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Importance of Communication in Accounting for decision makers

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Introduction

Importance of Communication in Accounting for decision makers Managerial reporting can help corporation achieve its goal, objectives and mission. The information is useful in assessing both the past performance and future directions of the corporation. It provide decision-making support, and for evaluating and rewarding decision-marking performance. Financial reporting is useful in making investment and credit decisions. The information is useful in assessing amount, timing and uncertainty of future cash flows. It can affect economic resources, claims to resources, and changes in resources and claims. After steps of accounting processing, accounting information goes to decision makers in the corporation. With such useful information, they will decide a series of economic activities for current cycle or even the next cycle. With identifying different costing method, decision maker will do performance evaluation to see how the corporation is performing for the current year. Also, with accurate information, decision maker will do incremental analysis to identify the relevant revenues and costs for each economic activates and the expected impact in the future. With correct measure for each cost method, decision maker can propose budgeting for next year. So decision makers can determine what cost or capital should allocate to each department. Also, decision makers can pre-determine which cost method will be most effective for cost saving. With accurate internal report, company management can calculate their earnings per share and release it to public. ...read more.

Middle

It was a major player in the energy industry during the 1990s led by CEO Kenneth Lay. However, a series of failed deals and projects led to a cover-up by executives of the company. Company executives hid billions of debts from the books and Arthur Andersen, the outside auditor, failed miserably in detecting any of the accounting irregularities practiced by Enron. As a result of the falsified financial reporting and criminal actions of the company executives, Enron eventually went under in what was then the largest bankruptcy in US history and it brought Arthur Andersen down with it. Many investors lost huge sums of money in Enron, with some who lost their life savings. The demise of Enron and subsequently WorldCom led to the passing of the Sarbanes-Oxley Act by Congress. Sarbanes-Oxley, or SOX for short, fundamentally changed the way corporations do business by requiring more stringent financial reporting and disclosures and, more importantly, by demanding that company auditors be independent. Some critics of Sarbanes-Oxley have cited the cost of compliance as a disadvantage for US publicly-traded corporations when competing against foreign companies. However, Sarbanes-Oxley may have ultimately prevented more Enron-like scandals by creating more corporate transparency and enhancing financial disclosures. (Bruce) (Continue Nick's part) government will review report at the end of the cycle, this will affect the economic activates for next year. ...read more.

Conclusion

By using relationship management skills, a successful financial professional can anticipate the customer's needs and gain trust from the customer. 3. Marketing and Sales Skills This is somewhat related to relationship management but goes a step further. The successful financial professional must be able to sell a product that the customer may not recognize is best for him or her. For example, a customer may be reluctant to invest in oversea stocks because he or she is not familiar with the foreign market. However, as a successful financial professional you must be able to convince the customer to maintain a balanced portfolio that includes both foreign and domestic equities. This is where the marketing and sales skills come into play. How do you overcome the customer's skepticism in the foreign market? One way to do this may be to highlight the potential of the so-called BRIC (Brazil-Russia-India-China) emerging markets. The successful financial professional will put together recommendations based on demonstrated top performers in the BRIC markets and explain the need to portfolio diversification to take advantage of the growth in the BRIC markets. "GM's Future IPO: Whom Can Investors Trust?" The accounting Onion. 16 August. 2010. 27 November. 2010 <http://accountingonion.typepad.com/theaccountingonion/2010/08/gms-ipo-whom-can-investors-trust.html> Williams, Jan R., Haka, Susan F., Bettner, Mark S. and Meigs, Robert F. "Accounting for Decision Making." Financial and Managerial Accounting: The Basis for Business Decisions, 12/e. Mc Graw Hill, 2002 Bruce Nussbaum. "Can You Trust Anybody Anymore?" Bloomberg Business Week 28 January. 2002. 27 November. 2010 <http://www.businessweek.com/magazine/content/02_04/b3767701.htm> ...read more.

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