Ahsan Ali Khan.docx

ASSIGNMENT # 04

FIELD OF ACCOUNTING ACTIVITY M

SUBMITTED TO SIR ZAHEER SWATI

SUBMITTED BY AHSAN ALI KHAN SP17-BS(BA)-002/ATD

DATE 28th December 2017 ________ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ___ ________ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______

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O M S A T S

INSTITUTE OF INFORMATION TECHNOLOGY, ABBOTTABAD

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Field of Accounting Activity Accounting is misinterpreted and perceived to only be about recording of business transactions, also known as bookkeeping. Bookkeeping forms only a small part of accounting and is possibly simplest. Accounting includes the design of efficient information systems, budgeting, cost analysis, tax planning, auditing and the analysis and interpretation if information. Accountants play an important role in society and offer a wide range of services to business as well as the government.

Public Accounting Accounting firms engaged in public accounting provide a variety of accounting services to the public for a fee. They vary in size from large national or international accounting firms employing thousands of persons to numerous one person practices which operate on regular or local basis. Chartered Accountants (CAs) They are individuals who are similar to doctors and lawyers are licensed to practice their profession to ensure that public gets professional services of an acceptable standard. To become a CA, it is necessary to pass a rigorous and comprehensive examination conducted by the institute of Chartered Accountants and undergo at least three years of practical training in accounting, auditing, tax and other related areas. On successful completion of the examination and training, the individual can apply for a certificate of practice which is the license to practice as a CA. Accounting firms provide a wide variety of services. The principal services offered include:    

Auditing Tax Services Management Advisory Services Small Business Services

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Auditing It involves the examination of financial statements and generally forms an important part of the work of a practicing CA. All limited companies must have their financial statements audited by an outside CA. The major duties of a company’s auditor are examining and verifying the company’s financial statements; appraising the company’s procedure for collecting, recording and reporting financial information; testing the controls by which the company protects its financial system from frauds and errors; and publishing an independent professional opinion as to whether company’s financial statements give a “true and fair view” of its financial affairs. Auditing enhances the credibility of financial reports prepared by an enterprise. By ensuring that the financial statements are correct and complete, auditing increase their reliability and usefulness for making economic decisions by investors, creditor’s, analysts and other usefulness for making economic decisions by investors, creditor’s, analysts and other. Credible financial reports are essential for society to have trust in public companies. Auditors must be both technically competent in their work and independent of the enterprise whose financial statements they audit. A rigorous system of raining and examination certifies that auditors possess the requisite technical skill but it is not always easy for auditors to be independent of the enterprise that engage and pays them. At a minimum, auditors should scrupulously avoid transactions and client relationship that could compromise their ability to express an independent professional opinion on its financial statements.

Tax Services Business enterprise have to consider the tax consequences of alternative courses of action. Tax services include not only preparation of tax returns and compliance with tax laws but also planning business activities with a view to minimize the taxes. It is often possible to effect considerable savings in tax expense by appropriately arranging one’s business affairs. While evasion of taxes is definitely unlawful, it is perfectly legitimate for everyone to reduce their tax expense. To be successful in tax practice, an accountant should be up to date with changes in tax statutes, rules, notifications and circulars as well as court decision.

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Management Advisory Services An Important part of the revenues of large accounting firms comes from management advisory services, an omnibus term for a wide variety of consulting activities. These services go beyond the traditional boundaries of accounting and auditing. Examples Consulting Assignments include    

Recruiting suitable personnel Reviewing costing systems Helping with the design Helping growing companies go public

Small Business Services Many accounting firms provide a variety of services for small business. Setting up an accounting system, compiling financial statements, preparing budgets and forecasts, assisting the client in obtaining a bank loan are examples of small business services.

Private Accounting An accountant is said to be in private accounting when she is employed by a business enterprise. Private accountant are employed by organizations in such diverse business as steel making, mining, banking, airlines, software, real estate and hotels. Typical designations of these accountants are financial vice president, financial controller, works accountant, and management accountant. The areas in which private accountant specialize are management accounting, internal auditing, and information systems. Management Accounting Accountants in management accounting provide information to management for making business decisions and formulating long term policies. Management accounting information has use in several areas including cost control, product costing, capital investment appraisal, profitability analysis corporate planning, budgeting, pricing policies and cash flow. 4

Internal Auditing In addition to the audit by outside accounting firms most large corporations have their internal audit departments. Internal auditors are concerned with reviewing internal controls, assessing compliance with established policies, ascertaining the extent to which company’s assets are safeguard and recommending improvements to operations. External auditors by contrast are primarily concerned with the fairness of financial statement of a business. Information Systems A rapidly growing field for accountants is the design and development of information systems for processing accounting data. Since large corporations make extensive use of computer for processing transactions, a good working knowledge of computer hardware and software is indispensable for specialization in this field Government Accounting Government department and agencies receive and pay huge sums of money. We are familiar with government organizations such as Pakistan Railways, PIA, OCDCL the police and defense services. Unlike business enterprises the sole objective is not to make a profit from its operations. Still, it’s essential that the sums due to government are collected when due, and payments are properly authorized and result in expected benefits. The government should be cost effective in its operations so that taxes and other levies can be kept low. Sources of government revenue include income tax, excise and custom duties, value added tax, and various types of fees. Example  Payments made by government include salaries and allowances.  Pensions of retired government employees  Costs of goods and services procured for projects

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