FASB ASC Topic 850: Related Party Disclosures
I believe that note 13 on the related party receivables meets the disclosure requirements of related-party receivable transactions. It is because Adelphia’s management was able to reveal the key elements of the receivable transactions associated with the related party transactions. The note was also able to meet the U.S GAAP guidelines and programs through showing the key details on the related party transactions (Enriques, 2015). The disclosures made in the note were directly related with the information in the balance sheet of Adelphia.
It is significant for Adelphia’s treatment of the related party receivables and payables, as it reveals the ability of the company to account and report the transactions third party individuals and companies which transacts with the company. It shows the level of account receivables of the company relevant in the financial reporting process.
The failure of the company to disclosure all the details of related-party transactions would be a violation of the SEC regulations and provisions. It is a requirement that all publicly traded companies should disclosure the information of the transactions done with the related-parties (Pizzo, 2013). The company can be sued for the misrepresentation of the financial reports and information as the omission of the related-party transactions leads to incorrect financial information and data.
The disclosure of the related party transactions is important for the companies. The information helps the company compare its results of operation and financial performance with past periods and other companies’ performance. It also helps the users of the financial statements determine the possible differences in the performance of the company over prior periods and with other companies (Thibodeau, & Freier, 2014). It could also help to clarify the transactions and activities, which affect the normal operation of the business. As a result, the company should always disclosure the data and information relating to the related-party transactions.
Enriques, L. (2015). Related party transactions: Policy options and real-world challenges (with a critique of the European Commission proposal). European Business Organization Law Review, 16(1), 1-37.
Pizzo, M. (2013). Related party transactions under a contingency perspective. Journal of Management & Governance, 17(2), 309-330.
Thibodeau, J. C., & Freier, D. (2014). Auditing and accounting cases: Investigating issues of fraud and professional ethics. New York, NY: McGraw-Hill, a business unit of The McGraw-Hill Companies, Incorporated.
Communication Skills for Accountants
The communication skills for the professional accountants are critical in informing the users of the financial statements and reports on the performance of the companies. There are three main skills of communication important to the accountants including writing skills, interpersonal skills, and listening skills. To come up with effective accounting reports and statements, the accountants should understand three communication skills including interpersonal, listening, and writing skills (Riley, & Simons, 2016). For example, the listening skills would help in gathering quality information through observations and interviewing the management and important stakeholders about the performance of the organization. As a result, effective communication skills and report writing helps the accountants to articulate their responsibilities well.
Accountants usually exhibit strong linguistic-verbal intelligence since the work involves a lot of reading and writing. Although most are comfortable with the writing, some are not. Even though it is not usually a job requirement that is listed, it is still an important skill. According to Lawson et al. (2015), an accountant has to prepare objection notices, special letters, and voluntary disclosures and also maintain proper documentation. These tasks require the accountant to have concise and clear writing that can communicate the intended messages. The messages are always expected to meet the high standards of intelligibility.
Writing skills are also effective in ensuring the accountant can translate financial statements to clients. The financial statements make sense to an accountant but for a client they may seem like a foreign language. The explanations must be comprehensible and lucid in writing and an example is where some reports and statements demand that there is an inclusion of written opinions and commentaries from the firm. As the communication modes evolve, writing is becoming more invasive, an accountant has to be able to correspond with clients through emails and messaging.
These skills help the accountant adapt effectively to the job requirements by allowing the accountant understand the needs of the client easily. Good interpersonal skills help with commercial awareness where the accountant is able to understand how certain issues affect the business. The accountant will be able to back any arguments and thoughts and make informed choices (Bedwell, Fiore, & Salas, 2014). The skills also useful in the management of stakeholders since the skills enable the accountant explain finance and accounting to non-finance and finance people and also to senior managers.
Interpersonal skill also ensures that these accountants are honest enough to ask for assistance when they need it. As an accountant, every end month, quarter or end year comes with a load of work and therefore interpersonal skills help in managing, prioritizing and delegation of work when necessary. Connecting with the colleagues at work and external work partners is an important move for any accountant. The accountant will need to come off as clear, responsible and friendly either over the phone or during face to face meetings (Lawson, et al., 2015). The accountant will need to gather information from different sources thus the need for good workplace relationships.
Every day in either a company or organization an accountant deals with different kinds of outsiders and employees. Good communication is important in the diverse units in the organization. The communication of information is important as it allows the management makes clear informed decisions. The information itself should be understandable and make sense. The communication skills are also applied when it comes to giving reports concerning the financial status to investors (Bedwell, et al., 2014). The information is usually communicated through reports that include income statements and balance sheets. Efficient reporting is not only important to management, but also to investors.
Accountants need to develop extensive listening skills meaning that they will need to be able to listen and hear exactly what the client is trying to convey. As an accountant is process driven, undisciplined ones may find themselves drifting from the client’s conversation. An effective accountant will not only understand the message being communicated, but will also refrain from jumping to conclusions when it comes to the client’s needs. A good accountant will master the active listening part of communication to ensure that they follow instructions given to them either by management or clients.
Riley and Simons (2016) shows that an accountant should remain non-judgmental and neutral and should not form any opinions or take any sides when conversing with a client. The accountant further needs to be patient and should actively resist any temptation to either finish a speaker’s sentence or to draw opinions. The accountant should be able to offer the speaking party the time and chance to explore their own ideas and thoughts. Active listening does not mean that the accountant has to solely focus on the speaking party, but that the accountant can show the non-verbal and verbal listening signs.
Interview skills help accountants separate themselves from each other and also help them apply for a job with confidence. Before an interview, an accountant should have diverse knowledge of the accounting standards which include Sarbanes-Oxley. The accountant will also need to be fluent in explaining the depths of this knowledge. Riley and Simons (2016) finds that avoiding the word no is an important interview skill since the accountant should always display enthusiasm in interviews. The different methods that the accountant has used the estimation of bad debt with previous employers are also a handy interview skill.
An accountant should be able to articulate their own functionality and responsibility when it comes to the month end, quarter end and year end processes in the organization. As expected, experienced accountants possess additional skills that include recognizing the enterprise resource planning systems and be a master of programs such as excel (Apostolou, Dorminey, Hassell, & Rebele, 2015). Experienced replies are also an important interview skill, as they help the accountant answer questions about previously held jobs and the requirements for these jobs.
In the communication of the accountants, excellent report writing skills are vital. Effective writing skills help the accountants in interpreting the figures in the accounting statements and reports. The professional development and competitive edge of the accountants is mainly dependent on the ability to communicate well. Improved report writing aligns with the proper communication skills that include the explaining and presenting research appropriately. The structure of research reports in accounting discipline ensures that the clients understand the analysis well. For example, the writing of the accounting memorandum assists in guiding the financial performance to non-accountants. It is clear that there are numerous users of the accounting reports that depend on the accountants to develop clear reports.
In tax cases, accounting information will need to be relayed to the associated government entities therefore accountants must be aware of how to present certain information. There are usually certain rules and regulations that the governmental institutions require adherence to thus the accountant needs these skills. An example is given by Apostolou et al. (2015) that for banks that require appraisals, the accountants need to be competent in communicating issues associated accounting. Another example is where certain banks put their main interest in the cash flows. Accountants will have to be fluent in special reporting and in the communication of these reports.
Advanced reporting writing skills assist in the creation of quality journal entries, tax returns, and financial reports. It is because the accountants are usually involved in the communication of the performance of the company. The accountants are expected to write quality footnotes after the design of the journal entries. However, the footnotes need to be simple and easy to understand to promote the report writing. While interviewing the professional accountants, their communication abilities are critical. For example, having a good resume with proper structure is critical.
Amongst the accounting students, good report writing relies on their communication levels and skills. In most occasions, the accounting students are required to practice reading, communication, and writing. Good communication abilities can open opportunities for students as they are able to design quality and strong resume. Apostolou et al. (2015) explains that students aspiring to take CPA exams, the communication skills are significant. Thus, the report writing skills forms part of the key communication skills that would improve the ability of the accountants to perform their accounting tasks and responsibilities.
In summary, the scholarly journals present the three important communications skills critical in enhancing clarity of report writing and effective communication process. Good interpersonal skills help with commercial awareness where the accountant is able to understand how certain issues affect the business. For example, interview skills help accountants in applying for a job with confidence. Before an interview, an accountant should have diverse knowledge of the accounting standards. The accountants should understand three communication skills including interpersonal, listening, and writing skills. Improved report writing aligns with the proper communication skills that include the explaining and presenting research appropriately. The report writing aligns with the proper communication skills that include the explaining and presenting research appropriately. The structure of research reports in accounting discipline ensures that the clients understand the analysis well. Even accounting students are trained to have improved communication skills including excellent report writing skills and abilities.
Apostolou, B., Dorminey, J. W., Hassell, J. M., & Rebele, J. E. (2015). Accounting education literature review (2013–2014). Journal of Accounting Education, 33(2), 69-127.
Bedwell, W. L., Fiore, S. M., & Salas, E. (2014). Developing the future workforce: An approach for integrating interpersonal skills into the MBA classroom. Academy of Management Learning & Education, 13(2), 171-186.
Lawson, R. A., Blocher, E. J., Brewer, P. C., Morris, J. T., Stocks, K. D., Sorensen, J. E., … & Wouters, M. J. (2015). Thoughts on competency integration in accounting education. Issues in Accounting Education, 30(3), 149-171.
Riley, T. J., & Simons, K. A. (2016). The written communication skills that matter most for accountants. Accounting Education, 25(3), 239-255.