Forensic Accounting

 

Forensic accounting Forensic accounting is the specialty alty practice area of accountancy that describes engagements that result from actual or anticipated disputes or litigation. "Forensic" means "suitable for use in a court of law", and it is to that standard and potential outcome that forensic accountants generally have to work. Forensic accountants, also re ferred to as forensic auditors or investigative auditors, often have to give expert evidence at the eventual trial.[1] All of the larger accounting firms, as well as many medium-sized and boutique firms, have specialist forensic accounting departments. Within these groups, there may be further sub-specializations: some forensic accountants may, for example, just specialize in insurance claims, personal injury claims, fraud, construction, or royalty audits. Fund Accounting is an accounting system emphasizing accountability rather than profitability, used by nonprofit organizations and governments. In this system, a fund is a self-balancing set of accounts, segregated for specific purposes in accordance with laws and regulations or special restrictions and limitations.[1] Fund Accounting The label, Fund Accounting, has also been applied to Investment Accounting, Portfolio  Accounting or Securities Accounting - all synonyms describing tthe he process of accounting for a portfolio of investments such as securities, commodities and/or real estate held in an investment fund such as a mutual fund or hedge fund.[2][3] Investment accounting, however, is a different system, unrelated to government and nonprofit fund accounting. Governmental accounting Governmental accounting is an umbrella term which refers to the various accounting systems used by various public sector entities. In the United States, for instance, there are two levels of government which follow different accounting standards set forth by independent, private sector boards. At the federal level, the Federal Accounting Standards  Advisory Board (FASAB) (FASAB) sets forth the accounting ng standards to follow. Similarly, there is the Governmental Accounting Standards Board (GASB) for state and local level government.

Projects differ in that they frequently cross organizational boundaries, may last for anything from a few days or weeks to a number of years, during which time budgets may also be revised many times. They may also be one of a number of projects that make up a larger  overall project or program. Consequently, in a project management environment costs (both direct and overhead) and revenues are also allocated to p rojects, which may be subdivided into a work b reakdown structure, and grouped together into project hierarchies. Project accounting permits reporting at any such level that ha s been defined, and often allows comparison with historical as well as current budgets. Project accounting is commonly use at government contractors, where the ability to account for costs by contract (an d sometimes contract line item, or CLIN) is usually a requirement for interim payments. Percentage-of-completion is frequently independently assessed by a project manager. Funding advances and actual-to-budget cost variances are calculated using the project budget adjusted to percent-of-completion. The capital budget processes of corporations and g overnments are chiefly concerned with major investment projects that typically have upfront costs and longer term benefits. Investment go / no-go decisions are largely ba sed on net present value assessments. Project accounting of the costs and benefits can pro vide crucially important feedback on the quality of these important decisions.  An interesting specialized form of project accounting is production accounting, which tracks the costs of individual movie and television episode film production costs. A movie studio will employ production accounting to track the costs o f its many separate projects. Resource Consumption Accounting (RCA) Resource Consumption Accounting (RCA) is formally defined as a dynamic, fully integrated, principle-based, and comprehensive management accounting approach that provides managers with decision support information for enterprise optimization. RCA is a relatively new, flexible, comprehensive management accounting approach based largely on the German management accounting approach Grenzplankostenrechnung (GPK) and also allows for the use of a ctivity-based drivers.

Management accounting Social accounting Management accounting or managerial accounting is concerned with the provisions and use of of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. In contrast to financial accountancy information, management accounting information is:

 

designed and intended for use by managers within the organization, whereas financial accounting information is designed for use by shareholders and creditors.

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usually confidential and used by management, instead of publicly reported;

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forward-looking, instead of historical;

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computed by reference to the needs of managers, often using management information systems, instead of by reference to financial accounting standards.

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This is because of the different emphasis: management accounting information is used within an organization, typically for decision-making. Project accounting Project accounting (sometimes referred to as job cost accounting) is the practice of creating financial reports specifically designed to track the financial progress of projects, which can then be used by managers to aid project management. Standard accounting is primarily aimed at monitoring financial progress of organizational elements (geographical or functional departments, divisions and the enterprise as a whole) over defined time periods (typically weeks, months, quarters and years).

Social accounting (also known as social and environmental accounting, corporate social reporting, corporate social responsibility reporting, non-financial reporting, or sustainability accounting) is the process of communicating the social and environmental effects of  organizations' economic actions to particular interest groups within society and to society at large.[1] Social accounting is commonly used in the con text of business, or corporate social responsibility (CSR), although any organisation, including NGOs, charities, and government agencies may engage in social accounting. Social accounting emphasises the notion of corporate accountability. D. Crowther defines social accounting in this sense as "an approach to reporting a firm’s activities which stresses the need for the identification of socially relevant behaviour, the determination of  those to whom the company is accountable for its social performance and the development of appropriate measures and reporting techniques."[2] Social accounting is often used as an umbrella term to describe a broad field of re search and practice. The use of more narrow terms to express a specific interest is thus not uncommon. Environmental accounting may e.g. specifically refer to the research or practice of accounting for an organisation's impact on the natural environment. Sustainability accounting is often used to express the measuring and the quantitative analysis of social and economic sustainability.

BUSINESS ENTITY ACCOUNTING PRINCIPLE OR CONCEPT  CONCEPT 

 

business · Owner separate from the business

· Company has a separate existence

· Affairs of the owners separate from the business

NOTES:   NOTES:

 A business (company, enterprise or firm) firm) is a legally recognized organization designed to provide goods or services, or both, to consumers, businesses and governmental entities.[1] Businesses are predominant in capitalist economies. Most businesses are privately owned.  A business is typically formed formed to earn profit tthat hat will increase the wealth of its ts owners and grow the business itself. The owners and operators of a business have a s one of their main objectives the receipt or generation of a financial re turn in exchange for work and acceptance of risk. Notable exceptions include coope rative enterprises and state-owned enterprises. Businesses can also be formed not-for-profit or be state-owned. Commerce

Commerce is a division of trade or production which deals with the exchange of goods and services from producer to final consumer OR commerce is the exchange of goods and By understanding this concept, we then realized that all the financial data will only be related directly to the services from the point of production to the point of consumption to satisfy human wants. It the trading of something of economic value such as goods, services, activities of the business. The business is a separate “animal― by itself. It’s run by a procomprises fessional board information, or money between two or more entities. Commerce functions as the central of directors who is responsible and accountable for the every day’s ru nning of the business. mechanism which drives capitalism and certain other economic systems (but co mpare command economy, for example). Commercialization or commercialisation consists of the process of transforming something into a product, service o r activity which one may then use in commerce. Commerce involves trade and a ids to trade which help in the exchange ILLUSTRATION NO.1  NO.1  of goods and services. Say, a minority shareholder who held shares in listed Company ABC has recently been made

Trade

bankrupt.Question: Do you think that his bankruptcy will affect the financial health or activities ofTrade the is the voluntary exchange o f goods, services, or both. Trade is also called commerce or transaction. A mechanism that allows trade is called a market. The original form of trade was barter, the direct exchange of good s and services. Later one side of the barter were company?Answer: Basing on this business entity concept, the affairs of the shareholder has nothing to do with the metals, precious metals (poles, coins), bill, paper money. Modern traders instead the company. generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper  money and non-physical money) greatly simplified and promoted trade. Trade between two ILLUSTRATION NO.2  NO.2  traders is called bilateral trade, while trade between more than two traders is called multilateral trade. Industry and  Assuming the shareholder Mr. X of Company ABC owns personal assets of five Porsche, Porsche, five bungalows expensive arts.

Industry refers to the production of an e conomic good (either material or a service) within an economy.[1] There are four key industrial economic sectors: the primary sector, largely Question: Do you take up these personal assets belong to Mr. X into the books o f Company ABC?Answer: The raw material extraction industries such as mining and farming; the seco ndary sector, involving refining, construction, and manufacturing; the tertiary sector, which deals with answer is NO, the personal assets o f the shareholder has nothing to do with the company. services (such as law and medicine) and distribution of manufactured goods; and the quaternary sector, a relatively new type o f knowledge industry focusing on technological research, design and development such as computer p rogramming, and biochemistry. A ILLUSTRATION NO. 3  3  fifth, quinary, sector has been proposed encompassing nonprofit activities. The economy is also broadly separated into public sector and private sector, with industry generally categorized as private. Industries are also any business or manufacturing.  Applying to the same company ABC, you read in the financial statement statement that its ultimate mate holding company is Profit Company ZZZ. Therefore don’t be surprised that company ABC as an en tity can also be part of a larger  In accounting, profit is the difference between price and the costs of bringing to market whatever it is that is accounted as an enterprise (whether by harvest, extraction,  Also, Company ZZZ might might have many business unit operating units/entities like ike company ABCmanufacture, or purchase) in terms of the component costs of delivered goods and/or  services and any operating or other expenses. business entity which is company ZZZ.

transaction Definitions (2) 1. An agreement between a buyer and buyer and a seller to seller to exchange anasset f or payment. or payment.  

2. In accounting, any event or condition recorded in the book ofaccounts. o faccounts.  

Gross profit equals sales revenue less Cost of Goods Sold (COGS), thus removing only the part of expenses that can be traced directly to the production of the goods. Gross profit still includes general (overhead) expenses like R&D, S&M, G&A, also interest expense, taxes and extraordinary items. Operating profit equals gross profit less all operating expenses. Th is is the surplus generated by operations. It is also known a s Earnings Before Interest and Taxes EBIT, Operating Profit Before Interest and Taxes OPBIT or simply Profit Before Interest and Taxes PBIT.

 

(Net) Profit Before Tax PBT equals operating profit less interest expense (but before taxes). It is also known as Earnings Before Tax EBT, Net operating income before taxes or simply Pretax Income. Net profit equals Profit After Tax (unless some distinction about the treatment of  extraordinary expenses is made). In the US the term Net Income is commonly used. Income before extraordinary expenses represents the same but before adjusting for  extroardinary items. Net income less dividends becomes retained earnings. There are several additional important profit measures, notably EBITDA and NOPAT. To accountants, economic profit, or EP, is a single-period metric to determine the value created by a company in one period - usually a yea r. It is the net profit after tax less the equity charge, a risk-weighted cost of capital. This is almost identical to the economist's definition of economic profit. There are commentators who see benefit in making adjustments to economic profit such as eliminating the effect of amortized goodwill or capitalizing expenditure on brand advertising to show its value over multiple accounting periods. The underlying concept was first introduced by Schmalenbach, but the commercial application of the concept of adjusted economic profit was by Stern Stewart & Co. which has trade-marked their adjusted economic profit as EVA or Economic Value Added. Some economists define further types of profit:  Abnormal profit (or supernormal supernormal profit) Subnormal profit monopoly profit (super profit) Optimum Profit - This is the "right amount" of profit a business can achieve. In business, this figure takes account of marketing strategy, market position, and other methods of  increasing returns above the competitive rate.  Accounting profits should include include economic profits, which are also called economic rents. For instance, a monopoly can have very high economic profits, and those profits might include a rent on some natural reso urce that firm owns, where that resource cannot be easily duplicated by other firms.