Top Accounting Challenges Faced by Corporates
Rapid innovation in the field of accounting has made accounting tasks simpler and less burdensome. The updates made in accounting systems enabled the companies to get professionalized services at low costs. In the present scenario accounting is both a complex as well as a simple task. Various companies are facing many accounting challenges which cannot be eliminated easily, even though the updates made are effective but still there are many flaws in accounting.
What are the main Accounting challenges faced by a corporate?
Corporate companies always demand an accounting system which makes their burden less, but there are many situations where they tackle many problems which create hindrance while carrying out the business transactions such as:
1. Rapid changes in technology:
The frequent changes and updates made in the technology and the accounting software makes it difficult for the corporate entities to carry out transactions, because the accountants of the company take time to adapt those changes and this causes delay in the accounting process and the company may fail to achieve the expected target on time.
2. Changes in accounting principles and laws:
The companies which deal overseas have to face the problem of difference in accounting principles. The accounting principles followed by different countries will vary from country to country, it is not necessary that they should follow the universal principles. In addition to that the changes made in the accounting principles that were followed earlier make it difficult for the companies to adopt those amendments; also the accountants need to study those changes deeply to understand its effects on the policies and strategies of the company.
3. Variations in tax laws:
This is also one of the major Accounting challenges faced by the companies, different countries have different tax laws, systems and the companies must comply with such laws to avoid excessive taxes and keeping the knowledge of tax laws of every country is a hectic task. And the accountants may also face the problems to compute the accurate amounts due to the changes in tax laws.
4. Change in currency rates:
The companies which carry out business with more than one country may face the problem of changes in currency rate and they will have to conduct business by keeping in mind the prevailing currency rate which is likely to fluctuate from time to time. These changes affect the accounting process and there are more chances of making mistakes and errors.
5. Maintaining confidentiality of accounting information:
The company must maintain secrecy of confidential information related to accounting such as credit card details, bank account details, passwords etc. if this information gets leaked then the company may face huge losses. In other words cyber security is one of the major concerns of companies because there can be some hackers who can hack into the company’s database and acquire such information including accounting records.
6. Unqualified accountants:
Sometimes in order to reduce costs some companies select unqualified accountants who lack experience and professionalism and they may not fulfill the expectations of the firm and the required result may not be attained by the companies. So it is always the best course to outsource the accounting activities rather than selecting unqualified accountants.
7. Requirements of new skill:
As company face many accounting challenges related to diversity in accounting principles and tax laws, the corporates are always in search of the accountants and professionals who have vast knowledge and skills regarding the accounting process which is too hard to find and at last the companies end up with accountants with limited knowledge who may not fulfill the company’s expectations.
8. Increase in fraudulent activities and malpractices:
There can be chances of fraud and malpractices that may be done by different individuals within a company which may affect the accounts of the firm, and sometimes the accountants may be held responsible for such malpractices and errors made by the other which result to a decrease in the morale of accountants and they may not be loyal to the company.