Accounting is a critical component of any business. If you're thinking about a career in accounting, you should be aware of the various types of accounting available depending on the industry.
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In this article, we will look at the various types of accounting fields and the career options available to accounting professionals.
Accounting Types
Accountants can specialise in various areas of accounting based on their career interests and objectives. Here are the nine most common accounting types:
1. Monetary accounting
The process of compiling information for financial reports for external reporting is central to financial accounting. Financial accountants collaborate with their colleagues and managers to devise strategies for increasing a company's profitability. They also monitor all financial activity recorded in a ledger, as well as ensuring that internal procedures are followed and that all financial activity appears on relevant financial statements. Financial accountants typically oversee or participate in general ledger accounting, accounts payable, accounts receivable, payroll, grant management, and fixed assets. A financial accountant will be concerned with accurately recording and reporting previous financial transactions.
2. Accounting for managers
This type of accounting documents, monitors, and aids in an organization's financial planning. Their documentation is usually intended for internal stakeholders rather than the general public. A managerial accountant must be cautious about who receives confidential information. They collaborate with their managers to analyse and develop a budget to meet the organization's short- and long-term objectives. Managerial accountants are interested in analysing past performance in order to forecast future performance.
3. Accounting for costs
Cost accounting is a subcategory of managerial accounting; however, cost accountants' activities affect both financial and managerial accountants. Manufacturing cost accountants are in charge of documenting, presenting, and reviewing manufacturing costs. They monitor all variable and fixed costs to ensure that output matches the cost of producing a product. They also collaborate with managers to make future decisions based on financial projections and production progress.
Unit costs are calculated differently in different industries and even in similar businesses. Cost accountants are in charge of implementing, supervising, and providing feedback on how these costs are tracked. The allocation of overhead is a primary concern. Direct materials and direct labour are easily tracked, but indirect costs—such as machinery, building, utilities, shared staff, and so on—can be allocated in a variety of ways.
Cost accountants can also be used to determine an employee's true cost. Similarly to how indirect costs are assigned to products or services to determine a unit cost, department costs and overhead can be assigned to employees to determine how much it costs to employ them versus how much money they bring in. This can be used for employees who generate revenue as part of their job, such as salespeople or healthcare providers.
4. Auditing
External auditing is the process by which a company sends financial documents to a third party for financial analysis. In this case, a third party is a reliable source for determining whether a company's financial statement complies with GAAP. A Certified Public Accountant performs external auditing (CPA).
The effectiveness of internal accounting processes is determined by internal auditing. An internal auditor can examine employee departmental responsibilities, management policies, and project approval procedures. As a result, they provide valuable feedback that can assist a company in becoming more profitable and efficient. Internal auditor qualifications will vary because this is an internal role. An accountant can become a Certified Internal Auditor (CIA), and some public companies and government agencies may require this certification of their internal auditors.
5. Accounting for taxes
When businesses file their tax returns each year, tax accountants assist them in remaining in compliance with the Internal Revenue Code. They also help businesses plan for future tax returns, such as avoiding certain tax burdens and comprehending the consequences of specific tax decisions. Larger organisations will typically hire a tax accountant to help them navigate the complexities of financial records.
6. Accounting information System
Accounting information systems (AIS) are the systems that a company uses to collect, store, and process financial and accounting data. Many AIS are now designed to integrate with other departments, such as linking the Human Resources hiring process to the payroll function of a newly hired employee. This flow-through process reduces the need for manual data entry.
Accounting procedure improvement is managed by AIS professionals. Employees in this field decide when it is best to install new technology and monitor the progress of existing systems to see if there is an increase in productivity over a given timeframe. They can make decisions in collaboration with the IT department to ensure technological continuity. They also frequently provide technical support in the maintenance of AIS, such as creating new accounts in the system or troubleshooting software errors.
7. Accounting for forensic purposes
Forensic accounting is used to investigate individuals' or businesses' financial records. When some financial information is missing or unavailable for review, accountants may be required to recreate it. The goal of forensic accounting is to collect all available documentation and account for all transactions in financial statements accurately and comprehensively. These professionals are frequently involved in legal cases involving fraud, claims, and disputes.
8. Public Accounting
Public accounting refers to businesses that offer accounting advice to clients based on their specific requirements. They can work in auditing, help with tax returns, consult on procedures for installing technology or computer programmes, and provide legal advice.
9. Governmental Accounting
Governmental accountants oversee the financial planning and resource allocation of departments within a local, state, or federal government. This type of accounting must adhere to standards established by the Governmental Accounting Standards Board (GASB), which is in charge of developing consistent accounting procedures for local and state governments. Federal employees will follow the Federal Accounting Standards Advisory Board's recommendations (FASAB). Governmental accountants will also keep track of a government's budget and allocate funds as needed.
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