Field to practice their profession to ensure that public

Field of Accounting Activity

 Accounting is misjudged and supposed to only be
about copy of commercial transactions, also known as bookkeeping. Bookkeeping
forms only a minor part of accounting and is possibly humblest. Accounting
includes the design of efficient information systems, budgeting, cost analysis,
tax planning, auditing and the analysis and interpretation if information.
Accountants play an important role in society and offer a wide range of
services to business as well as the government.

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Public Accounting

Accounting firms
engaged in public accounting provide a variety of accounting services to the
public for a fee. They vary in size from large national or international
accounting firms employing thousands of persons to numerous one person practices
which operate on regular or local basis.

Chartered Accountants (CAs)

They are individuals
who are similar to doctors and lawyers are licensed to practice their
profession to ensure that public gets professional services of an acceptable
standard. To become a CA, it is necessary to pass a rigorous and comprehensive
examination conducted by the institute of Chartered Accountants and undergo at
least three years of practical training in accounting, auditing, tax and other
related areas. On successful completion of the examination and training, the
individual can apply for a certificate of practice which is the license to
practice as a CA.

Accounting firms
provide a wide variety of services. The principal services offered include:

·       
Auditing

·       
Tax
Services

·       
Management
Advisory Services

·       
Small
Business Services

 

Auditing

It involves the
examination of financial statements and generally forms an important part of
the work of a practicing CA. All limited companies must have their financial
statements audited by an outside CA. The major duties of a company’s auditor
are examining and verifying the company’s financial statements; appraising the
company’s procedure for collecting, recording and reporting financial
information; testing the controls by which the company protects its financial
system from frauds and errors; and publishing an independent professional
opinion as to whether company’s financial statements give a “true and fair
view” of its financial affairs.

Auditing enhances the
credibility of financial reports prepared by an enterprise. By ensuring that
the financial statements are correct and complete, auditing increase their
reliability and usefulness for making economic decisions by investors,
creditor’s, analysts and other usefulness for making economic decisions by
investors, creditor’s, analysts and other. Credible financial reports are
essential for society to have trust in public companies.

Auditors must be both
technically competent in their work and independent of the enterprise whose
financial statements they audit. A rigorous system of raining and examination
certifies that auditors possess the requisite technical skill but it is not
always easy for auditors to be independent of the enterprise that engage and
pays them. At a minimum, auditors should scrupulously avoid transactions and
client relationship that could compromise their ability to express an
independent professional opinion on its financial statements.

 

Tax Services

Business enterprise
have to consider the tax consequences of alternative courses of action. Tax
services include not only preparation of tax returns and compliance with tax
laws but also planning business activities with a view to minimize the taxes.
It is often possible to effect considerable savings in tax expense by
appropriately arranging one’s business affairs. While evasion of taxes is   definitely unlawful, it is perfectly
legitimate for everyone to reduce their tax expense. To be successful in tax
practice, an accountant should be up to date with changes in tax statutes,
rules, notifications and circulars as well as court decision.

Management Advisory Services

An Important part of
the revenues of large accounting firms comes from management advisory services,
an omnibus term for a wide variety of consulting activities. These services go
beyond the traditional boundaries of accounting and auditing.

Examples

Consulting Assignments
include

·       
Recruiting
suitable personnel

·       
Reviewing
costing systems

·       
Helping
with the design

·       
Helping
growing companies go public

Small Business Services

Many
accounting firms provide a variety of services for small business. Setting up
an accounting system, compiling financial statements, preparing budgets and
forecasts, assisting the client in obtaining a bank loan are examples of small
business services.

 

 

Private
Accounting

An accountant is said
to be in private accounting when she is employed by a business enterprise.
Private accountant are employed by organizations in such diverse business as
steel making, mining, banking, airlines, software, real estate and hotels.
Typical designations of these accountants are financial vice president,
financial controller, works accountant, and management accountant. The areas in
which private accountant specialize are management accounting, internal
auditing, and information systems.

Management Accounting

Accountants in
management accounting provide information to management for making business
decisions and formulating long term policies. Management accounting information
has use in several areas including cost control, product costing, capital
investment appraisal, profitability analysis corporate planning, budgeting,
pricing policies and cash flow.

Internal Auditing

In addition to the
audit by outside accounting firms most large corporations have their internal
audit departments. Internal auditors are concerned with reviewing internal
controls, assessing compliance with established policies, ascertaining the
extent to which company’s assets are safeguard and recommending improvements to
operations. External auditors by contrast are primarily concerned with the
fairness of financial statement of a business.

Information Systems

A rapidly growing field
for accountants is the design and development of information systems for
processing accounting data. Since large corporations make extensive use of
computer for processing transactions, a good working knowledge of computer
hardware and software is indispensable for specialization in this field

Government Accounting

Government department
and agencies receive and pay huge sums of money. We are familiar with
government organizations such as Pakistan Railways, PIA, OCDCL the police and
defense services. Unlike business enterprises the sole objective is not to make
a profit from its operations. Still, it’s essential that the sums due to
government are collected when due, and payments are properly authorized and
result in expected benefits. The government should be cost effective in its
operations so that taxes and other levies can be kept low.

Sources of government
revenue include income tax, excise and custom duties, value added tax, and
various types of fees.

Example

·       
Payments
made by government include salaries and allowances.

·       
Pensions of
retired government employees

·       
Costs of goods
and services procured for projects

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