● Careers in Accounting
Accounting-along with such fields as architecture, engineering, law, medicine, and theology is recognized as a profession. What distinguishes a profession from other disciplines? There is no single recognized definition of a profession, but all of these fields have several characterize in common.
First, all professions involve a complex and evolving body of knowledge. In accounting, the complexity and the ever-changing nature of the business world. financial reporting requirements, management's demands for increasingly complex information, and income tax laws certainly meet this criterion. Second, in all professions, practitioners must 'use their professional judgment to resolve problems and dilemmas. Throughout this text, we will point out situations requiring accountants to exercise professional judgment. Of greatest importance, however, is the unique responsibility of professionals to serve the public's best interest, even at the sacrifice of personal advantage. This responsibility systems from the fact that the public has little technical knowledge in the professions, yet fair
and competent performance by professionals is vital to the public's health, safety. or well-being. The practice of medicine, for example, directly affects public health, while engineering affects public safety. Accounting affects the public's well-being in many ways, because
accounting information is used in the allocation of economic resources throughout society. Thus, accountants have a basic social contract to avoid being associated with misleading
information. Accountants tend to specialize in specific fields, as do the members of other professions
Career opportunities in accounting may be divided into four broad areas:
(2) management accounting,
(3) governmental accounting, and
(4) accounting education.
PUBLIC ACCOUNTING
Certified public accountants offer a variety of accounting services to the public. These individuals may work in a CPA firm or as sole practitioners.
The work of public accountants consists primarily of auditing financial statements, income tax work, and management advisory services (management consulting). Management advisory services extend well beyond tax planning and accounting matters CPAs advise management on such diverse 1ssues as international mergers, manufacturing processes, and the introduction of new products. CPAS assist management because financial
considerations enter into almost every business decision.
Careers in Accounting
A great many CPAs move from public accounting into managerial positions with organizations. These "alumni" from public accounting often move directly into such top management
positions as controller, treasurer, or chief financial officer
The CPA Examination To become a CPA, a person must meet several criteria, including an extensive university education requirement, passing the CPA examination, and meeting a practice experience requirement. CPA certificates are granted by 55 legal jurisdictions. (50 U.S, states, Guam, Puerto Rico, the Virgin Islands, Washington, D.C., and the Mariana Islands).
The CPA examination:- is a rigorous examination that covers a variety of
accounting and business subjects that allow candidates to demonstrate their knowledge and skills in areas believed important for protecting the public. The exam is computer-based and
is offered at many testing centers throughout the United States.
MANAGEMENT ACCOUNTING:-
In contrast to the public accountant who serves many clients, the management accountant works for one enterprise. Management accountants develop and interpret accounting information designed specifically to meet the various needs of management. The chief accounting officer of an organization usually is called the chief accounting officer (CAO) or controller The term controller has been used to emphasize the fact that one basic purpose of accounting data is to aid in controlling business operations. The CAO or controller 1s part of the top management team, which is responsible for running the business, setting its objectives, and seeing that these objectives are met. For example, only three corporate
officers are required to sign the Form 10-K that public connives file yearly with the Securities and Exchange Commission-the CEO, the CFO, and the chief accounting officer (CAO).
In addition to developing information to assıst managers, management accountants are responsible for operating the company's accounting system, including the recording of transactions and the preparation of financial statements, tax returns, and other accounting reports. Because the responsibilities of management accountants are so broad, many areas of specialization have developed. Among the more important are financial overcasting, cost accounting, and internal auditing.
GOVERNMENTAL ACCOUNTING
Governmental agencies use accounting information I'm allocating their resources and in controlling their operations. Therefore, the need for management accountants in governmental agencies is similar to that in business organizations.
The GAO: Who Audits:
The Government? The Government Accountability Office (GAO) audits many agencies of the federal government, as well as some private organizations doing business with the government,. The GAO reports its findings directly to Congress, which, in turn, often discloses these findings to the public, GAO investigations may be designed either to evaluate the efficiency of an entity's operations or to determine the fairness of accounting information reported to the government.
The IRS: Audits of Income Tax Returns:
Another governmental agency that performs extensive auditing work is the Internal Revenue Service (IRS). The IRS handles the millions of income tax returns filed annually by individuals and business organizations and frequently performs auditing functions to verify data contained in these returns.
The SEC: The "Watchdog" of Financial Reporting
The SEC works closely with the FASB in establishing generally accepted accounting principles. Most publicly
owned corporations must file audited financial statements with the SEC each year. If the SEC believes that a company's financial statements are deficient in any way, it conducts an investigation. If the SEC concludes that federal securities laws have been violated, it initiates legal action against the reporting entity and responsible individuals. Many other governmental agencies, including the FBI, the Treasury. Department, and the
FDIC (Federal Deposit Insurance Corporation), use accountants to audit compliance with governmental regulations and to investigate suspected criminal activity. People beginning their careers in governmental accounting often move into top arbitrative positions.
ACCOUNTING EDUCATION
Some accountants, including your instructor and the authors of this textbook, have chosen to pursue careers in accounting education. A position as an accounting faculty member offers opportunities for teaching, research, consulting, and an unusual degree of freedom in developing individual skills. Accounting educators contribute to the accounting profession in many ways. One, of course, lies in effective teaching; second, in publishing significant research findings and third, in influencing top students to pursue careers in accounting
WHAT ABOUT BOOKKEEPING
Some people think that the work of professional accountants consists primarily of bookkeeping. Actually, it doesn't. In fact, many professional accountants do little or no book-keeping.
Bookkeeping is the clerical side of accounting -the recording. of routine transactions and day-to-day record keeping. Today such tasks are performed primarily by computers and
skirled clerical personnel, not by accountants. Professional accountants are involved more with the interpretation and use of accounting information than with its actual preparation. Their work includes evaluating the efficiency of operations, resolving complex financial reporting issues, forecasting the results of future operations, auditing, tax planning, and designing efficient accounting systems. There is very
little that is "routine" about the work of a professional accountant. A person might become a proficient bookkeeper in a few weeks or months. To become a professional accountant, however, is a far greater challenge because this requires more than understanding the bookkeeping systems. It requires years of study, experience, and an ongoing commitment to keeping current.
We will illustrate and explain a number of bookkeeping procedures in this text, particularly in the next several chapters. But teaching bookkeeping skills is not our goal; the primary
purpose of this text is to develop your abilities to understand and use accounting information in today's business world.
ACCOUNTING AS A STEPPING-STONE:
We have mentioned that many professional accountants leave their accounting careers for key positions in management or administration. An accounting background is invaluable in such positions, because top management works continuously with issues defined and described in
accounting terms and concepts. An especially useful stepping-stone is experience in public accounting. Public accountants have the unusual opportunity of getting an inside look at many different business organizations,
which makes them particularly well suited for top management positions in other organizations
BUT WHAT ABOUT ME? I'M NOT AN ACCOUNTING MAJOR:-
Most students who use this book are not accounting majors, However, the study of accounting is still important to you. You need to understand accounting concepts, both for your professional careers and for many aspects of your personal life. Accounting is the language of business, and trying to run a business without understanding accounting information is analogous to trying to play sports without understanding the rules. Finance students need to understand accounting concepts if they seek positions in investment banking, consulting, or in corporate
America as a financial analyst. Approximately 50 percent of the chief financial offices of large U.S. corporations have a background in accounting. A management student seeking a career as a management trainee with the ultimate goal of running a corporation or a crop rate division needs to understand accounting in order to be able to run, control, and evaluate the performance of a business unit.
For example, the CEO, who holds the top management position, must certify the accuracy of the company's financial statements on a quarterly an yearly basis. The Sarbanes-Oxley Act imposes severe civil' and criminal sanctions on CEUS who certify their company's financial statements if the CEO knows, or should have known, that the financial statements are materially misstated, Marketing students often take positions in sales. It is imperative that marketing students understand the principles of revenue recognitions, as well as the obligations of a public company under the U.S. securities laws. A lack or this understanding has led many a marketing/sales executive to become involved in improve revenue recognition schemes, Many of these executives have been subject to civil and criminal prosecution
Finally, accounting knowledge is helpful in many aspects of your personal lives. Accounting concepts are integral to such everyday decisions as personal budgeting, Retirement and college planning, lease versus buy decisions, evaluation of loan terms, and evaluation of investment opportunities. Since accounting skills are designed to help you make better economic decisions, you will be using these skills for the rest of your life. The only question is the degree of skill with which you will apply these concepts. Unfortunately, there is substantial evidence that most Americans have a low level of skill when it comes to applying accounting or financial concepts. For example, a recent study by the Securities and Exchange Commission found that "retail investors have a weak grasp of elementary financial concepts and lack critical knowledge of ways to avoid investment fraud".
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