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What is Accounting?

Key Practice Areas in the Accounting and Finance Industry

April 3rd 2008 21:49

Key Practice areas in the Accounting and Finance Industry

Compliance Audits

A compliance audit verifies documentation and assesses business systems, processes, or products against specific standards.

Common compliance audits:
• GLBA – Gramm-Leach-Bliley Act
• HIPAA - Health Insurance Portability And Accountability Act
• PCI DSS – Payment Card Industry Data Security Standard
• SOX – Sarbanes-Oxley Act

Compliance Audits should have three characteristics:
• Systematic,
• Independent,
• Documented.

Mergers and Acquisitions

Mergers and acquisitions (M&A) is all about acquiring, selling and combining (merging) different companies to help a growing company grow rapidly without having to create another business entity. On one hand, it is a demanding and complex field that involves corporate strategy, corporate finance and management, but it can also be an exciting and lucrative area of practice.

Book keeping:

Book keeping involves recording all financial transactions entered into by an individual or organization, including businesses, charities and even clubs. Financial transaction is any event that involves money.

Book keepers generally account for all balance sheet and income statement items:
• Assets;
• Liabilities;
• Equity;
• Revenue;
• Income;
and maintain supporting documents like receipts from transactions.

Accounting packages:

A wide variety of Accounting Software packages are currently available. Their key purpose is to record and process transactions through electronic accounts like Accounts Payable, Accounts Receivable and Payroll. Many also generate financial reports based on the transactions entered.

Core modules include:
• Accounts receivable
• Accounts payable
• General ledger
• Billing
• Inventory
• Purchase Order
• Sales Order

Small business accounting

Small business accounting is based on the same principles as for larger corporations. Accurate Balance Sheets, Income Statements and Cash Flow Statements should be prepared at least monthly to help the owner assess performance and make business decisions.

Good software packages for small businesses include:
• Quick Books Pro
• PeachTree Accounting
• MYOB.

Accounting career paths

Strong financial skills are well-regarded throughout industry, leading to a wide range of career paths for accountants. The following is an example career path at a large public accounting firm:

Title / Level Salary Experience

Entry Level $45-60,000 First year
Junior Staff Accountant $55-66,000 1-2 years
Senior Staff Accountant $64-83,000 3-5 years
Manager $80-106,000 5-7 years
Senior Manager $100-160,000 7 years plus
Partner $250,000 10 years plus

Accounting solutions

Most people are familiar with MYOB and Quickbooks for small businesses, but there are actually over 50 well-known accounting software solutions available to meet the needs of any business.

These are available with a range of licenses:
• GPL (General Public Licence)
• Proprietary; and
• Software as a service.

Accounting solutions cater to all requirements: Personal use, small business, mid-market, high-end and specialty organisations like Pharmacies, Accounting Firms, Restaurants and Law Firms.

Business valuation

Business valuation is all about determining the economic value of an owner’s interest in a business. Business valuation is often used to estimate the selling price of a business, resolve disputes related to estate and gift taxation, divorce litigation, allocate business purchase price among the business assets, and many other business and legal disputes.

Business valuation takes into account:
• Economic Conditions
• Financial Analysis
• Normalization of financial statements
• Discounts and Premiums

The aim of Business Valuation is to determine the fair market value of a business.

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Posted By: Jarrod Bayliss-McCulloch - Category: No Category

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Accounting Overview

April 3rd 2008 21:46

What is Accounting?

Accounting is the foundation of business. Professional and ethical accounting practices build a clear financial picture of a business, allowing managers to make informed decisions, keeping investors abreast of business developments, and facilitating profitable business practices like the flow of funds in a modern economy. Accounting has also been around for thousands of years, making it one of the oldest professions in existence.

In its long history, Accounting has developed into a broad field encompassing a number of disciplines including book keeping and auditing, which are traditional accounting functions. These are functions that are carried out by in-house accountants in a company’s internal finance department, providing management accounting services (custom-made financial reports for internal management) and financial accounting services (producing general purpose financial reports for external users).

Large international accounting firms, such as the Big Four (Deloitte, KPMG, Ernst & Young and PwC), offer diversified services including Taxation, Risk Management, Strategy and Operations Consulting, Forensic Accounting, Corporate Finance and Mergers and Acquisitions (M&A), Insolvency and Corporate Reorganisation. Most employees at these firms hold the Chartered Accountant (CA) qualification, which requires a combination of practical experience and structured coursework, and is an alternative to the Certified Public Accountant (CPA) designation.

Accounting is important because financial records are used to make vital decisions. When the decision concerns a major corporate acquisition – a company is considering acquiring a subsidiary – millions or even billions of dollars may be at stake.

Consequently, good accounting practice is supported by the “Conceptual Framework”, a set of principles that provides practical guidance to accountants. The framework defines important accounting elements such as Assets, Liabilities, Equity, Revenue and Expenses, outlines recognition criteria, and explains qualitative characteristics of accounting information: Relevance, Reliability, Understandability and Comparability. It also forms the basis for the International Accounting Standards (IAS) governing industry practice.

Accounting Careers

Accountants may work in Public Accounting Firms, Government, Corporations or as Sole Practitioners, in one of the following areas:

• Audit - Verifying accounting ledgers and financial.
• Budget analysis – developing and managing an organization’s financial plans.
• Financial Accountant – prepare financial statements based on general ledgers.
• Management Accountant – work internally in companies.
• Tax - prepare corporate and personal income tax statements and formulate tax strategies.

There are currently very strong job prospects for Accountants in most OECD countries.

What is Accounting?

Key Practice Areas in the Accounting and Finance Industry

Accounting Overview

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