Lai 1

Accounting's Role in Our Society Today

Accounting can be dated back to 3,000 B.C., first used by the ancient Sumerians who needed a
way to record their trading activities. Accounting is still as indispensable today as it was thousands of
years ago. Today I will tell you about how accounting affects our public interest, our businesses, and our
employment.
First, lets see how accounting defends our public interest. Accounting standards makes the
marketplace transparent. The Securities and Exchange Commission spells out that as more and more
first-time investors turn to the markets to help secure their futures, pay for homes, and send children to
college, the [investor] protection mission is more compelling than ever.1 One way the SEC achieves its
mission is by delegating the Financial Accounting Standards Board to issue Generally Accepted
Accounting Principle that the public have to follow. SEC can enforce punishments to those who violate
the rules. Under GAAP, public exchange companies have to faithfully disclose their future cash flows,
assets, and liabilities.
Investors and creditors need financial reporting to make informed decisions. Indeed, accounting
provides the financial statements that give us insight into the value of our investments and helps us
minimize significant investment risk. As a result, private investors- like you and me- can decide where
best to put our money to reach our financial goals and security. The Public Company Accounting
Oversight Board asserts that without accounting our competitive free market system could not function
properly.2
In addition, accounting facilities capital formation. Long-term U.S. economic growth cannot be
sustained by consumer spending. According to the Federal Reserve Bank of St. Louis, standard

The Investor's Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital
Formation. (2013, June 10). Retrieved February 17, 2015, from
http://www.sec.gov/about/whatwedo.shtml#.VO_47vnF9x0
2
Harris, S. (2014, March 20). The Importance of Auditing and Audit Regulation to the Capital Markets. Retrieved
February 17, 2015, from http://pcaobus.org/News/Speech/Pages/03202014_American.aspx

Lai 2
economic-growth theory suggests that an economy must continuously invest in new capital goods and
structures in order to grow, become more productive and raise citizens living standards over time.3
Investments pour in when consumer confidence is high. The first thing consumer confidence relied on is
the accuracy of companies accounting procedures. With relevant financial data, consumer then- and only
then- will be willing to engage in market activities. Consequently, you can see how accounting sets the
foundation for our countrys GDP growth, as well as making our economy the largest and most powerful
in the world.
Now you see why accounting is necessary for our public interest, lets take a look at why its also
necessary for businesses. Companies needs accounting in order to survive and grow. Enterprises will
inevitably fail without some sort of metric to see how they are doing and where they are going. To
illustrate how accounting can help businesses: A financial accountant can make sure a companys cash
inflow exceeds cash outflow in conjunction with identifying which part is losing money and which part is
generating profit. A tax accountant can seek ways to save taxes for a company within legal boundary. A
managerial accountant can assist a company in saving cost, improving productivity, forecasting sales, and
creating budgets. An external auditor can assure a companys compliance with regulations. An internal
auditor can mitigate a companys organizational risks. These are all crucial benefits accounting provides
to companies.
We now understand why every business needs an accountant. I want to move on to the strength
of its employment. Accounting employs many people and that is good for the economy. Deloittes new
CEO Cathy Engelbert confirmed on the news that Deloitte will accelerate hiring to increase the
workforce to about 74,000 by the end of May 2016.4 Keep in mind that Deloitte is just one of the Big 4

Emmons, W. (2012, January 5). Don't Expect Consumer Spending To Be the Engine of Economic Growth It Once
Was. Retrieved February 17, 2015, from https://www.stlouisfed.org/publications/regional-economist/january2012/dont-expect-consumer-spending-to-be-the-engine-of-economic-growth-it-once-was
4
Basak, S. (2015, February 9). Deloitte Names Engelbert CEO to Focus on Bank Rules, Cyber. Retrieved February 17,
2015, from http://www.bloomberg.com/news/articles/2015-02-09/deloitte-names-engelbert-ceo-to-focus-onbank-rules-cyber-risk

Lai 3
accounting firms. The Bureau of Labor Statistics reports that, employment of accountants is projected to
grow 13 percent from 2012 to 2022.5 Total workforce in accounting is projected to reach toward one
and a half million.6 Every company, big or small, public or private, needs an accountant. The industry
trend looks positive right now.
In conclusion, accounting is the basic business language that weaves the fabric of our society. It
allows us to be able to advance ourselves, create enterprises, and keep people at work. Hopefully you now
understand accountings impact on us.

Bureau of Labor Statistics (2014, January 8). Occupational Outlook Handbook, 2014-15 Edition, Accountants and
Auditors. Retrieved February 17, 2015, from http://www.bls.gov/ooh/business-and-financial/accountants-andauditors.htm#tab-6
6
Ibid.