Impact on Accounting Education

Accounting is considered to be the language of business. The number of globalized businesses in the world is vast and increasing, which emphasizes the importance of achieving a common accounting language. Accounting is predominantly known as the profession that analyzes the past, but because of globalization it is important to look into the future.

As a result, it is important to educate the accounting field on the standards of other countries. The IRSF was created by the International Accounting Standards board. The Financial Accounting Standards Board created the generally accepted accounting principles.

Accounting is predominantly known as the profession that analyzes the past and looks into the future. Globalization plays a huge role on accounting education. Thus it is more important to educate accountants on the standards of other countries, so that they are knowledgeable in their field because many businesses operate with countries across the world.

The accounting education is more important in such a way that the accountant becomes a part of the management and decision-making team, rather than just providing the financial information. Accounting in the future will require not only specific knowledge but also must also be able to change with the globalization. Accountants will need to be well prepared in computer skills, the ability to learn new software and new accounting rules.

Realizing the importance of information technology most of the colleges and universities have added a new track called Accounting Information System. The Professional accountants employ extensively in the computer applications to perform their tasks such as email to communicate, Internet for search, and accounting software to record and analyze financial transactions for decision-making. Computerized accounting systems have now replaced manual accounting systems in most of the organizations.

Significance of Accounting Payroll

Payroll Accounting is important for an Employee and the Employer, which deals with the payment of your employees and paying the appropriate taxes to the government. The payroll system is the most frequently updated part of financial record in most of the organizations. Nowadays even a small business can manage this system with the online processing sites.

Payrolls are considered to be the lifeline of any organization. It consists of procedures and mechanisms ensuring that an accountant processes the employee salary information in complete manner with accuracy. Also allows the business owners to create a function that is easy for them to understand and use. Usually small businesses run their payroll systems like that of the larger organizations.

In many organizations there are several pension plans, offered to their previous employees based on the duration and the importance of their responsibilities. It is very important for an organization to maintain and manage their payrolls. If the payrolls are kept by the organization in an efficient manner, it would keep the employees, in the healthiest state of mind.

If there is any occurrence of issues in the payrolls of the company, then it may lead to the employee dissatisfaction having a direct bearing on the efficiency of their services. Thus the Payroll accountant has to take care of the payrolls right from the salaries and wages such as paid vacation, insurance coverage of the company. They must properly integrate the pay records with the payroll and the benefit systems.

A manual payroll system requires that the payroll to be processed by hand and is therefore a considerably slower procedure. But an automated payroll system enables the employer to process its payroll through a computerized system which makes the process faster by reducing the errors that occurs in manual system. This may be considered as one of the demerit that the employer must invest in for the payroll software and maintain it.

Accounting principle- Accrual Basis

 Figures generated / kept in accordance to accounting principle is prepared on accrual basis. For instance, accountant record the provision for warranty ( based on estimate) even though there's no actual cash/ economic outflow yet.

In finance, cash basis figures are more relatively more valuable , as compared to accrual basis ( advocated by accounting principle), in order to value a business.

What do you think ? You prefer a an accrual method or cash method in valuing a business?

Auditing Creditors- Creditor Turnover Analysis

 In audit, it's essential to form an expectation of the Company's results before we really drill into the details. We compare the actual Company's results to our expectation, and investigate the variances accordingly. This is the analytical procedures adopted by most of the audit Company. Besides, we also compare the result / financial position with prior period.

Creditors' turnover anlaysis is one of the auditing procedure we performed. What are we expecting from the audit client, in general. We expect the creditors turnover (days) to increase, as compared to prior period.

To illustrate, majority of our audit clients are affected by the economy turmoil. They are squeezing suppliers' credit ( by delyaing the repayment), in order to maintain the Company's working capital, as our audit client's working capital are most likely affected by the delay of repayment from customers.

We have formed an expectation, and we will compare the actual result with our expectation. Any unusual movements need to be identified.

Auditing: Annual Budget vs Actual Results

 Company prepare budget and use budget as a performance benchmark and monitoring tools. For instance, senior management can question sales department if their actual yeat-to-date entertainment has exceeded the budget before the end of the year. Budget is , usually, prepared and approved at the beginning of the year or before that.

Budget has incorporated management's forecast, estimation and outlook of the business in the coming times.

Is management's budget useful to auditor?

The answer is yes. Budget, which represents management's expectation, should be compared against the actual results. Significant variances should be investigated. Apparently, management would have to explain the variances. It's important for auditor to find out the reason of the variances to identify potential changes in business operation, significant developments during the year.

Understanding how management view the business (by looking at the budget) is a crucial stage in audit planning, it enhance our knowledge and understanding on the business, the industry and the overall economy as a whole.