Accounting Assignment

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Accounting Assignment on:

Exploring the Web -Careers in Accounting
Submitted to Ms Moushumi Farjana Lecturer: Intermediate Accounting (CC 304) Department: BBA Faculty of Business Studies Dhaka International University

Submitted by: Group no.03 Optimus

LETTER OF TRANSMITAL

May 12, 2012 Ms Moushumi Farjana Lecturer: Intermediate Accounting Department: BBA Faculty of Business Studies Dhaka International University Subject: Submission of assignment on “Exploring the Web – Careers in Accounting” Dear Ma’am Respectfully with great pleasure we would like to submit our assignment for Intermediate Accounting in Dhaka International University as a requirement of the course CC-304. We tried our best to gather relevant information for constructing a complete assignment as outlined. The preparations of this assignment enabled us to a great extent to complete my theoretical knowledge with practical analysis. I would like to express my profound gratitude for your kind and conscious guidance in preparing my assignment in the giving time. Thank you very much for your heartiest co-operation. Yours Sincerely Group no.02 (Optimus) Dept: BBA Dhaka international University

ACKNOWLEDGEMENT It is a great pleasure for me to submit this assignment after completion of the course Intermediate Accounting at Dhaka International University. My first thanks goes to Ms Moushumi Farjana, Lecturer in Intermediate Accounting, Who gave me endless inspiration to apply her teachings in real life and sincere co-operation with effective guidance to make this assignment worthwhile. I have benefited in many ways from the ideas of the website http://www.careers-inaccounting.com/ where the importance of application of accounting career in the practical world and its essence over there is clearly flashed to the world. I would like to thank Chartered Accountant Dr Mohitur Rahman (phD) who provided me with priceless information about accounting careers and evaluating Accounting career as the best selection for us students just for the sake of my assignment. I would like to give special thanks to those people who gave me priceless assistance and suggestions- the members of the Optimus group they all helped me immensely.

Table of Contents Chapter-1 : Introduction 1.1 Origin of the Assignment 1.2 Objective of the Assignment 1.3 Methodology 1.4 Limitations Chapter 2 What are the three broad areas of Accounting (from “Skills and Talents required”)? Chapter 3 List Eight skills required in Accounting Chapter 4 How do the three accounting areas differ in terms of these eight skills required? Chapter 5 Explain one key job function in accounting. Chapter 6 Based on the smart money survey, what is the salary range for a junior staff accountant with Deloitte & Touché? Conclusion Bibliography

CHAPTER-1: INTRODUCTION 1.1 Origin of the Assignment
In Bangladesh and other countries worldwide Accounting or the process of keeping the economical actions of a Business in a track record has immensely carried a significant value in trade and commerce almost as an Aids to Trade. The American Institute of Certified Public Accountants (AICPA) defines accountancy as "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof." In the major case therefore Career in Accounting can reap valuable results and can be classified as one of the most successful careers in life. Some examples of how accounting is used in other careers include: General management: If a renowned organization such as Grameen phone, Square Pharmaceuticals, Beximco Pharma or Benson & Hedges has to be run efficiently all general managers needs to understand where the enterprise’s cash comes from and where it goes in order to make wise decisions. Marketing: A marketing specialist at a company like P&G and Kohinoor Chemical Co. (BD) Limited must develop strategies to help the sales force to be successful. But making sale is meaningless unless it is a profitable sales. Marketing people must be sensitive to costs and benefits, which accounting helps to quantify and understand. Finance: If anyone wants to be a banker in BRAC bank or Sonali bank or Standard Chartered or an investment analyst in Dutch Bangla Bank the fields however heavily rely on accounting.In matter of fact it is very difficult to get a finance sector job without two or three accounting courses. As students of Business Administration it is therefore necessary to learn those powerful Accounting techniques so that they can prepare themselves to start a successful career.

1.2 Objective of the assignment
It is a requirement of the course “Intermediate Accounting” (CC-304) under Dhaka International University to prepare an assignment to prove efficient allocation of the knowledge gained through-out the course for the students. The title of my assignment is “Exploring the Web – careers in accounting”. In the assignment a set of five elemental questions are explored thoroughly by provision of the information from the careers of accounting website, which evaluates the true value of accounting as a career. The other objectives of the assignment is to gain real life exposure of the Accounting Principles as they are deployed in practicality.

1.3

Methodology : the data collecting methods

The nature of this report is analytical and descriptive so observation method has been utilized by observing the official documents of different companies and at different informative websites and by observing the discussion forums related with the topic.Furthermore certain experts in the sector of accounting was also interviewed to provide with advanced subsidiary notes in the assembly of the assignment

1.4 Limitations As a novice it was very difficult understand certain Advanced Accounting Terms, Acts and other things out of our curriculum and was difficult to explain which was a quite time consuming process. Different Advanced Accounting Concepts had to be went through before explaining the main thing of the topic.

Chapter 2 What are the three broad areas of Accounting (from “Skills and Talents required”)?
The three broad areas of accounting on which the accounting career from Bachelors Degree major to Doctorate are

1. Audit Accounting: The general definition of an audit is an evaluation of a person,
organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, but similar concepts also exist in project management, quality management, water management, and energy conservation. Audits are performed to ascertain the validity and reliability of information; also to provide an assessment of a system's internal control. The goal of an audit is to express an opinion of the person / organization / system (etc.) in question, under evaluation based on work done on a test basis. Due to constraints, an audit seeks to provide only reasonable assurance that the statements are free from material error. Hence, statistical sampling is often adopted in audits. In the case of financial audits, a set of financial statements are said to be true and fair when they are free of material misstatements - a concept influenced by both quantitative (numerical) and qualitative factors. But recently, the argument that auditing should go beyond just True and fair is gaining momentum. And PCAOB has come out with a concept release on the same. Auditing is a vital part of accounting. Traditionally, audits were mainly associated with gaining information about financial systems and the financial records of a company or a business. However, recent auditing has begun to include non-financial subject areas, such as safety, security, information systems performance, and environmental concerns. With nonprofit organizations and government agencies, there has been an increasing need for performance audits, examining their success in satisfying mission objectives. As a result, there are now audit professionals who specialize in security audits, information systems audits

In cost accounting, it is a process for verifying the cost of manufacturing or producing of any article, on the basis of accounts measuring the use of material, labour or other items of cost. In simple words the term, cost audit, means a systematic and accurate verification of the cost accounts and records, and checking for adherence to the cost accounting objectives. According to the Institute of Cost and Management Accountants of Pakistan, a cost audit is "an examination of cost accounting records and verification of facts to ascertain that the cost of the product has been arrived at, in accordance with principles of cost accounting." An audit must adhere to generally accepted standards established by governing bodies. These standards assure third parties or external users that they can rely upon the auditor's opinion on the fairness of financial statements, or other subjects on which the auditor expresses an opinion. The Definition for Audit and Assurance Standard AAS-1 by the Institute of Chartered Accountants of India(ICAI) - "Auditing is the independent examination of financial information of any entity, whether profit oriented or not, and irrespective of its size or legal form, when such an examination is conducted with a view to expressing an opinion thereon."

Integrated audits
In the US, audits of publicly traded companies are governed by rules laid down by the Public Company Accounting Oversight Board (PCAOB), which was established by Section 404 of the Sarbanes-Oxley Act of 2002. Such an audit is called an integrated audit, where auditors, in addition to an opinion on the financial statements, must also express an opinion on the effectiveness of a company's internal control over financial reporting, in accordance with PCAOB Auditing Standard No. 5. There are also new types of integrated auditing becoming available that use unified compliance material. Due to the increasing number of regulations and need for operational transparency, organizations are adopting risk-based audits that can cover multiple regulations and standards from a single audit event. This is a very new but necessary approach in some sectors to ensure that all the necessary governance requirements can be met without duplicating effort from both audit and audit hosting resources.

Assessments
The purpose of an assessment is to measure something or calculate a value for it. Although the process producing an assessment may involve an audit by an independent professional, its purpose is to provide a measurement rather than to express an opinion about the fairness of statements or quality of performance. As a general rule, audits should always be an independent evaluation that will include some degree of quantitative and qualitative analysis whereas an assessment implies a less independent and more consultative approach. Auditors: Auditors of financial statements can be classified into two categories:


External auditor / Statutory auditor is an independent firm engaged by the client subject to the audit, to express an opinion on whether the company's financial statements are free of material misstatements, whether due to fraud or error. For publicly-traded companies, external auditors may also be required to express an opinion over the effectiveness of internal controls over financial reporting. External auditors may also be engaged to perform other agreed-upon procedures, related or unrelated to financial statements. Most importantly, external auditors, though engaged and paid by the company being audited, are regarded as independent auditors.

The most used external audit standards are the US GAAS of the American Institute of Certified Public Accountants; and the ISA International Standards on Auditing developed by the International Auditing and Assurance Standards Board of the International Federation of Accountants



Internal auditors are employed by the organization they audit. They perform various audit procedures, primarily related to procedures over the effectiveness of the company's internal controls over financial reporting. Due to the requirement of Section 404 of the Sarbanes Oxley Act of 2002 for management to also assess the effectiveness of their internal controls over financial reporting (as also required of the external auditor), internal auditors are utilized to make this assessment. Though internal auditors are not considered independent of the company they perform audit procedures for, internal auditors of publicly-traded companies are required to report directly to the board of directors, or a sub-committee of the board of directors, and not to management, so to reduce the risk that internal auditors will be pressured to produce favorable assessments.

The most used Internal Audit standards are those of the Institute of Internal Auditors


Consultant auditors are external personnel contracted by the firm to perform an audit following the firm's auditing standards. This differs from the external auditor, who follows their own auditing standards. The level of independence is therefore somewhere between the internal auditor and the external auditor. The consultant auditor may work independently, or as part of the audit team that includes internal auditors. Consultant auditors are used when the firm lacks sufficient expertise to audit certain areas, or simply for staff augmentation when staff are not available. Quality auditors may be consultants or employed by the organization.



Quality audits: Quality audits are performed to verify conformance to standards through review of objective evidence. A system of quality audits may verify the effectiveness of a quality management system. This is part of certifications such as ISO 9001. Quality audits are essential to verify the existence of objective evidence showing conformance to required processes, to assess how successfully processes have been implemented, for judging the effectiveness of achieving any defined target levels, providing evidence concerning reduction and elimination of problem areas and are a hands-on management tool for achieving continual improvement in an organization. To benefit the organization, quality auditing should not only report non-conformance and corrective actions but also highlight areas of good practice and provide evidence of conformance. In this way, other departments may share information and amend their working practices as a result, also enhancing continual improvement. Project management Projects can undergo 2 types of audits:
• •

Regular Health Check Audits: The aim of a regular health check audit is to understand the current state of a project in order to increase project success. Regulatory Audits: The aim of a regulatory audit is to verify that a project is compliant with regulations and standards. Best practices of NEMEA Compliance Center describe

that, the regulatory audit must be accurate, objective, and independent while providing oversight and assurance to the organization. Energy audits: An energy audit is an inspection, survey and analysis of energy flows for energy conservation in a building, process or system to reduce the amount of energy input into the system without negatively affecting the output(s). Operations audit: Operations audit is examination of the operations of the client’s business. In this audit the auditor thoroughly examines the efficiency, effectiveness and economy of the operations with which the management of the entity (client) is achieving its objective. The operational audit goes beyond the internal controls issues since management does not achieve its objectives merely by compliance of satisfactory system of internal controls. Operational Audit covers any matters which may be commercially unsound. The Objective of operational audit is to examine Three E’s, namely Effectiveness – doing the right things with least wastage of resources. Efficiency – performing work in least possible time. Economy – balance between benefits and costs to run the operations. A control self-assessment is a commonly used tool for completing an operations audit

2.Tax & Financial Accounting:
U.S. tax accounting refers to accounting for tax purposes in the United States. Unlike most countries, the United States has a comprehensive set of accounting principles for tax purposes, prescribed by tax law, which are separate and distinct from Generally Accepted Accounting Principles. The Internal Revenue Code governs the application of tax accounting. Section 446 sets the basic rules for tax accounting. Tax accounting under section 446(a) emphasizes consistency for a tax accounting method with references to the applied financial accounting to determine the proper method. So the taxpayer must choose a tax accounting method using their financial accounting method as a reference point. Proper accounting methods are found in section 446(c)(1) to (4) which permits cash, accrual, and other methods approved by the IRS including combinations. After choosing a tax accounting method, under section 446(b) the Secretary of the Treasury has wide discretion to re-compute the taxable income of the taxpayer by changing the accounting method to be used by the taxpayer in order to clearly reflect the taxpayer's income. If the taxpayer engages in more than one business then it may use a different method for each business according to section 446(d). If the taxpayer wants to change their tax accounting method, section 446(e) requires the taxpayer to acquire the consent of the Secretary of the Treasury. There are two kinds of changes, one where you must receive a letter of approval from the Secretary of the Treasury. Another type of change comes from a series of more routine changes each of which is an automatic change. To get the automatic change the taxpayer must fill out a form and return it to the Secretary of the Treasury.

The taxpayer can adopt another method if the taxpayer files a tax return using that method for two consecutive years. This is different from changing a tax accounting method under the release of the Secretary of the Treasury because in the case of adopting another method the IRS may assess fines and reallocate taxable income. If the taxpayer wants to return to the previous method the taxpayer must ask for permission from the Secretary following the 446(e) procedure. If the taxpayer fails to request a change of method of accounting then according to section 446(f) the taxpayer does so at their own peril by exposure to penalties. n many other countries, the profit for tax purposes is the accounting profit defined by GAAP (coined the term "book profit" by the 18th century scholar Sean Freidel), with such additional adjustments to book profit as are prescribed by tax law. In other words, GAAP determines the taxable profits except where a tax rule determines otherwise. Such adjustments typically include depreciation and expenses which for policy reasons are not deductible for tax purposes, such as entertaining costs and fines. But the U.S. is not the only jurisdiction in which there is a wide divergence between tax and financial accounting. Hugh Ault and Brian Arnold, in their book "Comparative Income Taxation," have observed that in The Netherlands, where financial accounting is known as "commercial accounting," there is a substantial divergence between those and the tax books. "Differences between tax and commercial accounting rules arise where the tax instrument is employed to pursue economic, social and cultural purposes," write Ault and Arnold. Financial accountancy (or financial accounting) is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies, owners, and other stakeholders. Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power. The fundamental need for financial accounting is to reduce principal–agent problem by measuring and monitoring agents' performance and reporting the results to interested users. Financial accountancy is used to prepare accounting information for people outside the organization or not involved in the day-to-day running of the company. Management accounting provides accounting information to help managers make decisions to manage the business. In short, financial accounting is the process of summarizing financial data taken from an organization's accounting records and publishing in the form of annual (or more frequent) reports for the benefit of people outside the organization. Financial accountancy is governed by both local and international accounting standards. Financial accountants produce financial statements based on generally accepted accounting principles of a respective country. In particular cases financial statements must be prepared according to the International Financial Reporting Standards. Financial accounting serves the following purposes:

• • •

producing general purpose financial statements producing information used by the management of a business entity for decision making, planning and performance evaluation producing financial statements for meeting regulatory requirements

The accounting equation (Assets = Liabilities + Owners' Equity) and financial statements are the main topics of financial accounting. The trial balance which is usually prepared using the double-entry accounting system forms the basis for preparing the financial statements. All the figures in the trial balance are rearranged to prepare an profit & loss statement and balance sheet. Accounting standards determine the format for these accounts (SSAP, FRS, IFRS). Financial statements display the income and expenditure for the company and a summary of the assets, liabilities, and shareholders or owners’ equity of the company on the date to which the accounts were prepared. Expenses and withdrawals have normal debit balances, i.e., debiting these types of accounts increases them. Liabilities, revenues, and capital have normal credit balances, i.e., crediting these increases them

3. Management Accounting
Management accounting or managerial accounting is concerned with the provisions and use 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:
• • • • •

primarily forward-looking, instead of historical; model based with a degree of abstraction to support decision making generically, instead of case based; designed and intended for use by managers within the organization, instead of being intended for use by shareholders, creditors, and public regulators; usually confidential and used by management, instead of publicly reported; computed by reference to the needs of managers, often using management information systems, instead of by reference to general financial accounting standards.

According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-

management groups such as shareholders, creditors, regulatory agencies and tax authorities"(CIMA Official Terminology). The Institute of Management Accountants (IMA) recently updated its definition as follows: "management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems,and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy". The American Institute of Certified Public Accountants(AICPA) states that management accounting as practice extends to the following three areas:
• • •

Strategic Management—Advancing the role of the management accountant as a strategic partner in the organization. Performance Management—Developing the practice of business decision-making and managing the performance of the organization. Risk Management—Contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization.

The Institute of Certified Management Accountants(ICMA), states "A management accountant applies his or her professional knowledge and skill in the preparation and presentation of financial and other decision oriented information in such a way as to assist management in the formulation of policies and in the planning and control of the operation of the undertaking". Management Accountants therefore are seen as the "value-creators" amongst the accountants. They are much more interested in forward looking and taking decisions that will affect the future of the organization, than in the historical recording and compliance (score keeping) aspects of the profession. Management accounting knowledge and experience can therefore be obtained from varied fields and functions within an organization, such as information management, treasury, efficiency auditing, marketing, valuation, pricing, logistics, etc. The International Federation of Accountants (IFAC) depicts the roles and domain of professional accountants in business (management accountants) in its publication Competent and Versatile: How Professional Accountants in Business Drive Sustainable Organizational Success

Traditional vs. innovative practices

Within the area of Management Accounting there are almost an infinite number of tools, methods, techniques and approaches floating around. The distinction between ‘traditional’ and ‘innovative’ accounting practices is perhaps best illustrated with the visual timeline of managerial costing approaches presented at the Institute of Management Accountants 2011 Annual Conference. Traditional Standard Costing (TSC), used in Cost Accounting dates back to the 1920’s and is a central method in management accounting practiced today because it is used for financial statement reporting for the valuation of Income Statement and Balance Sheet line items such as Cost of Goods Sold (COGS) and Inventory valuation. Traditional Standard Costing must comply with generally accepted accounting principles (GAAP US) and actually aligns itself more with answering Financial Accounting requirements rather than providing solutions for management accountants. Traditional approaches limit themselves by defining cost behavior only in terms of production or sales volume. In the late 1980s, accounting practitioners and educators were heavily criticized on the grounds that management accounting practices (and, even more so, the curriculum taught to accounting students) had changed little over the preceding 60 years, despite radical changes in the business environment. In 1993, the Accounting Education Change Commission Statement Number 4 calls for faculty members to come down from their ivory towers and expand their knowledge about the actual practice of accounting in the workplace. Professional accounting institutes, perhaps fearing that management accountants would increasingly be seen as superfluous in business organizations, subsequently devoted considerable resources to the development of a more innovative skills set for management accountants.

Variance analysis, which is a systematic approach to the comparison of the actual and budgeted costs of the raw materials and labor used during a production period. While some form of variance analysis is still used by most manufacturing firms, it nowadays tends to be used in conjunction with innovative techniques such as life cycle cost analysis and activity-based costing, which are designed with specific aspects of the modern business environment in mind. Life-cycle costing recognizes that managers’ ability to influence the cost of manufacturing a product is at its greatest when the product is still at the design stage of its product life-cycle (i.e., before the design has been finalized and production commenced), since small changes to the product design may lead to significant savings in the cost of manufacturing the products. Activity-based costing (ABC) recognizes that, in modern factories, most manufacturing costs are determined by the amount of ‘activities’ (e.g., the number of production runs per month, and the amount of production equipment idle time) and that the key to effective cost control is therefore optimizing the efficiency of these activities. Both lifecycle costing and activity-based costing recognize that, in the typical modern factory, the avoidance of disruptive events (such as machine breakdowns and quality control failures) is of far greater importance than (for example) reducing the costs of raw materials. Activity-based costing also deemphasizes direct labor as a cost driver and concentrates instead on activities that drive costs, As the provision of a service or the production of a product component. Other approaches that can be viewed as innovative to the U.S. is the German approach, Grenzplankostenrechnung (GPK). Although it has been in practiced in Europe for more than 50 years, neither GPK nor the proper treatment of 'unused capacity’ is widely practiced here in the U.S. Thus GPK and the concept of unused capacity is slowing become more recognized in America, and "could easily be considered 'advanced' by U.S. standards". One of the more innovative accounting practices available today is Resource consumption accounting (RCA). RCA has been recognized by the International Federation of Accountants (IFAC) as a “sophisticated approach at the upper levels of the continuum of costing techniques” because it provides the ability to derive costs directly from operational resource data or to isolate and measure unused capacity costs. RCA was derived by taking the best costing characteristics of the German management accounting approach Grenzplankostenrechnung (GPK), and combining the use of activity-based drivers when needed, such as those used in Activity-based costing. With the RCA approach, resources and their costs are considered as “foundational to robust cost modeling and managerial decision support, because an organization’s costs and revenues are all a function of the resources and the individual capacities that produce them”. Role within a corporation Consistent with other roles in today's corporation, management accountants have a dual reporting relationship. As a strategic partner and provider of decision based financial and operational information, management accountants are responsible for managing the business team and at the same time having to report relationships and responsibilities to the corporation's finance organization.

The activities management accountants provide inclusive of forecasting and planning, performing variance analysis, reviewing and monitoring costs inherent in the business are ones that have dual accountability to both finance and the business team. Examples of tasks where accountability may be more meaningful to the business management team vs. the corporate finance department are the development of new product costing, operations research, business driver metrics, sales management score carding, and client profitability analysis. Conversely, the preparation of certain financial reports, reconciliations of the financial data to source systems, risk and regulatory reporting will be more useful to the corporate finance team as they are charged with aggregating certain financial information from all segments of the corporation. In corporations that derive much of their profits from the information economy, such as banks, publishing houses, telecommunications companies and defence contractors, IT costs are a significant source of uncontrollable spending, which in size is often the greatest corporate cost after total compensation costs and property related costs. A function of management accounting in such organizations is to work closely with the IT department to provide IT Cost Transparency. Given the above, one widely held view of the progression of the accounting and finance career path is that financial accounting is a stepping stone to management accounting. Consistent with the notion of value creation, management accountants help drive the success of the business while strict financial accounting is more of a compliance and historical endeavor. An alternative view A very rarely expressed alternative view of management accounting is that it is neither a neutral or benign influence in organizations, rather a mechanism for management control through surveillance. This view locates management accounting specifically in the context of management control theory. Stated differently, Management Accounting information is the mechanism which can be used by managers as a vehicle for the overview of the whole internal structure of the organization to facilitate their control functions within an organization. Specific concepts Cost accounting Cost accounting is a central element of managerial accounting. Grenzplankostenrechnung (GPK) Grenzplankostenrechnung is a German costing methodology, developed in the late 1940s and 1950s, designed to provide a consistent and accurate application of how managerial costs are calculated and assigned to a product or service. The term Grenzplankostenrechnung, often referred to as GPK, has best been translated as either Marginal Planned Cost Accounting or Flexible Analytic Cost Planning and Accounting. The origins of GPK are credited to Hans Georg Plaut, an automotive engineer and Wolfgang Kilger, an academic, working towards the mutual goal of identifying and delivering a sustained

methodology designed to correct and enhance cost accounting information. GPK is published in cost accounting textbooks, notably Flexible Plankostenrechnung und Deckungsbeitragsrechnung and taught at German-speaking universities today. Lean accounting (accounting for lean enterprise) In the mid- to late-1990s several books were written about accounting in the lean enterprise (companies implementing elements of the Toyota Production System). The term lean accounting was coined during that period. These books contest that traditional accounting methods are better suited for mass production and do not support or measure good business practices in just-in-time manufacturing and services. The movement reached a tipping point during the 2005 Lean Accounting Summit in Dearborn, MI. 320 individuals attended and discussed the merits of a new approach to accounting in the lean enterprise. 520 individuals attended the 2nd annual conference in 2006. 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 emerged as a management accounting approach around 2000 and was subsequently developed at CAM-I the Consortium for Advanced Manufacturing–International, in a Cost Management Section RCA interest group in December 2001. Throughput accounting The most significant recent direction in managerial accounting is throughput accounting; which recognizes the interdependencies of modern production processes. For any given product, customer or supplier, it is a tool to measure the contribution per unit of constrained resource. Transfer pricing Management accounting is an applied discipline used in various industries. The specific functions and principles followed can vary based on the industry. Management accounting principles in banking are specialized but do have some common fundamental concepts used whether the industry is manufacturing based or service oriented. For example, transfer pricing is a concept used in manufacturing but is also applied in banking. It is a fundamental principle used in assigning value and revenue attribution to the various business units. Essentially, transfer pricing in banking is the method of assigning the interest rate risk of the bank to the various funding sources and uses of the enterprise. Thus, the bank's corporate treasury department will assign funding charges to the business units for their use of the bank's resources when they make loans to clients. The treasury department will also assign funding credit to business units who bring in deposits (resources) to the bank. Although the funds transfer pricing process is primarily applicable to the loans and deposits of the various banking units, this proactive is applied to all assets and liabilities of the business segment. Once transfer pricing is applied and any other management accounting entries or adjustments are posted to the ledger (which are usually memo

accounts and are not included in the legal entity results), the business units are able to produce segment financial results which are used by both internal and external users to evaluate performance. Resources and continuous learning There are a variety of ways to keep current and continue to build one's knowledge base in the field of management accounting. Certified Management Accountants (CMAs) are required to achieve continuing education hours every year, similar to a Certified Public Accountant. A company may also have research and training materials available for use in a corporate owned library. This is more common in "Fortune 500" companies who have the resources to fund this type of training medium. There are also numerous journals, on-line articles and blogs available. The journal Cost Management (ISSN 1092-8057)[9] and the Institute of Management Accounting (IMA) site are sources which includes Management Accounting Quarterly and Strategic Finance publications. Indeed, management accounting is needed in an organization. Management accounting tasks/ services provided Listed below are the primary tasks/ services performed by management accountants. The degree of complexity relative to these activities are dependent on the experience level and abilities of any one individual.
• • • • • • • • • • • • • • • • • • • • •

Rate and volume analysis Business metrics development Price modeling Product profitability Geographic vs. Industry or client segment reporting Sales management scorecards Cost analysis Cost–benefit analysis Cost-volume-profit analysis Life cycle cost analysis Client profitability analysis IT cost transparency Capital budgeting Buy vs. lease analysis Strategic planning Strategic management advice Internal financial presentation and communication Sales forecasting Financial forecasting Annual budgeting Cost allocation

Related qualifications There are several related professional qualifications and certifications in the field of accountancy including:




Management Accountancy Qualifications o CIMA o ICMA o CMA Other Professional Accountancy Qualifications o Chartered Institute of Public Finance and Accountancy, CIPFA o Chartered Certified Accountant, (ACCA) o Chartered Accountant, (CA) o Certified Public Accountant, (CPA)  American Institute of Certified Public Accountants o Certified Practicing Accountant (CPA Australia) o Chartered Global Management Accountant

Methods
• • • • • • •

Activity-based costing Grenzplankostenrechnung (GPK) Lean accounting Resource Consumption Accounting Standard costing Throughput accounting Transfer pricing

Chapter 3 List Eight skills required in Accounting

The Eight Skills required in Accounting are: 1. People skills 2. Sales skills 3. Communication skills 4. Analytical skills 5. Ability to synthesize 6. Creative ability 7. Initiative 8. Computer skills

Chapter 4 How do the three accounting areas differ in terms of these eight skills required?
The three accounting areas differ in terms of these eight skills in the following ways:

In Audit accounting people skill required is Medium where team management is not a very big issue to handle, Sales is medium for only advertising of an auditor is required only, Communication skills are also medium because lots of verbal communication is not significant, Analytical skills are also required high for it is verification work and Ability to synthesize is medium creative ability low, Medium Initiative and High Computer skills. In tax and financial accounting, people skills ,sales skills and communication skills are required at medium, analytical skills are required at a high level, ability to synthesize is low and creative ability and initiative is required medium level but needs High computer skills. In Management accounting people skills is medium, sales skills is low, communication skills is highly required , Ability to synthesize is also highly required, Creative ability and initiative is medium required but it needs very high computer skills.

Chapter 5 Explain one key job function in accounting.
Key job function can be defined as the main duty of an employee toward his/her job the key job functions of an accountant are as follows: 1. Prepare profit and loss statements and monthly closing and cost accounting reports. 2. Compile and analyze financial information to prepare entries to accounts, such as general ledger accounts, and document business transactions. 3. Establish, maintain, and coordinate the implementation of accounting and accounting control procedures. 4. Analyze and review budgets and expenditures for local, state, federal, and private funding, contracts, and grants. 5. Monitor and review accounting and related system reports for accuracy and completeness. 6. Prepare and review budget, revenue, expense, payroll entries, invoices, and other accounting documents. 7. Analyze revenue and expenditure trends and recommend appropriate budget levels, and ensure expenditure control. 8. Explain billing invoices and accounting policies to staff, vendors and clients. 9. Resolve accounting discrepancies. 10. Recommend, develop and maintain financial data bases, computer software systems and manual filing systems. 11. Supervise the input and handling of financial data and reports for the company's automated financial systems. 12. Interact with internal and external auditors in completing audits. 13. Other duties as assigned

Chapter 6 Based on the smart money survey, what is the salary range for a junior staff accountant with Deloitte & Touché?
According to the Smart money Survey,The median entry level salary in public accounting in 2010 was $59,000. After four years you can expect to make something approximating $70,000 to $85,000. Accounting salaries are usually similar in the private sector and slightly lower in government. They tend to higher in major cities. There is huge upside in the Big 4 accounting firms at the top. While not widely publicized, annual payouts to top partners at PWC, E&Y, Deloitte and KPMG often run north of $1,000,000.
Recent salary ranges in accounting are:

Entry Level Junior Staff Accountant Senior Staff Accountant Manager Senior Manager Partner

Big 4 Firm Overall Typical Experience $55,000 $50,000 - 70,000 First year $46,000 - 63,000 $40,000 - 80,000 1-2 years $65,000-95,000 $70,000 3-5 years $65-140,000 $85,000 5-7 years $72-160,000 $115,000 7 years plus $200,000 - 3,000,000 $150,000 10 years plus

Conclusion
In conclusion, lets review the History of accounting, Accounting is thousands of years old; the earliest accounting records, which date back more than 7,000 years, were found in Mesopotamia (Assyrians). The people of that time relied on primitive accounting methods to record the growth of crops and herds. Accounting evolved, improving over the years and advancing as business advanced. Early accounts served mainly to assist the memory of the businessperson and the audience for the account was the proprietor or record keeper alone. Cruder forms of accounting were inadequate for the problems created by a business entity involving multiple investors, so double-entry bookkeeping first emerged in northern Italy in the 14th century, where trading ventures began to require more capital than a single individual was able to invest. The development of joint stock companies created wider audiences for accounts, as investors without firsthand knowledge of their operations relied on accounts to provide the requisite information. This development resulted in a split of accounting systems for internal (i.e. management accounting) and external (i.e. financial accounting) purposes, and subsequently also in accounting and disclosure regulations and a growing need for independent attestation of external accounts by auditors. Today, accounting is called "the language of business" because it is the vehicle for reporting financial information about a business entity to many different groups of people. Accounting that concentrates on reporting to people inside the business entity is called management accounting and is used to provide information to employees, managers, owner-managers and auditors. Management accounting is concerned primarily with providing a basis for making management or operating decisions. Accounting that provides information to people outside the business entity is called financial accounting and provides information to present and potential shareholders, creditors such as banks or vendors, financial analysts, economists, and government agencies. Because these users have different needs, the presentation of financial accounts is very structured and subject to many more rules than management accounting. The body of rules that governs financial accounting in a given jurisdiction is called Generally Accepted Accounting Principles, or GAAP. Other rules include International Financial Reporting Standards, or IFRS, or US GAAP. Therefore it can be classified as choosing Accountancy as a career is almost as passing on a tradition.

BIBLIOGRAPHY
http://www.careers-in-accounting.com/ http://www.wiley.com/colledge/weyagandt Accounting Principles 9th Edition – Weygandt kimmel kieso

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