, Finance and Accounting - Research Paper Example

Research Paper, Finance and Accounting Contents Introduction 3 Discussion 3 Managerial accounting 3 Tax accounting 4 Audit accounting 5 Forensic accounting 6 Finance consulting 7 Analysis 8 Conclusion 8 Reference 9 Introduction American Institute of Certified Public Accountants (AICPA) has summarized the definition of Accounting as the One Degree with 360 Degrees of Possibilities. Accounting degree gives an individual the education to succeed at just about anything in the business world. Accounting opens the doors to all kind of business coast to coast. It gives an individual the foundation ones need to go on and become certified Public Accountants. It prepares one to become a partner in accounting firms, work in government, and pursue a career in corporate management or in finance or even become an entrepreneur. Hence having an accounting background opens the door to a wide range of career opportunities. Accounting has always been considered as the language and basic tool of business and it is concerned with determining how a business is doing and what the bottom line of the business is. The demand for accountant has been growing and it is outstripping supply. There are a lot of field where accounting can be done like tax, managerial, audit, forensic, governmental, consulting etc. This paper will discuss about the pros and cons of each of the above field of accounting and arrive at the most important one among them which is more relevant today. Discussion Managerial accounting Managerial accounting is referred to as management accounting and is defined as the internal business building role of finance and accounting professionals who designs, implement and manage internal systems that supports effective decisions and support, plan and control, the value creation operation of an organization. In other words, managerial accounting supports the decision making process through planning and controlling operations. Managerial accounting emphasizes on future event of a company and hence is often considered to be forward looking and uses past result as the basis for estimating future results. It increases the efficiency of a company as everything is done in management accounting in a scientific way of evaluation and compares the performance of the company. It maximizes profitability and simplifies financial statements. But there are many disadvantages to it as well like personal prejudices and bias can occur while interpreting financial information. It is a tool and decisions can’t be taken by using it. Management accounting is still in the development stage and thus the tools and technique used may give different results. Recent developments in global economic have raised the importance of management accountants. Companies have to navigate the opportunities and risks to move forward. Hence there is great potential for management accountants to lead business towards the success in future. In addition to having good accounting fundamentals, they have to possess competencies in assessing, monitoring and forecasting performance and thus help their colleagues understand costs and income and thus assist the management in making decisions which are critical for the organization to move in the right strategic direction. Tax accounting Tax advisor is one of the most important types of financial experts with good knowledge and advanced training on tax laws. Companies take help of tax advisors to find out the ways to reduce the burden of all types of taxes while remaining acquiescent with law in general and even complex financial conditions. Tax advisors include tax attorneys, Certified Public Accounts and financial advisors. The laws of tax are changing from time to time and tax consultants are needed to keep track of all accounting records. It is important to keep tax professionals to understand all the tax laws since any error in filing tax can be investigated by government officials. The tax consultants are subjected to intense and extensive testing and training so as to ensure that they are acquainted with the federal and state laws. This indicates that they can comprehensively handle taxes. Tax consultants are need while starting up a business since during early days a lot of wrote offs of the equipment bought can happen. In such cases it is important to have a tax consultant who can take care of the write offs. They have to advise on employee incentive schemes like share ownership trusts, share options, creation of employee benefit trusts and tax efficient employee benefits. They have to help individuals and businesses create strategies to deal with tax and prepare them for future decision making. They have to advise on property transactions like acquisitions of foreign property, efficient use of co-ownership structures and partnerships1. Audit accounting Auditing means evaluating whether the internal controls of a company are effective so that it can help achieve business objectives, obtain reliable financial information, minimizes the cost of capital and prevent misappropriation and fraud of its assets. It is important for conveying accurate information to the shareholders and other interested parties. It is a legal requirement on the part of the company to have their figure and financial facts checked. Audit accounting is needed to make the financial reports accepted by government authorities and central banks. It is used to detect and rectify Errors and frauds in time. Audited financial statements are needed by organizations to access finance from Banks. Audited accounts can help the management help understand the financial position of a business so that the management can take important decisions on important matters like internal control system of an organization. Systematic audit can reduce the chance of committing errors and frauds by employees in the accounts departments. In case of loss of property by fire audited accounts can help in early settlement of claims from the insurance company. Audit accounting has several limitations as well. Through the process of accounting, it is not possible to ensure future viability of the organization. It cannot ensure the efficiency and effectiveness of the management. Through audit accounting, the auditors mainly express their opinion and hence it does not give total assurance of the true and fair presentation of annual reports. Forensic accounting Forensic accounting uses the auditing, accounting and investigative skills so as to examine the financial statements of the company. Thus it provides an accounting analysis which is suitable for the court. Forensic accountants need to look beyond the usual numbers and deal with the business reality. There are many positive points of forensic accounting. It provides a valuable contribution to an economy. The information studied and result achieved is useful in forming the arrangements on an economy. Forensic accounting can be used to accomplish balanced governance so as to avert them from happening again. It identifies and prevents fraud. Such an activity guarantees fundamental disciplinary or legal recourse which is taken to prevent future events of fraud. Forensic accounting helps the investors to rely on trustworthy choices and invest in business which can generate accurate returns for them. In addition to that it gives conceivable guidelines so as to rectify the shortcomings of the business. It is a fantastic career where in addition to usual accounting it provides them with the opportunity to acts as an investigator. But forensic accounting uses latest computer software and thus it is an expensive procedure. It turns out that it is significantly more expensive that discoveries made through legal representation. Forensic accounting uncovers many criminal acts and thus they are open to other criminal acts like threats and coercion from people uncovered in their endeavour to frustrate this enterprise. According to institute of Certified Forensic Accountants states that in the process of forensic accounting some information may come up which should not be revealed unless power has been given to reveal informative content. But sometimes under pressure, confidentiality is not maintained. Finance consulting Accounting and finance consultants are responsible for reviewing the internal processes and giving recommendations for improvement in case any. The finance consultants may be hired from independent consulting service to within the company. It is related to financial planning analysis. As a financial analyst one has to review operating data of a company and has to compare the current and historical information and finally recommend ways of improving the nonperforming areas. A financial planner helps the company in reaching long term investment goals. Financial consulting is an important process in corporate decision making process. It helps senior executive select adequate investment options to generate quality returns, like profitability analysis tools like profit margin is useful to the managers to find out corporate profit potential. Working with a certified financial planner is beneficial to the business. They can develop a comprehensive plan to meet the financial goals of a company. They can thus give expert advice which most regular people don’t have. A certified financial planner can chalk out the ways of investing so as to generate good returns and increase wealth of the client. Financial consultant charges hefty fees in a number of ways for their services. They charge fees based on the amount of portfolio they have to manage. A poor quality financial consultant is detrimental since it can result in decrease of wealth for a company or individual. Analysis From the above advantages it is clear that Accounting represents wide variety of choices to the students. According to me, Forensic consultant is the best among others. Forensic accountants encompasses all other accountant majors where one has to be versatile in all these accounting policies top detect fraud committed within a company. It has become the cornerstone in safeguarding the business interests and corporate assets in ever changing environment. Detecting fraud committed stops illegal activity within a company and eventually helps in making a better economy. Also the career is extremely rewarding. Reports prepared by forensic accountant are accepted by court of law and is given upper hand as compared to other accountants. They are also in high demand and can easily draw a salary in the range of $40,000 to $ 60,000 per annum. Conclusion Accounting degree is a rewarding degree for individuals as it opens up range of career options to students. The demands for accountants are growing and it is exceeding the supply. The Job opportunities in today’s business climate are far better than ever for accountants. Over the last two decades, the field of accounting has been changing dramatically because of recent trends as computer revolution, frequent tax changes, increased government regulation, globalization of business, restructuring of corporations and ongoing downsizing of firms. As discussed above there are many areas within accounting which are essential for today’s business. These include income taxes, consulting services, auditing, forensic accountants and finance consultants. Among them it is clear that Forensic accountants are the most important of them all. It encompasses all the other types since it has to detect fraud committed by all the other professionals. Again their reports are accepted by court of law and is placed above all others. They also draw good salaries and thus they are in high demand. Hence it is better to be a Forensic Accountant. Reference College of Business Administration, “Why Major in Accounting?”College of Business Administration, Accessed 08 March, 2014, https://www.csulb.edu/colleges/cba/accountancy/major/. Read More