like White Elephants, By Hemmingway - 1257 Words

In Hemmingway’s short story, â€Å"Hills Like White Elephants,† it is proceeded throughout that there are more problems than just deciding on what to do with the unborn child. Making such a huge decision with someone who is incapable of supporting anyone other than himself. Typically, when someone already has low self esteem, being in a relationship with someone who is passive aggressive, makes for an even bigger catastrophe. The time frame that the two individuals are in, it is considered immoral to get an abortion, so the decision the two encounter is vague because the man tries to persuade Jig that it is simple and many people get abortions, basically that it is a common procedure many couples face. In Hemmingway’s â€Å"Hills Like White Elephants,† It can be quite evident to look at a relationship and know why a couple may be having problems, it is made clear and that the mans passive aggressive attitude towards Jig makes her feel as if she only wants to get an abortion because the man wants her to. While sitting at the table with their drinks, the man says, â€Å"If you don’t want to you don’t have to. I wouldn’t have you do it if you didn’t want to. But I know it’s perfectly simple† (Page 275). This is the Americans way of trying to psychologically get into Jigs head and make her feel like she needs to get the abortion, while doing it in a way that seems sympathetic. The man lacks empathy for Jig and everything she has to go through, it is also brought to the reader’s attentionShow MoreRelatedHills Like White Elephants By Ernest Hemmingway1508 Words   |  7 Pages â€Å"Hills Like White Elephants† By Ernest Hemmingway is an interesting piece that consists entirely of an odd conversation between two people sitting at a train station in Spain, having drinks while they wait on their ride. The couple do not have names, just â€Å"The American† and â€Å"The Girl† who is also called â€Å"Jig† a time or two by The American. Hemmingway uses these characters and their actions along with the setting and symbolism to paint a beautiful picture of an untruthful relationship and a secretiveRead MoreSimilarities between Eveline and Hills like White Elephants by Ernest Hemmingway756 Words   |  4 Pagesbetween â€Å"Eveline† and â€Å"Hills like White Elephants† In both â€Å"Eveline† by James Joyce and â€Å"Hills like White Elephants† by Ernest Hemmingway, the characters are forced to make important life changing decisions. This is just one of the many similarities between stories. One thing that was obvious to me while reading each of these short stories was the presence of a dominant male antagonist in each story; The father in â€Å"Eveline† and the American in â€Å"Hills like White Elephants.† These two charactersRead MoreLiterary Analysis of Hills Like White Elephants by Ernest Hemmingway1014 Words   |  5 PagesErnest Hemingways Hills Like White Elephants consists mostly of a dialogue between a pregnant girl and her husband, who would like her to have an abortion. The story defines a two-part theme. The first is a commentary about the way selfishness can corrupt a relationship. The second comments on life and what it means to bear life. This story is developed in a short period of time by Hemin gways use of two central elements, character and setting. Though the setting is heavily symbolic, and charactersRead MoreEssay on Jig’s Rebirth in Hemmingways Hills Like White Elephants1204 Words   |  5 PagesJig’s Rebirth in Hemmingways Hills Like White Elephants Ernest Hemmingway has a specific style of writing. Most of his short stories are terse, short, and objective. Not only does he like to use short, simple sentences, but he also repeats them over and over for effect. Hemmingway is also known being blunt. In his short story Hills Like White Elephants, he is just the opposite. He dances around the truth and never reveals Jig’s final decision. Does Jig go through with this simple operationRead MoreHills Like White Elephants By Ernest Hemingway1487 Words   |  6 PagesMegan Skolmen 13 February Hills like White Elephants Ernest Hemingway First Published August 1927 I read a short story called Hills like White Elephants, by Ernest Hemmingway. This story presents to the readers a conversation between a young man and women who are located at a station, drinking beer, arguing whilst waiting for a train to take them to Madrin - the town in which we learn the girl is said to be having an operation. Overall, this text was one which I quite enjoyed. Although upon readingRead More Symbolism in Hills Like White Elephants, by Ernest Hemingway1687 Words   |  7 Pagesfrequently uses various literary elements in his writing to entice the reader and enhance each piece that he writes. In Hills Like White Elephants, Hemingway uses symbols to teach the reader certain things that one may encounter during daily life. Symbolism may be defined as relating to, using, or proceeding by means of symbols (Princeton). The use of symbols in Hills Like White Elephants is utterly important to the plot line and to the fundamental meaning of the story. Through this use of symbolism, theRead MoreHills Like White Elephants Analysis Essay1636 Words   |  7 Pagesâ€Å"Hills like White Elephants† is a short story about a young couple that is assumed to love one another. The story is set in a bar, outside a train station in Spain, while the young couple awaits to make the journey for an operation. Both the American and the girl in the story convey to the readers their opposing stances, through Hemmingway’s use of symbolism, in regards to a complex life or death decision they are forced to make. Neither party is willing to fully acknowledge or discuss the other’sRead MoreLiterary Pieces And Can Complicate More Than What Essay852 Words   |  4 Pagesto the readers whilst portraying different aspects for literary criticisms. Many authors utilize these poetic tactics to give different perspectives to their written works. Ernest Hemmingway, a great American 20th century novelist produced many literature writings, and of his greatest creations Hills like White Elephants emerged in 1920. A short story consisting of what appears to be a simplistic conversation between an American man and a mysterious woman named Jig, (whose ethnicity was never revealed)Read MoreThe Hills Like White Elephants1143 Words   |  5 PagesAfter reading â€Å"The Hills like White Elephants,† I discovered that there are a lot of interpretations that could be made to accompany this story. The story takes place at a bar across from a Spanish railroad crossing. The story states that there is no shade or trees, and that the hills are white. The story does not provide a plethora of information on the characters, it rather just jumps right into the story, leaving a lot to the imagination on how they got there. I do believe that this is done onRead MoreMoving to the Girl’s Side of â€Å"Hills Like White Elephants†1697 Words   |  7 PagesMoving to the Girl’s Side of â€Å"Hills Like White Elephants† In the article, â€Å"Moving to the Girl’s Side of ‘Hills Like White Elephants†, Stanley Renner carefully analyzes the movements of the female character and argues the different view from the general conclusion while still pondering on the open-end question the writer, Ernest Hemmingway, has left with the readers. Renner is left unsatisfied with the unresolved ending of the story. Although the majority of critics conclude that the girl will have