Accounting

1 Introduction
The essential functions of external auditor and accounting practice in the contemporary business environment are to build the public confidences that the business organizations are free of corruption, and their annual financial records are free of financial abnormalities. Essentially, in the present global business uncertainty, external auditors serve as external and objective checks and balances on an organizational financial records. Thus, the external auditors and accountants are required to provide sound financial and reassuring records to the stakeholders because many stakeholders may particularly have interest in the financial records of  a company. Typically, the essential functional role of an accountant is to employ his expertise to mediate uncertainty by constructing true, objectives and fair accounts to corporate organizations. (Sikka, 2009).

However, the recent international financial crisis that have emanated around the world in the banking sectors have revealed several loopholes in the accounting profession. With present international crisis, several big banks across the world have collapsed due to the financial turmoil that these banks are facing. For example, the collapse of Northern rock in 2007, which was the fifth largest mortgage bank in the UK. Moreover, in 2008, Lehman Brothers, which was one of the biggest financial institutions in the United States, went bankrupt with recorded debt of 613 billion, and bonds debt valued 155 billion. (Mamudi, 2008). The results of the banking financial crisis had made United States government to close 22 banks. In the UK, the Bank of England had issue 750 billion to rescue failed banks. The United States government had also issued 8.5 trillion from the public funds to rescue failed financial institutions. (Sikka, 2009).

The question is where are the accountants before the emancipation of the international financial crisis
The objective of this paper is to examine whether the accounting profession bear any blame in the current financial crisis.

1.1 Argument on whether the accounting profession bears any of the blame for the current financial crisis

Several scholars have provided the arguments on whether accounting professionals should bear any blame on the current financial crisis.

Arnold (2009) argued that the accounting profession is deeply to blame in the current financial crisis. The author argued that there were loopholes in the financial reports provided by the accounting firms to many financial institutions. Although, many major accounting firms in the US and the UK offer the advise to many investment banks in US and in Europe about the securitization of their finance. Despite the financial advice offered to baking sectors, many accounting firms lacked the skill to identify the troubles signed that was emanating in the financial institutions.  Typically, the loopholes of accounting profession come from their strong attachment to the accounting theory that fails to restore the financial stability and allocating capital efficiency.

Inanga and Schneider (2005) there is no known theory that can guide the accounting practice. However, the accounting theory that has recently emanated to guide accounting profession to enhance financial reporting is pragmatic in nature. This accounting theory is authoritative in nature on which its opinion must be accepted. This known accounting theory has been a guiding principle of accounting profession over the years, and this has influenced the practice of accounting profession.
For example, Sikka (2009) argued that different countries have accounting standard which accounting profession should follow. For example, the UK audit standard is in line with international accounting standard, and states the audit procedures that should be followed in the UK. Despite the rules about the audit procedures, many banks received unqualified audit report from top audit firms in the UK and USA. For example, shortly before the financial crisis, Northern Rock received unqualified audit report in February 2007 from PricewaterhouseCoopers (PWC) who provided the clean health bills to the bank. However, in the same year, Northern rock recorded the biggest financial turmoil that has ever been recorded in the UK. Moreover, Lehman Brothers received unqualified audit report from Ernst and Young in February 2008, and the Lehman Brother received a clean bill record that the banks financial situation was healthy. However, in the same year Lehman Brother faced financial turmoil, which was the biggest financial crisis that United States has ever recorded after 1930.  Other financial institutions received unqualified audit reports from different accounting firms. Bear Stream received unqualified audit report in January 2008, and by March 2008 in the same years, Bear Stream faced financial crisis. Meanwhile, the list of the financial institutions that received unqualified report from accounting firms across the world barely few months before the international financial crisis are uncountable. The examples mentioned in this paper are just the tip of the iceberg. The numbers are uncountable.

Humphrey, Loft, and Wood (2009) also supported the argument that the present global financial crisis come from the perspective of auditing firms. For example, many auditing firms are incapacitated to supply objective auditing report to the clients. Added to this, the international financial regulators add to the present financial turmoil.  The author argued that both private and public owned international financial regulators are also to blame for the present international financial crisis. For example, there are several international financial regulators such as international accounting (IASB) standard, US Public Company Accounting Oversight Board (PCAOB), international for enhancing auditing standard (IAASB). Other international financial regulators are International Federation of Accountants (IFAC), International Organisation of Securities Commissions (IOSCO), and other international financial regulators. These bodies are to protect the interest of the public and see that that the private accounting firms do not exploit the public by providing the unqualified audit report that can influence the interest of the public. Thus, where are they when the Big Four (KPMG, PricewaterhouseCoopers, Ernst and Young, and Deloitte) are providing the unqualified audit reports to many of the biggest financial institutions in the world.

Despite the contributions of these literatures reviewed, some group of scholars has taken different dimensions in providing the pictures of recent international financial crisis. For example, Sikka (2006) argued that states laws of most developed countries do not protect the stakeholders from the exploitative attitude of financial institutions and accounting profession. Typically, many states laws easily accommodate the demand of corporate organizations at the expenses of the stakeholders.  For example, many financial institutions have conducted contrary to the law of the states. It should be noted that many financial institutions conduct in the manner that they do not provide transparency of their financial records. Sikka (2009) pointed out that
     an early estimate suggested that despite a raft of accounting standards, banks had around
      US5000 billion of assets and liabilities off balance sheet  though this figure is being
      constantly revised. Citigroup alone has some US1.23 trillion of assets in entities which
      are not shown on its balance sheet.(p.869). Thus, many financial institutions only support laws that can aid them to achieve tax avoidance, reduction of employees rights and subsidies. Many corporate institutions also have habits of evading taxes. For example in the UK, the government is forced to shift the tax burden on the income earners. In the UK, the income tax on the income earners increases from 48.8 billion in 1990 to 114 billion in 2004. While corporate income tax barely increased from 21.5 to 28.1 billion between 1990 and 2004.

The inability of the states laws to regulate the conduct of financial institutions has also contributed to the present financial crisis. For example, the report provided by the Treasury Committee (2009) revealed that the UK Financial Services Authority has failed to provide effective supervisory role on the financial sectors, and its inability to provide effective role contribute to the present financial turmoil.

2 Conclusion
The paper reveals provide the argumentative essay on whether the accounting profession is to be blame for the present financial crisis. The paper reveals that while that while the accounting profession   have some contribution in the present financial crisis, it should be noted that the blame should be not centered only on the accounting professions. Other international financial institutions need to be blamed for the present financial turmoil. Typically, there are bodies such as international auditing standards (IAASB) and international accounting (IASB) that need to regulate the conduct of accounting professions. These bodies have also failed to provide their supervisory role. In addition, the states regulations have also failed to curb the excess of the accounting and banking sectors. For example, public financial bodies such as UK Financial Services Authority and Public Company Accounting Oversight Board (PCAOB) have not shown their incapacities to provide the regulatory role. Thus, it is impossible to put an accusing finger to a particular body as the contributor to the present global crisis. This paper argues that the causes of present financial crisis are the network of factors such as global mismanagement on the part of private financial institutions, corrupt practices of accounting professions, and inefficiency of state regulatory forces.