Public accounting

Date: 2015-10-07; view: 453.

The work of an Accountant

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Accountants are employed in three broad fields: (1) in public accounting, (2) in private accounting, or (3) in government.

Auditing. The principal service offered by public accountants is auditing. Banks commonly require an audit of the financial statements of companies that apply for a sizable loan. Such audits are performed by public accountants who are not employees of the audited concern but are independent professional persons working for a fee. Also, companies whose securities are offered for sale to the public generally must he audited before their securities may he sold. Thereafter, additional audits must be made periodically if the securities are to continue being traded.

The purpose of an audit is to lend credibility to a company's financial statements. In making the audit, the auditors carefully examine the company's statements and the accounting records from which they were prepared. In the examination, the auditors seek to determine whether the statements fairly reflect the company's financial position and operating results in accordance with generally accepted accounting principles. Based on their examination, the auditors prepare a report that expresses their opinion about the financial statements. 'The auditors' report is published together with the audited financial statements.

Banks, investors, and other users of financial statements rely on independent auditors to determine that a company's financial statements are fairly presented. The audit gives these financial statement users the confidence to use financial statement information in making loans, in granting credits, and in buying and selling securities.

Management Advisory Services. In addition to auditing, public accountants commonly offer management advisory services. An accountant gains from an audit an intimate knowledge of the audited company's accounting and operating procedures. Thus, the accountant is in an excellent position to offer constructive suggestions for improving the company's methods of operation. Clients expect these suggestions as a useful audit by-product. They also commonly engage public accountants to conduct additional investigations for the purpose of determining ways in which their operations may he improved. Such investigations and the suggestions growing from them are known as management advisory services.

Management advisory services include the design, installation, and improvement of a client's general accounting system and any related information systems it may have for managing the company. This may involve selecting appropriate computers, developing software, and installing the procedures necessary to bring an information system into effective operating use. Management advisory services may also include financial planning, budgeting, forecasting, and inventory control.

Tax services. In this day of highly complex tax laws and high tax rates, few important business decisions are made without consideration being given to their tax effect. A professional accountant, through training and experience, is well qualified to render important service in this area. Tax services include not only the preparation and filing of tax returns but also advice as to how transactions may be completed so as to incur the smallest tax.