Accounting has come to occupy an ever more significant position in the functioning of modem industrial societies.
Emerging from the management practices of the estate, the trader and the embryonic corporation, it has developed into an influential component of modem organizational and social management.
At a broader social level, Accounting has become no less influential as it has come to function in a multitude of different and ever-changing institutional areas.
The emergence of the modem state has been particularly important in this respect.
The economic calculations provided by enterprise-level accounting systems have come to be used not only as a basis for governmental taxation but, also as a means of enabling the more general economic management policies of the state to grow in significance and impact.
Accounting data are now used in the derivation and implementation of policies for economic stabilization, price and wage control, the regulation of particular industrial and commercial sectors and the planning of national economic resources in conditions’ of war and peace and prosperity and depression.
Indeed in its continuing search for greater economic and social efficiency the state has been an active agent both for the continued development of accounting systems in industrial and commercial enterprises and for their introduction into more sectors of society.
In this regard, nowadays accounting is known as the driving force of the modem economy and during the last half-century, accounting has gained the same professional status as the medical and legal professions.
Today millions of people in the world hold accounting-related positions and it is assumed that the demand for accountants will increase rapidly.
So now accounting can be considered a career.
Accountants tend to specialize in specific fields, as do the members of other professions. In terms of career opportunities, accounting may be divided into four broad areas;
- Public Accounting,
- Private or Managerial Accounting,
- Governmental and other Not-for-Profit Accounting, and
- Accounting Education.
In public accounting, an accountant offers a variety of accounting services to the general public in much the same way as a doctor serves patients or a lawyer serves clients.
These public accountants are known as
- CPA (Certified Public Accountants) in the western world especially in America.
- Other Parts of worlds some of the public accountants are known as CA (Chartered Accountant),
- CMA (Cost & Management Accountant), Income Tax Practitioners, and Management Consultants etc.
In order to be a public accountant some prescribed qualifications are required e.g. having some professional degree in the field of accounting like to be a CA or ACMA.
The work of public accountants consists primarily of auditing financial statements, income tax work, and management advisory services (management consulting).
Auditing: A major portion of accounting involves auditing. A business seeking a loan or attempting to have its securities traded on a stock exchange usually must provide financial statements to support its request.
Users of the Company’s financial statements are more confident if they are audited by a CA firm.
So companies hire CA firms to conducts independent audits and give an expert opinion whether the financial statements are showing a true and fair view or not.
Tax Services: The public accountants often provide expert advice on tax planning and .preparing various tax returns.
The objective in preparing tax returns is to use legal means to minimize the taxes paid. Almost every major business decision has a tax impact. Tax planning helps clients know the tax effects of each financial decision.
Management Advisory (or Consulting) Services: Providing management advisory services is, perhaps, the fastest growing area in public accounting.
The advisory services extend well beyond tax planning and accounting matters. The public accountants advise management on such diverse issues as international mergers, manufacturing processes, and the introduction of new products.
They might also suggest improvements in the design and. installation of an accounting system, the electronic processing of accounting data, inventory control, budgeting, or financial planning.
The entry of accountants into the field of management consulting reflects the fact that financial considerations enter into almost every business decision.
Private or Managerial Accounting
In contrast to public accountants, who provide accounting services for many clients, management accountants provide accounting services for a single business.
Managerial accountants develop and interpret accounting information designed specifically to meet the various needs of management.
The chief accounting officer of an organization is usually called the controller, in recognition of the fact that one basic purpose of accounting data is to aid in controlling business operations.
He is a member of the top management which is responsible for running the business, setting its objectives, and seeing that the objectives are achieved.
Many management accountants specialize in one particular area of accounting.
some may specialize in measuring and .controlling costs, others in budgeting (the development of plans for future operations), and still others in financial accounting and- reporting.
Many management accountants become specialists in the design and installation of computerized accounting systems.
As the responsibilities of managerial accountants are so broad, many areas of specialization have been developed. Among the more important are the following:
- General accounting: Recording daily transactions and preparing financial statements and related relevant, reliable and timely information for the users.
- Cost accounting: Determining the per-unit cost of business activities and of manufactured products, and interpreting this cost data to make effective and efficient business decisions.
- Budgeting: A financial forecast that assisting management in quantifying goals concerning revenues, costs of goods sold, and operating expenses.
- Accounting Information System: Designing both manual and computerized data processing systems in order to ensure the accountability of the resources used and to provide relevant, reliable and timely information to conduct the business activities properly.
- Tax accounting: Preparing tax returns and doing tax planning for the company.
- Internal auditing: Reviewing the company’s operations to see if they comply with management policies and evaluating the efficiency of operations.
- Human resource accounting: An attempt to recognize the human resources of an organization, quantify them in monetary terms and show them in the financial statements.
- Environmental accounting / green reporting: An attempt to quantify the costs and benefits of a company’s operations in relation to the environment.
- Social responsibility accounting: Reporting of the costs and benefits of social accounting issues by a business like charitable donations of equipment and time, education initiatives, product safety, community involvement, employment of disadvantaged groups, and the provisions of sports equipment or sponsorship.
Governmental & Not-for-Profit Accounting
Many accountants including CAs, CPAs & CMAs, work in governmental and other not- profitable concerns.
They have essentially the same educational background and training as accountants in public accounting and private accounting.
Governmental offices like various ministries, governmental departments, undertakings, and local bodies employ governmental accountants.
Often the duties of these accountants relate to tax revenues and expenditures.
For example, the National Board of Revenue employees uses their accounting knowledge in reviewing tax returns and investing in tax frauds. Governmental agencies use accounting information to allocate resources and to control their operations.
In addition, the government performs several audit functions since it has to provide information to legislators, citizens, employees, and creditors.
The audit of accounts of various ministries, government departments, undertakings, local bodies is done by government auditors.
Not-for-Profit organizations, such as churches, charities, Hospitals, colleges, universities, etc. need accountants to record and account for funds received and disbursed.
Even though these agencies do not have a profit motive, they should operate efficiently and use resources effectively.
Many accountants have chosen to pursue careers in accounting education.
The activities of these academic accountants include teaching accounting courses effectively, conducting scholarly and applied research and, publishing the results, and performing service for the institution and the community.
They also influence top students to pursue a career in accounting.