Luca Pacioli is known as the 'Father of Accounting'. However, he did not invent the accounting system, but he codified it in the way accounts are done today. According to the American Institute of Certified Accountants (AICPA), accounting has been defined 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."
Accounting Career Types
Any educated individual with an analytical understanding of finances can aspire to be an accountant. Interpersonal skills, ability to communicate and market awareness play a key role in understanding the complex and changing financial environment. Following are the different types of accounting careers.
Financial accounting is based on rules issued by the Securities and Exchange Commission (SEC), the Financial Accounting Standards Board (FASB) and the International Accounting Standards Committee (IASC). The work of the financial accountant is to make analytical observations that would influence the investment and credit decisions of a company or firm.
This type of accounting is the most varied type and includes bookkeeping, account management and financial analysis for individuals, private businesses, public firms, government or NGOs, which are either based nationally are internationally. A public accounting business can have one or more accountants and both certified and non-certified accountants can provide public accounting services to their clients. A public accountant can also be involved in external auditing and/or forensic accounting. In external auditing, auditors go through the financial records of their clients to make sure that they are in order and there are no discrepancies. Forensic accounting involves analyzing historical financial data to check for any illegal and questionable money transactions such as money laundering, embezzlement, securities frauds and any other illegal financial transaction and draw it to the attention of the law enforcement authorities.
This form of public accounting is specific to government agencies and ensures all revenues and expenditure are in accordance to law. The conventional accounting methods of double entry system in ledgers and journals are used here. Government accounting is differentiated from other types of accounting in respect of providing service that is not profit based but service based. Government accountants are employed by the federal government, either as a part of the IRS or any other budget or asset management division.
National Income Accounting
This type of accounting is predominantly for the government and is responsible for providing the general public the data with reference to the gross national product about all market-related information, such as the value of the country's goods and services provided and its purchasing power. National income accounting gives an idea about the state of economy of a country and how and where money is being generated and spent.
Accountants who specialize in this type of accounting are also known as private, industrial or corporate accountants. Management accountants provide their services to business houses for recording and studying the company's financial data. Their portfolio in the private firms includes cost and asset management, budgeting and performance evaluation. This is more on the basis of employer-employee relation. They also perform internal audit to review the company's financial management practices and keep an in eye for any mismanagement and fraud. The accountants who perform these audits have specializations in, compliance auditing, information technology auditing or environmental auditing.
Any accounting which is performed for a trust is called fiduciary accounting. Fiduciary accounting is done by the administrator, executor or the trustee, who also controls all property subjected to the trust. The task of a fiduciary accountant is to maintain detailed financial record and to manage the assets of the trust. He/she also needs to keep an account of all incomes and interest that the trust or estate has made or received. Moreover, any expenses that are incurred while maintaining and administering the trust is also reviewed and recorded by the fiduciary accountant.
An accountant who helps either an individual or a firm in filing an income tax return or planning taxes is known as a tax consultant or tax accountant. The tax accountant must be aware of the rules and regulations pertaining to tax policies. A tax accountant helps individuals and firms in tax planning and advice them on how to utilize their resources to gain maximum tax benefit.
An accountant analyzes and interprets data and is responsible for recording all financial transactions of the company or an individual. In any organization, they are part of the core team that studies the risks for future growth and development. As the financial sector grows, career opportunities in accounting will also be on the rise. As such accounting would possibly be an excellent choice for a rewarding career.