Private Accounting

Date: 2015-10-07; view: 544.

Accountants employed in a single enterprise are said to be in private accounting. A small business may employ only one accountant or it may depend on the services of a public accountant and employ none. A large business on the other hand, may have more than 100 employees in its accounting department. They commonly work under the supervision of a chief accounting officer called the controller. The title controller stems from the fact that one of the chief uses of accounting data is to control the operations of a business.

The one accountant of the small business and the accounting department of a large business do a variety of work, including general accounting, cost accounting, budgeting and internal auditing.

General accounting. The task of recording transactions, processing the recorded data and preparing financial reports for the use of management, owners, creditors, and governmental agencies is called general accounting.

Private accountant employees design a company's accounting information system, perhaps with the help of company auditors. The private accountant employees also supervise the clerical or data processing staff in recording transactions, maintaining financial records, and preparing the company's financial reports.

Cost Accounting. The phase of accounting that has to do with determining and controlling costs and assessing the performance of managers who are re­sponsible for costs is called cost accounting. This may involve accounting for the costs of producing a given product or service, of the costs of performing some other specific function. Knowledge of costs and controlling costs is vital to good management. Therefore, a large company may have a number of accountants engaged in this activity.

Budgeting. The process of developing formal plans for future business activities is called budgeting. The objective of budgeting is to provide management with a clear understanding of all the activities that must be undertaken and completed in order to accomplish their objectives for the company. Then, after the budget plan has been put into effect, it provides a basis for evaluating actual accomplishments. Many large companies have a number of people who devote all their time to this phase of accounting.

Internal Auditing. In addition to an annual audit by an independent firm of public accountants, many companies maintain a staff of internal auditors. These employees move from one department of the company to another, checking the records and operating procedures of each department. It is the responsibility of internal auditing to make sure that established accounting procedures and management directives are being followed throughout the company. Also, internal auditors are often asked to evaluate the operating efficiency of each department.