The main branches of accounting and job skillets and competencies

Accounting branches measure, process, and convey financial and non-financial information that influences the economic interests and affiliations of a firm. Accounting branches are used by the majority of firms and enterprises to measure the outcomes of their economic activities. Accounting branches employ a variety of techniques to assemble and present results to investors, creditors, management, regulators, and tax collectors. 

Accounting evolved to extend its branches and acquire specialities in a specific sector of finance as global companies expanded and tax rules and regulations expanded. Technological advancements and the exchange of foreign currencies result in the growth of accounting specializations that focus on a specific economic interest.

1. Financial accounting

Financial accounting includes tracking and interpreting a company's transactions, as well as preparing and presenting financial statements. Financial accounting adheres to GAAP standards and focuses on historical data. For example, a financial accountant will examine the financial data of the previous quarter to make recommendations for improvement in the following quarter. Financial accountants examine a company's balance sheet and generate profit and loss statements that provide guidance to managers and stakeholders regarding loans, investments, and acquisitions. Furthermore, Financial Accounting provides important economic information to creditors, banks or financial institutions, regulators, vendors, tax professionals.

The major goal of financial accounting is to determine a company's profit or loss over a period of time and to present an accurate picture of the company's financial situation as of a specific date. Financial accounting concepts are used to create a company's Trial Balances, Profit & Loss Accounts, and Balance Sheets. Creditors, banks, and financial institutions might utilize these to analyze the company's financial situation.

2. Managerial accounting

Management accounting is not like financial accounting in that it is concerned with the use of money rather than quantity. Management accounting focuses on the needs of management and may not always comply with GAAP accounting regulations. The Global Management Accounting Standards (GMAP) are a set of accounting principles created by the Chartered Institute of Management Accountants that are directly related to the field.

Management accounting helps companies improve management, increase profits and produce financial reports that help with planning and budgeting. Forecasting is made in this accounting discipline to advise management on optimal company procedures to meet objectives and maintain profitability. Internal tests, such as cost-per-volume-profit (CVP) or break-even point (BEP) analysis, are used in management accounting to identify factors that influence output. decision.

3. Cost accounting

The goal of cost accounting, which is considered a subset of management accounting, is to evaluate costs. To accurately assess the cost of a project or enterprise, this branch evaluates all manufacturing elements. Cost accounting examines production costs in order to develop and deliver reports that guide decision-makers on how to cut expenses or when to increase spending. It keeps track of projects to ensure that waste and costs are kept under control. Cost accounting examines actual costs in comparison to budgeted expenditures on a regular basis to predict future monetary actions.

4. Auditing

Internal and external auditing is a field of accounting that is usually done internally. Auditors analyze and oversee a company's financial integrity, the accuracy of reporting, and compliance with tax rules and regulations. Auditors might specialize in one of two areas: internal auditing or external auditing.

External auditor

An independent, outside auditor checks a company's financial accounts for accuracy in a state or federal audit. Internal auditing follows GAAP and assesses the effectiveness of a company's internal controls. External auditors can assess the effectiveness and integrity of the company's segregation of roles, policies, authorizations, and other management controls. 

Internal examiner 

Internal auditing discovers and prevents tax problems, as well as preparing the company for an external audit. Shareholders often choose auditors in this branch so that their role does not create a conflict of interest and ensures neutrality.

5. Tax accounting

Tax accounting involves advising on the effects of taxes on various aspects of a business, minimizing taxes through legal means and also verifying the consequences of taxes payable on the business. business action. We often call this activity tax planning. There is a big difference between tax planning and tax evasion. In general, tax planning means trying to minimize tax liability within legal boundaries. While tax evasion is a crime. When a company is engaged in tax evasion, the tax authorities can get them in trouble.

Tax accounting involves advising on the effects of taxes on various aspects of a business, minimizing taxes through legal means and also determining the consequences of taxes payable on the business. business action. We often call this activity tax planning. There is a big difference between tax and tax planning. In general, tax planning is meant to try to minimize liability within legal boundaries. While taxes are a crime. When a corporation has a behavioural tax, the tax authorities can get them in trouble.

6. Fiduciary accounting

Fiduciary accounting deals with accounts entrusted to the person in charge of property custody or management. The branch is typically used by guardians or custodians to track and report receipts and disbursements from accounts to guarantee proper financial allocations. 

Fiduciary accounting is often used for the following purposes: 

- Trusts

- Receiverships

- Estates

7. Project accounting

Construction and engineering, for example, operate on enormous projects that necessitate the use of a specialist accountant. Project accounting is included in the project management category. This accounting tracks a project's financial progress by analyzing expenditures and preparing reports at regular intervals. It provides historical data that can be used to inform future project decisions, such as cost-cutting or budget adjustments.

8. Forensic accounting

Legal accounting, sometimes known as forensic accounting, deals with legal issues such as bankruptcy, fraud, and mismanagement. This division performs investigations for court and litigation matters, estimates damages, and supervises the resolution of disputes. 

The purpose of forensic accounting is to: 

Lawyers 

Officers of the law 

Companies that provide insurance 

Governmental agencies 

Institutions of finance

9. Fund accounting

Fund accounting works with non-profit organizations (NPOs) to guarantee that money are allocated correctly and accurately. Fund accountants guarantee that NPO funds are distributed as intended by separating and distributing funds in compliance with the company's rules or legislation governing NPOs. 

The following organizations typically employ fund accounting: 

- Charities  

-Churches

- Government agencies

- Educational institutions

- Hospitals 

- Clubs and government agencies

10. Government accounting

Government accounting is in charge of overseeing and recording the distribution and disbursement of state and federal funds. This can include components of social accounting including the estimation of human costs in relation to federal land use, climate change, and welfare spending. Government accounting keeps track of money as it moves through different agencies and ensures that budget requirements are satisfied. Government accountants operate in areas such as healthcare, housing, and education on a state and federal level.

11. Political campaign accounting

The planning and implementation of a political campaign's finance systems is overseen by political campaign accounting. To maintain compliance with federal and state rules governing political campaigns, this could include transaction accounting or donation monitoring. Political campaign accounting is used in local, state, and national elections.

12. International accounting

International markets and the necessity for international accounting grow in tandem with global companies. This field of accounting is used to learn foreign laws and regulations in order to do business in an ethical and fair manner. International accountants are not only familiar with GAAP, but also with International Financial Reporting Standards (IFRS), the accounting system used in the majority of the world's economies.

References

Indeed.com. 2021. [online] Available at: <https://www.indeed.com/career-advice/career-development/accounting-branches> [Accessed 24 October 2021].

Borad, S., 2014. Branches of Accounting. [online] eFinanceManagement. Available at: <https://efinancemanagement.com/financial-accounting/branches-of-accounting> [Accessed 24 October 2021].