ACCOUNTING STUDIES

Mª ANGELA JIMENEZ 1

STRUCTURE:

1. INTRODUCTION TO ACCOUNTING 2. FINANCIAL STATEMENTS 3. BASIS CONCEPTS IN AUDITING 4. EXTERNAL AUDITING 5. INTERNAL CONTROL


THE FRAMEWORK OF THE AUDIT IS ACCOUNTING.

DIFERENT FIELDS OF ACCOUNTING ARE: FINANCIAL ACCOUNTING COST ACCOUNTING INTERNATIONAL ACCOUNTING STANDARDS MERGER ACCOUNTING MANAGEMENT ACCOUNTING AUDITING

EXTERNAL AUDIT INTERNAL AUDIT


ACCOUNTING IS VERY IMPORTANT FOR:

THE MAIN PURPOSE OF ACCOUNTING IS TO PROVIDE USEFUL INFORMATION TO PEOPLE WHO MAKE RATIONAL INVESTMENTS, CREDIT AND SIMILAR DECISIONS.

ALL ORGANIZATIONS IN ECONOMIC ACTIVITIES USE ACCOUNTING TO GENERATE INFORMATION ABOUT THEIR ACTIVITIES.

THE INTERNAL ROLE OF ACCOUNTING IS TO SERVE THE ORGANIZATION´S VARIOUS FUNCTIONS BY PROVIDING INFORMATION THAT HELPS MANAGERS.


ACCOUNTING PROVIDES: internal role of ACCOUNTING PROVIDES: internal role of accountingaccounting

EXECUTIVE MANAGEMENT: Financial EXECUTIVE MANAGEMENT: Financial Statements, budgets, performance reports.Statements, budgets, performance reports.

FINANCE: Cash Flow InformationFINANCE: Cash Flow Information HUMAN RESOURCES: Payroll informationHUMAN RESOURCES: Payroll information RESEARCH AND DEVELOPMENT: Cost RESEARCH AND DEVELOPMENT: Cost

reports.reports. PRODUCTION: Production reports, internal PRODUCTION: Production reports, internal

control.control. MARKETING: Sales report, cost reportsMARKETING: Sales report, cost reports


ACCOUNTING HELPS THE ORGANIZATION TO REACH ITS OVERALL GOALS.

THE PRIMARY FUNTION OF ACCOUNTING IS TO PROVIDE FINANCIAL INFORMATION: TO AN ORGANIZATION´S MANAGERS THAT IS USEFUL IN MAKING RATIONAL

INVESTMENT, CREDIT AND SIMILAR DECISIONS.

TO AN ORGANIZATION´S CREDITORS

FIELDS IN ACCOUNTING: EXTERNAL ACCOUNTING- EXTERNAL

AUDITING INTERNAL ACCOUNTING- INTERNAL AUDITING


OWNERS AND MANAGERS USE ACCOUNTING INFORMATION TO HELP THEM ANSWER QUESTIONS LIKE: HOW MUCH INCOME IS IT EARNING? ARE THE EXPENSES APPROPIATE FOR THE

AMOUNT OF SALES?


DOES IT HAVE GOOD PROSPECTS FOR FUTURE

EARNINGS?

ARE THE CUSTOMERS´ ACCOUNTS BEING COLLECTED PROMPTLY?

ACCOUNTING´S EXTERNAL FUNCTION IS TO PROVIDE: ASSURANCE THAT MANAGEMENT HAS COMPLIED

WHIT ALL LAWS.

INFORMATION TO USERS WHO ARE NOT INVOLVED IN THE ORGANIZATION´S DAILY ACTIVITIES (STAKEHOLDERS)

INFORMATION THAT MANAGERS USE TO

CONTROL BUSINESS OPERATIONS.


IT IS NECESSARY TO DIFERENCIATE BETWEEN ACCOUNTING AND BOOKKEEPING.

ACCOUNTING AND BOOKKEPING AREN´T THE SAMETHING.

BOOKKEPING IS THE PART OF ACCOUNTING THAT RECORDS TRANSACTIONS AND OTHER EVENTS.

ACCOUNTING INVOLVES DESIGNING AND IMPLEMENTING SYSTEMS TO PRODUCE USEFUL REPORTS AND TO CONTROL THE OPERATIONS OF AN ORGANIZATION.


ACCOUNTING INVOLVES DESIGNING AND IMPLEMENTING SYSTEMS TO PRODUCE USEFUL REPORTS AND TO CONTROL THE OPERATIONS OF AN ORGANIZATION.

ACCOUNTING INVOLVES MORE PROFESSIONAL EXPERTISE AND JUDGEMENT THAN BOOKKEEPING BECAUSE ACCOUNTANTS MUST ANALYZE COMPLEX AND UNUSUAL EVENTS.


THE MOST COMMONLY USED SYSTEM OF BOOKKEEPING IS THE “DOUBLE ENTRY BOOKKEEPING” .

IT IS BASED ON THE PRINCIPLE THAT EVERY FINANCIAL TRANSACTION INVOLVES THE SIMULTANEOUS RECEIVING AND GIVING OF VALUE, AND IS THEREFORE RECORDER TWICE.

EVERY TRANSATION AFFECTS AND IS RECORDED IN AT LEAST TWO ACCOUNTS. WHEN RECORDING EACH TRANSATION, THE TOTAL AMOUNT DEBITED MUST EQUAL THE TOTAL AMOUNT CREDITED. THE SUM OF DEBITS FOR ALL ENTRIES MUST EQUAL THE SUM OF THE CREDITS FOR ALL ENTRIES.


FINANCIAL ACCOUNTING: PROVIDES INFORMATION TO DECISION MAKERS WHO ARE NOT INVOLVED IN THE DAY-TO-DAY OPERATIONS OF AN ORGANIZATION. (STAKEHOLDERS)

THE INFORMATION IS DISTRIBUTED PRIMARILY THROUGH GENERAL PURPOSE FINANCIAL STATEMENTS: STATEMENT OF REVENUES AND EXPENSES BALANCE SHEET RELATED EXPLANATORY NOTES

FINANCIAL STATEMENTS DESCRIBE THE CONDITION OF THE ORGANIZATION AND THE EVENTS THAT HAPPENED DURING THE YEAR.


THE AUDIT IS RELATIONED WITH THIS FIELD OF ACCOUNTING. ( BY INDEPENDENT CPAs)

THE AUDIT IS A THOROUGH CHEK OF AN ORGANIZATION´S ACCOUNTING SYSTEMS AND RECORDS. IT IS PERFORMED TO ADD CREDIBILITY TO THE FINANCIAL STATEMENTS.

FOR EXAMPLE, BANKS REQUIRE AUDITS OF THE FINANCIAL STATEMENTS OF COMPANIES APPLYING FOR LARGE LOANS. (STAKEHOLDERS)


ALSO, FEDERALS AND STATE LAWS REQUIRE COMPANIES TO HAVE AUDIT BEFORE THEIR SECURITIES (STOCKS AND BOUNDS) CAN BE SOLD TO THE PUBLIC. (STAKEHOLDERS)

TO PERFORM AN AUDIT, AUDITORS:

TO EXAMINE THE FINANCIAL STATEMENTS TO EXAMNIE ACCOUNTING SYSTEM. TO DECIDE WHETHER THE STATEMENTS REFLECT

THE COMPANY´S FINANCIAL POSITION TO DECIDE WHETHER ACCOUNTING SYSTEM IS IN

AGREEMENT WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)


THESE PRINCIPLES ARE RULES ADOPTED BY THE ACCOUNTING PROFESSION AS GUIDE FOR MEASURING AND REPORTING THE FINANCIAL CONDITION AND ACTIVITIES OF A BUSINESS.

WHEN AN AUDIT IS COMPLETED, THE AUDITORS PREPARE A REPORT THAT EXPRESSES THEIR PROFESSIONAL OPINION ABOUT THE FINANCIAL STATEMENTS.

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) ARE IDENTIFIED IN RESPONSE TO THE NEEDS OF USERS AND OTHER AFFECTED BY ACCOUNTING. THEIR ARE SUBJECT TO CHANGE AS NEEDS CHANGE.


TO GIVE USERS MORE CONFIDENCE IN THE STATEMENTS, INDEPENDENT AUDITORS USUALLY EXAMINE THE FINANCIAL STATEMENTS AND DEVELOP AN AUDIT REPORT. (MERCANTILE REPORT)

THE STATEMENTS AND THE AUDIT REPORT THEN ARE DISTRIBUTED TO THE USERS. (STAKEHOLDERS)


THE GAAP ARE APPLIED IN PREPARING THE FINANCIAL STATEMENTS.

PREPARERS USE GAAP TO DECIDE WHAT PROCEDURES TO FOLLOW AS THEY ACCOUNT FOR BUSINESS TRANSACTIONS AND PUT THE STATEMENTS TOGETHER.

IN THE DIAGRAM, WE SHOW THAT AUDITORS ARE PERFORMED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS-GAAS AND ANALIZE THE GAAP ADOPTED AND USED TO PREPARE THE ACCOUNTING.


GAAP ARE THE RULES ADOPTED BY THE ACCOUNTING PROFESSION AS GUIDE FOR CONDUCTING AUDITS OF FINANCIAL STATEMENTS.

GAAS TELL AUDITORS WHAT THEY MUST DO IN THEIR AUDITS TO DETERMINE WHETHER THE FINANCIAL STATEMENTS COMPLY THE GAAP.

APPLYING BOTH GAAP AND GAAS ASSURE USERS THAT FINANCIAL STATEMENTS INCLUDE RELEVANT, RELIABLE AND COMPARABLE INFORMATION.


THE AUDIT DOES NOT ENSURE THAT THEY CAN SAFELY INVEST IN OR LOAN TO THE COMPANY.

THE AUDIT DOES NOT REDUCE THE RISK THAT THE COMPANY´S PRODUCTS AND SERVICES WILL NOT BE SUCESSFULLY MARKETED OR THAT OTHER FACTORS COULD CAUSE IT TO FAIL.


THE PRIMARY AUTHORITATIVE SOURCES OF GAAP ARE THE FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) IN U.S.A.

THE MOST IMPORTANT ORGANIZATION IN THE WORDL IS THE INTERNATIONAL ACCOUNTING STANDARDS BOARDS (IASB). ITS PRINCIPAL OBJETIVE IS TO CREATE MORE HARMONY AMONG THE ACCOUNTING PRACTICES OF DIFFERENT COUNTRIES AND TO DEVELOP A SINGLE SET OF HIGH QUALITY, UNDERSTANDABLE AND EFORCEABLE GLOBAL ACCOUNTING STANDARD THAT REQUIRE HIGH QUALITY, TRANSPARENT, AND COMPARABLE INFORMATION IN FINANCIAL STATEMENTS AND OTHER FINANCIAL REPORTING.


IF THE STANDARDS COULD BE HARMONIZED, A SINGLE SET OF FINANCIAL STATEMENTS COULD BE USED BY ONE COMPANY IN ALL FINANCIAL MARKETS.

IN 2007, THE COUNTRIES FROM EUROPEAN COMUNITY WILL APPLY THE SAME STANDARDS, THE IAS (INTERNATIONAL ACCOUNTING STANDARD). THIS HARMONY PROCESS WILL CHANGE THE GAAP USED IN EVERY COUNTRY OF THE EUROPEAN COMMUNITY.


ACCOUNTING PROCESS:


Bussines

Transactions

Other

Internal

events

Reporting

Useful

Information:

Classifying

And summari

-Sing the

Recorded

effects

Processing

Data:

Analyzing,

Economics

Events and

Recording

Their effects

Capturing

Data:

F.S. And

Other reports

Presented

To economic

Decision

Makers.

MANAGEMENT ACCOUNTING. IT IS RELATED WITH INTERNAL AUDIT.

MANAGEMENT ACCOUNTING COULD BE DEFINED AS:

“THE APPLICATION OF THE PRINCIPLES OF ACCOUNTING AND FINANCIAL MANAGEMENT TO CREATE, PROTECT, PRESERVE AND INCREASE VALUE SO AS TO DELIVER THAT VALUE TO THE STAKEHOLDERS OF PROFIT AND NON-PROFIT ENTERPRISES, BOTH PUBLIC AND PRIVATE”

M.A.: INVOLVES PROVIDING INFORMATION TO AN ORGANIZATION´S MANAGERS.


MANAGEMENT ACCOUNTING IS AN INTEGRAL PART OF MANAGEMENT, REQUIRING THE IDENTIFICATION, GENERATION, PRESENTATION AND USE OF INFORMATION RELEVANT TO:

FORMULATING BUSINESS STRATEGY PLANNING AND CONTROLLING ACTIVITIES DECISION-MAKING EFFICIENT RESOURCE USAGE PERFORMANCE IMPROVEMENT AND VALUE

ENHANCEMENT


SAFEGUARDING TANGIBLE AND INTANGIBLE ASSETS

CORPORATE GOVERNANCE AND INTERNAL CONTROL.

INSIDE MANAGEMENT ACCOUNTING IS POSIBLE TO DIFERENCIATE “COST ACCOUNTING”.

IT CAN BE DEFINED LIKE THE ESTABLISHMENT OF BUDGETS, STANDARDS COST AND ACTUAL COST OF OPERATIONS, PROCESSES, ACTIVITIES OR PRODUCTS. IT INCLUDES THE ANALYSIS OF VARIANCES, PROFITABILITY OR THE SOCIAL USE OF FUNDS.


COST ACCOUNTING IS A PROCESS OF ACCUMULATING THE INFORMATION MANAGERS NEED ABOUT OPERATING COST.

ITS HELPS MANAGERS IDENTIFY, MEASURE, AND CONTROL THE COST.

COST ACCOUNTING INVOLVES ACCOUNTING FOR THE COSTS OF PRODUCTS, SERVICES OR SPECIFIC ACTIVITIES.

THIS INFORMATION IS USEFUL FOR EVALUATING EACH MANAGER´S PERFORMANCE.


MANAGEMENT ACCOUNTING SYSTEM PROVIDES INFORMATION TO ASSIST MANAGERS IN THEIR PLANNING AND CONTROL ACTIVITIES.

MANAGEMENT ACCOUNTING ACTIVITIES INCLUDE COLLECTING, CLASSIFYING, PROCESSING AND ANALYZING AND REPORTING INFORMATION TO MANAGERS.

THIS INFORMATION SHOULD BE DESIGNED TO HELP DECISION MAKING WITHIN THE FIRM.


THE TEST OF MANAGEMENT ACCOUNTING SYSTEM IS WHETHER IT MOTIVATES AND ASSISTS MANAGERS IN ATTAINING THEIR ORGANIZACIONAL OBJECTIVES IN A TIMELY, EFFICIENT AND EFFECTIVE MANNER.

MANAGERIAL ACCOUNTING REPORTS INCLUDE MUCH OF THE SAME INFORMATION USED IN FINANCIAL ACCOUNTING. THIS INFORMATION IN NOT REPORTED OUTSIDE THE COMPANY.


ACCOUNTING STUDIES

Documents

Transcript of ACCOUNTING STUDIES