The Profession Of Accounting

The Profession Of Accounting

Accountancy can very well be viewed as a profession with 
stature comparable to that of law or medicine or engineering. The rapid

development of accounting theory and techniques especially after the

late thirties of 20th century has been accompanied by an expansion of

the career opportunities in accounting and an increasing number of

professionally trained accountants. Among the factors contributing to this

growth has been the increase in number, size and complexity of business

enterprises, the imposition of new and increasingly complex taxes and

other governmental restrictions on business operations.

Coming to the nature of accounting function, it is no doubt a

service function. The chief of accounting department holds a staff position

which is quite in contra - distinction to the roles played by production or

marketing executives who hold line authority. The role of the accountant

is advisory in character. Although accounting is a staff function performed

by professionals within an organization, the ultimate responsibility

for the generation of accounting information, whether financial or

managerial, rests with management. That is why one of the top officers of

many businesses is the financial controller. The controller is the person

responsible for satisfying other managers’ demands for management

accounting information and for complying with the regulatory demands

of financial reporting. With these ends in view, the controller employs

accounting professionals in both management and financial accounting.

These accounting professionals employed in a particular business firm

are said to be engaged in private accounting. Besides these, there are also

accountants who render accounting services on a fee basis through staff

accountants employed by them. These accountants are said to be engaged

in public accounting.

 Specialised Accounting Fields

As in many other areas of human activity, a number of specialized

fields in accounting also have evolved besides financial accounting.

Management accounting and cost accounting are the result of rapid

technological advances and accelerated economic growth. The most

important among them are explained below:

Tax Accounting:

Tax accounting covers the preparation of tax returns and the

consideration of the tax implications of proposed business transactions 

or alternative courses of action. Accountants specializing in this branch of

accounting are familiar with the tax laws affecting their employer or clients

and are up to date on administrative regulations and court decisions on tax cases.

International Accounting:

This accounting is concerned with the special problems associated

with the international trade of multinational business organizations.

Accountants specializing in this area must be familiar with the influences

that custom, law and taxation of various countries bring to bear on

international operations and accounting principles.

Social Responsibility Accounting:

This branch is the newest field of accounting and is the most

difficult to describe concisely. It owes its birth to increasing social

awareness which has been particularly noticeable over the last three

decades or so. Social responsibility accounting is so called because it not

only measures the economic effects of business decisions but also their

social effects, which have previously been considered to be immeasurable.

Social responsibilities of business can no longer remain as a passive chapter

in the text books of commerce but are increasingly coming under greater

scrutiny. Social workers and people’s welfare organizations are drawing the

attention of all concerned towards the social effects of business decisions.

The management is being held responsible not only for the efficient

conduct of business as reflected by increased profitability but also for what

it contributes to social well-being and progress.

Inflation Accounting:

Inflation has now become a world-wide phenomenon. The

consequences of inflation are dire in case of developing and underdeveloped

countries. At this juncture when financial statements or reports are based

on historical costs, they would fail to reflect the effect of changes in 

purchasing power or the financial position and profitability of the firm.

Thus, the utility of the accounting records, not taking care of price level

changes is seriously lost. This imposes a demand on the accountants for

adjusting financial accounting for inflation to know the real financial

position and profitability of a concern. Thus emerged a future branch

of accounting called inflation accounting or accounting for price level

changes. It is a system of accounting which regularly records all items in

financial statements at their current values.

Human Resources Accounting: 

Human resources accounting is yet another new field of accounting

which seeks to report and emphasize the importance of human resources

in a company’s earning process and total assets. It is based on the general

agreement that the only real long lasting asset which an organization

possesses is the quality and caliber of the people working in it. This system

of accounting is concerned with,

“the process of identifying and measuring

data about human resources and communicating this information to

interested parties”

 

 Nature And Meaning Of Accounting Principles

 

What is an accounting principle or concept or convention or

standard? Do they mean the same thing? Or does each one has its own

meaning? These are all questions for which there is no definite answer

because there is ample confusion and controversy as to the meaning

and nature of accounting principles. We do not want to enter into this

controversial discussion because the reader may fall a prey to the

controversies and confusions and lose the spirit of the subject.

The rules and conventions of accounting are commonly referred

to as principles. The american institute of certified public accountants has

defined the accounting principle as,

“a general law or rule adopted or

professed as a guide to action; a settled ground or basis of conduct or

practice”

. It may be noted that the definition describes the accounting

principle as a general law or rule that is to be used as a guide to action.

The canadian institute of chartered accountants has defined accounting

principles as,

“the body of doctrines commonly associated with the theory

and procedure of accounting, serving as explanation of current practices

and as a guide for the selection of conventions or procedures where

alternatives exist

”. This definition also makes it clear that accounting

principles serve as a guide to action.

.

which accounting is based. The term convention is used to signify customs

or traditions as a guide to the preparation of accounting statements