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July 16, 2022 July 16, 2022/
There are several types of accounting that range from auditing to the preparation of tax returns. Accountants tend to specialize in one of these fields, which leads to the different career tracks noted below. Financial AccountingThose in the financial accounting field are concerned with the aggregation of financial information into external reports. Financial accounting requires detailed knowledge of the accounting framework used by the reader of a company's financial statements, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). Or, if a company is publicly-held, it requires a knowledge of the standards issued by the government entity responsible for public company reporting in a specific country (such as the Securities and Exchange Commission in the United States). There are several career tracks involved in financial accounting. There is a specialty in external reporting, which usually involves a detailed knowledge of accounting standards. There is also the controller track, which requires a combined knowledge of financial and management accounting. Public AccountingThose in the public accounting field investigate the financial statements and supporting accounting systems of client companies, to provide assurance that the financial statements assembled by clients fairly present their financial results and financial position. This field requires excellent knowledge of the relevant accounting framework, as well as an inquiring personality that can delve into client systems as needed. The career track here is to progress through various audit staff positions to become an audit partner.
Those in the government accounting field use a unique accounting framework to create and manage funds, from which cash is disbursed to pay for a number of expenditures related to the provision of services by a government entity. Government accounting requires such a different skill set that accountants tend to specialize within this area for their entire careers. Forensic AccountingThose in the forensic accounting field are involved in the reconstruction of financial information when a complete set of financial records is not available. This skill set can be used to reconstruct the records of a destroyed business, to reconstruct fraudulent records, to convert cash-basis accounting records to the accrual basis, and so forth. This career tends to attract auditors. It is usually a consulting position, since few businesses require the services of a full-time forensic accountant. Those in this field are more likely to be involved in the insurance industry, legal support, or within a specialty practice of an audit firm. Management AccountingThose in the management accounting field are concerned with the process of accumulating accounting information for internal operational reporting. It includes such areas as cost accounting and target costing. A career track in this area can eventually lead to the controller position, or can diverge into a number of specialty positions, such as cost accountant, billing clerk, payables clerk, and payroll clerk. Tax AccountingThose in the tax accounting field are concerned with the proper compliance with tax regulations, tax filings, and tax planning to reduce a company's tax burden in the future. There are multiple tax specialties, tracking toward the tax manager position. Internal AuditingThose in the internal auditing field are concerned with the examination of a company's systems and transactions to spot control weaknesses, fraud, waste, and mismanagement, and the reporting of these findings to management. The career track progresses from various internal auditor positions to the manager of internal audit. There are specialties available, such as the information systems auditor and the environmental auditor. July 16, 2022/
Accounting information systems collect and process transaction data and communicate the financial information to interested parties. There are many types of accounting information systems and, as a result, they vary greatly. A number of factors influence these systems such as the type and size of the business, the volume of data, the type of data management needs, and other factors. Most businesses, except for the smallest, use computerized systems, also called electronic data processing (EDP) systems. These systems handle every step in the accounting process from recording the financial transaction to preparing the financial statements. Businesses are constantly improving their systems technology in order to remain competitive and to stay in compliance with the Sarbanes-Oxley Act of 2002. Even the smallest businesses may choose to use systems like Quickbooks. In order to understand how these accounting information systems work, you have to understand the basic accounting terms "business transactions" and "business processes." Most importantly, you need to understand how business transactions and processes come together to generate financial reports. With regard to accounting information systems, business transactions can be divided into several types of business processes: The business transactions that fall under these business processes are large volumes of daily sales, returns, and cash inflow transactions. The business transactions that fall under these business processes are large volumes of expenditure, returns, and cash outflow transactions. Payroll and fixed asset purchase transactions are also in this category. The business transactions under this category are raw materials and work-in-progress transactions. The business transactions that are administrative are investments, borrowing, and capital transactions. All of these business transactions result in T-accounts set up in the General Ledger processes, systems, and controls. From the general ledger, both internal and external financial statements are developed. Internal financial reports might be an aging schedule for accounts receivable or a sales inventory status report. External financial reports would be the income statement, balance sheet, and statement of cash flows. There are multiple types or categories of accounting information systems. What a business firm uses depends on the type of business, the size of the business, the needs of the business, and the sophistication of the business. Manual accounting information systems are used mostly by very small businesses and home-based businesses. If a system is entirely manual, it would require the following: source documents, general ledger, general journal, and special journals or subsidiary journals you might need. Legacy systems are often in existing business firms and were used before information technology got as sophisticated as it is today. Even though legacy systems may appear to be old-fashioned, they have some definite advantages to the firm. They contain valuable historical data about the firm. The firm personnel tend to know how to use the system and understand it. A legacy system has usually been customized to the specific needs of an individual firm. You won't find this kind of customization in generic accounting software packages. Unfortunately, legacy systems also have significant disadvantages. Often, they have no documentation. It is usually hard to find replacement parts because hardware and software may become obsolete. Even the computer language that legacy systems use is usually an older language. Most legacy systems have been built from scratch. You can completely replace your legacy system with a new, up-to-date system. That is quite an expensive solution. You can also update your legacy system. You can use a procedure called screen scraping, which is a technique that takes the data displayed on the computer screen and translates it so a newer application can read it. You can also set up an enterprise application integration system. This type of system networks the different applications in your legacy system, such as inventory, payroll, and others. If you are an SMB, unless you are the smallest, home-based variety, your accounting information system should be up-to-date in order to keep you competitive within your industry.
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