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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C 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.

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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