Accounting Practices

If you decide that you would like to go into the accounting industry, you will want to know what different fields are available. There are jobs such as the entry level bookeeper all the way up to the CFO (chief financial officer) of some major corportation. To be able to get to those high up positions and get those high salaries, you will need to get the education.

One thing you must do to become an accountant is to become a CPA or a certified public accountant. In order to do that you will need to go to college and major in accounting, then you will need to take and pass the CPA review. You will also need to pass the CPA examination. You may also need to get experience by spending some time learing in a CPA firm. Once you have done all of these things you will recieve your designation to be a CPA and you can now offer services to the general public.

Once you get into a office of accounting you will then want to move up to becoming the chief accountant which means he will control the flow of the whole business by staying on top of the current laws and by being responsible for how the financial statements are prepared. This person is also in charge of the financial planning and the budgeting of the business. When this accounting firm gets much bigger there may be several controllers to handle certain aspect of the firm. In addition the controller will handle the filing of taxes of the business and is involved in the budgeting for that business.

The next level is the Chief financial Officer who is responsible to create the growth and the profit of the company, he will design the right strategies that the company will need in order to get that growth.

If you are thinking about this type of career you should start today working in that direction.

When you recieve your audit report on your financial statement, it is usually meant to give your business that good opinion or to let you know whether it is healthy. On the other side of the table, your auditor can indicate that the statements found are misleading and cant be relied on. This type of audit report is known as the adverse opinion. That is the upper hand that your auditor has over your business is that they can give you an adverse opinion and make your business look bad. Having the threat of getting that adverse opinion makes more companies change their accounting practices and upgrade their disclosure techniques, which help them to avoid the problem of getting that adverse opinion. The SEC will suspend the trading of a business if the auditor gives that company an adverse opinion.

If a company recieves a report from the CPA company doing the audit, that says they doubts the capabilities of that business to maintain its status as a going concern ( note: a going concern is a company that has the financial means and the momentum to go on operating in the future and that they will be able to turn the bad situation around without defaulting on any of its current liabilities). In this case you may find that some companies may be showing distress but will still be a going concern, unless of course the auditor finds reason to believe it is not. If your company doesnt look good on paper you will need to start working today to ensure your accounting standards and your disclosure is up to par before you get that adverse opinion.

When you have a business, you may find yourself in need of an independent auditor. This CPA will come in and go over your accounting and give you and your business a report, this is usually a part of the financial statement of your business. If the company is publicly owned it is more likely that you will use one of the independent auditor firms to have the reports done as this helps lend credibility to your financial reports.

Your auditor will also ensure that the accounting system that you are using is one that is allowed by GAAP (generally accepted accounting principles). If everything is good and in place the financial report will show this and your company will look good. However if the auditor flag your companies financial records that means that there may be some potentially harmful trouble brewing and may indicate that this company's ability to run effectively is in doubt. These problems may be that there is low cash balances, it may show a lot of unpaid or overdue liabilities or even that the company is in the middle of lawsuits which they may not have the money to cover.

The auditor will be unbiased and skeptical, they should be ready to challenge whether the company has a good or bad systme and they should also adhere to the accounting standards that are not misleading. They should ensure that the reports are presented in a fair manner, and they must be tough with the customer to ensure that they don't make mistakes that could cost their company in the long run.  

Lastly they should be able to blow the lid off a company that is engaging in fraudulent and deceptive behaviors. They will also want to be very particular because in some court cases the company is engaging in some kind of fraud and the auditors are missing this fraudulent behavior, as seen by the Enron case.

The Independent auditor serves an interesting purpose, he gives a report that tells about the financial stability of the company, and give it credibility. However they are also very critical and will point out potential problems that your company's accounting system is having and how to fix them before the company goes under.