Types of accounting
/What are the Types of Accounting?
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 Accounting
Those 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 Accounting
Those 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. These jobs can involve substantial amounts of travel, and can be quite stressful.
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Government Accounting
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. There are many opportunities in this area, given the demand for accountants at the federal, state, county, and city levels.
Forensic Accounting
Those 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. Forensic accountants also work in litigation support, assisting attorneys in prosecuting and defending people accused of fraud.
Management Accounting
Those in the management accounting field are concerned with the process of accumulating accounting information for internal operational reporting. These reports are extremely useful for managing a business, since they identify areas in which costs can be reduced and margins improved. They can also lead to major investments in promising new areas, while suggesting to managers which product lines should be shut down.
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 Accounting
Those 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. Tax accountants also assist individual taxpayers with strategies to reduce their taxes to greatest extent legally possible.
Internal Auditing
Those 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. Internal auditors are used in all types of organizations, including for-profit, non-profit, and governmental organizations. 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.
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