Contemporary Accounting

Contents-(Contemporary Accounting)
Forensic Accounting
Inflation Accounting
Environmental Accounting
Creative Accounting
Human Resource Accounting
Forensic Accounting
 Objective
What is Forensic Accounting
Need of Forensic accounting
Activities of Forensic accountants
Scope
 What is Forensic Accounting
The investigation of an allegation whose
evidence is expected to be presented in the
Judicial forum.
Different from old debit or credit accounting.
It provides a scientific accounting analysis
which help in resolving the disputes that
arises in the organization.
 Forensic Accountancy is an unique job
because the responsibility involve the
integration of accounting, auditing and
investigative skills.
Using all of these skills, a FA is, in brief, a true
investigator
Takes a more proactive, skeptical approach in
examining the books of accounts.
 Need for Forensic Accounting
Rapid use of information technology
Growing Cyber crime
Increase in number of Corporate Scams
Failure of regulators to track the securities
scams
Series of chit funds, co-op. Banks etc.
Helping to Govt. in achieving compliance with
various form & regulation
 Activities
Investigating and analyzing financial evidence.
Developing computerized applications to
assist in the analysis and presentation of
financial evidence.
Communicating their findings in the form of
reports.
Assisting in legal proceedings as an expert
witness.
 Scope
In the scenario of implementing ERPs, forensic
accountants can play the role of proactive risk
reduction tools by performing extended
procedures as part of the design in the system
development phase itself.
According to IMF, money laundering has become
a major global problem as it seeks to show illegal
money as the money from legitimate sources. A
FA can unearth such money laundering
transactions by application of his skills set.
Inflation Accounting
 Meaning
Impact of inflation on the corporate financial
statements.
A mere excess of revenue over cost does not
always speak of the true character and real
nature of the economic surplus
Sales overstated and cost understated profits
overstated
 Definition
Inflation accounting requires statements to be
adjusted according to price indices, rather
than rely solely on a cost accounting basis
- Investopedia & Wikipedia
Stabilized accounting is a method of
converting values by means of an index
number from cost or depreciated cost to
current economic value - R. A. Foulke
Techniques of Inflation Accounting
Current Purchasing Power Method (CPP)
Current Cost Accounting Method (CCA)
Replacement Cost Accounting Method (RCA)
Current Value Accounting (CVA)
 Cost Inflation Index
Year CII Year CII Year CII
1981-82 100 1993-94 244 2005-06 497
1982-83 109 1994-95 259 2006-07 519
1983-84 116 1995-96 281 2007-08 551
1984-85 125 1996-97 305 2008-09 582
1985-86 133 1997-98 331 2009-10 632
1986-87 140 1998-99 351 2010-11 711
1987-88 150 1999-00 389 2011-12 785
1988-89 161 2000-01 406 2012-13 852
1989-90 172 2001-02 426 2013-14 939
1990-91 182 2002-03 447 2014-15 1024
1991-92 199 2003-04 463
1992-93 223 2004-05 480
 Limitations
Complicated, confusing and time consuming
Difficult to understand (for an ordinary person)
Sometimes inaccurate
Not accepted by Income tax Act
Continuous process constant adjustments
Environmental Accounting
 Meaning and Definition
Environmental Accounting is a system that
attempts to make the best possible
quantitative assessment (in terms of either
monetary or physical units) of the cost and
benefits to an enterprise due to the
environmental preservation activities that it
undertakes.
 It involves:
identification,
measurement and
allocation
of environmental costs, and the integration of
these costs into business and encompasses
the way of communicating such information
to the companies stakeholders
 Specific issues/problems
Identification of Environmental costs
(Expenses)
Capitalization of Costs;
Identification of Environmental Liabilities: and
Measurement of Liabilities.
 Functions and objectives
Recognizing the negative environmental effects
and show it in books of accounts
Identify environmentally related costs and
revenue
To encourage more environmentally benign
management decisions
Developing new forms of performance
measurement, reporting and appraisal
Rectify areas in which conventional (financial)
criteria and environment criteria are in conflict
 Benefits of Environmental Accounting
Many environmental problem can be
significantly reduced or eliminated
Environmental cost (and potential savings) may
be obscured in overheads
Environmental costs can be offset by generating
revenues (sale of waste)
More accurate costing and pricing
Competitive advantage
Support a companys development and
operation
Environmental Accounting in India
Neither the company law nor the
accounting standards
Purely voluntary
Lack of awareness and/or commitment
Poor environmental performance
non-disclosure or less disclosure
Poor enforcement of the environment
protection acts