The sixteenth agency in the community is the Accounting Agency. The agency’s primary function is to facilitate financial reporting and management in the community, through the establishment and maintenance of automated system needed to do so.

The agency works closely with other agencies to provide accurate, reliable, and complete information, which is necessary for the community’s economic system to perform optimally.[1]

As part of the Data Bureau, the Accounting Agency, together with the Data and QHSE Agencies, also trains participants. The training is mainly conducted online, with the help of modules available online, in addition to feedback surveys and monitoring.[2] The Accounting Agency also gives the community a sense of its financial direction by reporting on its bottom line, while suggesting remedial actions where improvements can be made.[3] By providing accurate, objective, reliable, and complete information, the Accounting Agency builds transparency and integrity within the community, further enabling other community agencies to fulfill their mandate to the participants and participants to run their stewardships for maximum prosperity and in accordance with the community’s financial bylaws.[4]

The accounting function in the community is participant-based. This means that participants, and agencies, perform most of their financial management functions. The Accounting Agency’s role is to offer systems that enable financial reporting and management to meet the standards indicated above, in addition to building the community’s capacity to actualize these standards. This role can be broken down into various aspects, some of which are performed by the agency alone, and others which are performed in coordination with other agencies in the community.

Core Responsibilities

The Accounting Agency’s core responsibilities reflect its financial reporting, advice, and training mandate. The agency aims to enable community agencies and participants’ businesses to access the financial information necessary to make sound economic decisions and improve their ability to prepare and analyze such information. The agency’s core responsibilities are:

Running automated systems for financial reporting and monitoring
Training and advice to businesses and community agencies on financial reporting and management
Formulation of accounting standards and guidelines

Financial reporting and monitoring

The Accounting Agency’s automated system consolidates the bookkeeping records provided by other community agencies to produce consolidated financial statements. These statements help the community assess its financial and economic health and what it needs to do to improve. The agency also provides additional measures of performance, such as financial ratios. These ratios help community members understand financial reports which would otherwise appear as abstract figures. The ratios also help the community compare its performance to similar entities and other communities.[5]

Using the automated system, participants will perform their own bookkeeping and prepare their financial reports. The Accounting Agency’s system is able to monitor these reports and ensure that they meet the required standards. In some instances, the agency may hire contractors to assist departmental agents provide direct assistance to participants. The agency will also derive additional data from these reports, which will help show the community economy’s performance and address common issues that may benefit businesses.

Training and consultancy

By monitoring participants businesses and their financial performance, the Accounting Agency is able to pinpoint the specific challenges that they face. The agency then comes up with advice on its online platform, which the participants can access to better their business management skills. Where necessary, the Data Department’s agents can engage with businesses to enable them to grasp what they need to do to improve. The training is geared towards improving participants’ financial management knowledge and skills, to match changing business circumstances.[6][7]

Formulating accounting standards and guidelines

Normally, firms apply the accounting standards and generally accepted accounting practices of the countries and regions they operate within. However, the community will need to have customized standards and guidelines to reflect its unique business model.[8] While these standards and guidelines must be aligned with those issued by national or regional professional accounting bodies, they will also reflect participants businesses’ peculiarities, including the absence of physical and fixed assets, the unique structure of debt and equity, as well as the absence of actual employees within businesses. [9] The process of setting standards will involve consultations and involvement of industry players, as well as review by the relevant professional and government authorities.[10]

Coordinated Responsibilities

The Accounting Agency also carries out additional roles with other agencies as part of its objective to make financial reporting a key part of business growth and the community economic system. Coordination is either horizontal (within the Data Department), vertical (within the Business Support Vertical), or diagonal (with agencies which are neither part of the Business Support Vertical nor the Data Department).

Horizontal coordination

The Accounting Agency works with Agency 16 – the Data Management Agency so that the Accounting Agency can provide easy access to financial information, while also securing it to allow only authorized access. The Accounting Agency also coordinates with the Data Management Agency to give it the capacity needed to handle large volumes of financial data, using advanced data processing technologies.[11]

Vertical coordination

The Accounting Agency provides Agency 8 – the Investment Bank Agency with the financial reports needed to appraise loan applications from participants. The Accounting Agency’s automated system is able to offer additional information such as financial analysis, which enable the Investment Bank Agency in its decision-making. The Accounting Agency provides training to participants on financial planning in coordination with Agency 2 – the Stewardships Agency. The Accounting Agency also liaises with Agency 14 – the IP Agency to provide practical financial planning advice to startup innovators on how to best commercialize their creations and on prudent business planning.[12] The Accounting Agency liaises with Agency 11 – the Bylaws Agency to ensure that the community’s accounting standards and practice guidelines fall within the community’s bylaws and public policy.

Diagonal coordination

The Accounting Agency liaises with Agency 13 – the Legal Services Agency in harmonizing accounting standards with the law and professional practice outside the community. The Accounting Agency also liaises with Agency 15 – the Audit Agency, providing information that the Audit Agency needs to reach opinions on the performance of community agencies and participants businesses, and recommending any steps necessary to improve financial performance and reporting. The Accounting Agency also liaises with Agency 10 – the Communication Agency, so that it can easily provide general community financial information to the participants. This information is published on the community’s intranet, administered by the Communications Agency. Focusing outside the community, the Accounting Agency liaises with Agency 12 – the Public Relations Agency to showcase the community’s overall financial performance as a reason why people should join the community as participants.

Conclusion

The Accounting Agency is tasked with ensuring that the financial information provided to decision-makers is of high quality. The agency cannot do this by actually producing the information since it mainly focuses on enhancing the capacity of participants to produce such information through training and advice. The agency’s system also monitors financial reports to ensure that financial reporting standards are maintained. The agency’s work helps boost the community economic system’s efficiency and contributes to the community’s allure to the outside world. Through a highly sophisticated reporting framework, which relies on blockchain and other emerging technologies, the Accounting Agency is able to prevent misrepresentation and fraud, while safeguarding the community infrastructure’s integrity.

[1] Among other factors, an entity’s financial performance and efficiency is tied to its financial reporting. This is especially so when the accounting function is not just an archiver of historical records, but takes an active role in planning. In the community, the Accounting Agency will be enable the community infrastructure perform at full capacity (Chen, F., et al. “Financial Reporting Quality and Investment Efficiency of Private Firms in Emerging Markets.” Accounting Review, Forthcoming (2010): SSRN: https://ssrn.com/abstract=1.).

[2] Studies have shown that online training can, when conducted properly, have greater rewards than in-person training. It saves time and resources, and due to the flexibility allowed, can result in better outcomes for the trainees. This will augur well for the Accounting Agency, which has neither the time and other resources required for in-person training, nor the organizational capacity to execute it (Sandlin, C. “An Analysis of Online Training: Effectiveness, Efficiency, and Implementation Methods in a Corporate Environment.” East Tenessee University (thesis) (2013): 1-26. electronic.).

[3] In contemporary organizations, the bottom-line (net profit/earnings/surplus) can be enhanced through reduced wastage, expenses and other factors. This means that the more efficient an organization is, the more its bottom-line will grow (Lean-CPA. Efficiency helps the bottomline. 2019. 01 06 2019.).

[4] Through sound financial reporting practices, accounting departments and entities help organizations build up, and benefit from, “reputational capital.” The community is build on among other things, the integrity of its systems, and the ability of its structures to prevent fraud and misrepresentation, which could severely impair judgement. The Accounting Agency’s work will help in actualizing this (Jackson, K. Building Reputational Capital: Strategies for Integrity and Fair Play that Improve the Bottom-line. Oxford: Oxford University Press, 2004.)

[5] Financial ratios are used to examine and compare an organization’s financial structure, health, and to provide a more general, yet detailed report on the entity’s performance. The use of ratios in the community will detail both the community economy’s performance, while also detailing the community agencies’ actual financial performance (Adedeji, E. “A Tool for Measuring Organization Performance using Ratio Analysis.” 4.19 (2014): 16-22.).

[6] Businesses, especially small enterprises, highly value business advice given by accountants, with a survey revealing that up to 78% of American small business regard accountants as the primary and most trusted source of business advice. The ability to advice is based on accountants understanding of what financial reporting trends and performance indicators mean, and what can be done to improve business performance through sound financial management. The Accounting Agency will be operating in an economy where virtually every business is a small business, in need of accounting advice, which might be impractical to have in-house (Accounting-Today. A small-business barometer for 2019. 06 11 2018. 02 06 2019.).

[7] Technology is also greatly affecting the way accounting is done in organizations. Powered by blockchain and AI, accounting tools are more advanced, giving businesses better information to make decisions. In the community, participants will need to update themselves on such changes, which could greatly help their understanding of accounting, and harness its power to drive business growth (Tysiac, K. and J. Drew. “Accounting firms: The next generation.” Journal of Accounting (2018): published online.).

[8] Within the community, the Accounting Agency will be tasked with formulating accounting standards and practice guidelines that help enhance business growth, as well as the accuracy, completeness and reliability of reports. Standards will also provide the community with a standardized financial reporting platform, enabling other community agencies and businesses better interpret the information (Beke, J. International Accounting Standardization. Oxford: Chartridge Books, 2014.)

[9] Once the standards have been developed, they must then be harmonized with existing GAAPs and FRS, among other standards. This is because financial reports are not for intra-community consumption only, but are also used outside the community, and need to be standardized (HLS. Harmonization of GAAP and IFRS. 27 02 2008. 01 06 2019.).

[10] With the help of business owners, the Accounting Agency will identify areas which require standards that work for the community. These standards and practices will then be derived, with rigorous examination to ensure that define them and what benefit they give business owners and the community as a whole (FASB. Standard-setting process. 2019. 01 06 2019.)

[11] Handlers of financial information have a duty to keep such information confidential, especially when it relates to third parties. Disclosure should be backed either by consent of the owner of the information, or under legal instructions to do so (LII. 12 U.S. Code § 3403. Confidentiality of financial records. 2019. 02 06 2019.).

[12] One of the main reasons why innovations fail is lack of financial planning, coupled with an overconfident innovator who expects instant financial success. The Accounting Agency can help the innovator in better financial planning, in collaboration with other agencies, and give the proposed IP a reality check (Levine, A. Why Innovation Fails. Albany: State University of New York Press, 1980.)