Accountants in high demand, despite the financial crisis
The global financial crisis of 2008 began with the rapid fall in house prices, rising interest rate and the increase in subprime loans leading to a growth rate of foreclosures. The subprime mortgage crisis has affected several financial institutions and banking systems around the world in different ways. With the collapse of major financial institutions such as Fannie Mae and Freddie Mac, Lehman Brothers, Merrill Lynch and American International Group (AIG) of the Federal Reserve have responded in an attempt to alleviate the crisis in credit markets. The collapse of financial institutions has created a domino effect on the economy. Therefore, there is little the Fed can do to prevent the collapse of other financial institutions. Besides affecting financial institutions, the financial crisis has affected the counters in various ways. Despite the global financial crisis has affected business in general a negative, effect on the counters have not been so negative.
Due to past accounting scandals, there has been a significant increase in financial law, more stringent government regulations, and the increased risk prevalent in financial institutions has become increasing demand for accountants, despite economy. The Public Company Accounting Oversight Board established the Sarbanes-Oxley Act of 2002 which requires all publicly traded companies in the United States to follow specific rules and regulations. The observance of these regulations increase the costs of publicly traded companies and, in turn increases the demand for accountants and auditors. As a result of the financial crisis, there is an increased risk within the financial aspects of business, hence the need for risk management has grown in financial institutions. Companies tend to show greater need to understand and assess the risk and are reaching out to accountants to assist in the understanding of risk management in these difficult times. Risk management is essential and can be the breaking point in the financial success of a company, especially during a financial crisis. This increase in financial laws, higher standards, and increased financial risk, has a positive effect on the demand for accountants.
The concept of globalization has a strong correlation with the global financial crisis of 2008. Because of globalization, countries are interrelated and depend on each other, now more than ever. Globalization has also affected the demand for accountants in various ways as well. The current global financial crisis is strongly correlated with globalization. Currently, financial institutions around the world are more interdependent firms that have been in the past. Consequently, the fall of major financial institutions can strongly affect other financial institutions around the world because they depend on each other. Another aspect of globalization that counters the effect is the change to the use of International Financial Reporting Standards (IFRS). The transition from Generally Accepted Accounting Principles to International Financial Reporting Standards has a great impact on the counters during this time. Accountants are preparing for the transition, which also causes an increased demand for accountants despite the global financial crisis. Accountants who are knowledgeable about the area are in greater demand, compared to the accountants who are less informed. Although countries are already linked, the adoption of IFRS only ensure a stronger connection between countries, because it will use the same regulations that may have an impact on the global financial crisis.
Although some of the effects on the counters are positive, the negative effects still exist. The global financial crisis is affecting all businesses in the United States and generally throughout the world. Due to the crisis, companies are cutting costs through their organizations. For example, clients of accountants are spending less and are greatly reduced due to the economy. As a result, the counters are losing customers that have established relationships with their clients because they have no income to support the services of accountants. Thus, the counters are losing customers, and therefore are also losing revenue. In exchange, accounting firms are also reducing costs throughout their organizations to account for the decline in customers. At present, accounting firms are cutting costs by reducing the number of employees to hire. recruitment practices have increased in the last couple of years, but with the economy approaching recession, recruitment practices have slowed.
Despite the global financial crisis of 2008 has a negative effect on business in general, the effects on the counters are not so negative. It is clear that accountants are in high demand at this point due to many factors, despite the economy. Accounting is a profession that is lucky to still be in high demand during the global financial crisis of 2008.
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