Accountants and auditors prepare, analyse and verify financial reports for businesses and government organisations. The accounting department figures profits for the company, prepares its taxes and keeps track of the cost of running the company. The auditors check those calculations to verify their accuracy.
Chartered Accountants maintain the records of financial transactions which every organization is required to keep by law. They keep records of the income and expenditure of the company and form the basis of the annual accounts. A firms account books need to be audited by a qualified accountant, and certified to be ‘true and fair’ giving full view of the company’s affairs. Only qualified Chartered Accountants are legally allowed to audit a company’s books. Public sector organizations must have their accounts checked by an appointed firm of accountants. Chartered Accountants are members of the Institute of Chartered Accountants of India. Only members of this Institute can call themselves Chartered Accountants. Under the Companies Act, Chartered Accountants in professional practice are authorized to audit company accounts.
Nature of Work
Chartered Accountants are found to be working in private practice or as employees in a firm. The range of work in private practice can vary enormously according to the size and place(city) of practice. If it is a large practising firm there is greater specialization of individual accountants within the organization. Accountants may specialize in the following disciplines :
Financial accounting
Financial accounting deals with keeping financial records. The main tasks are operating accounts, doing internal audits, dealing with wages and salaries, paying accounts and sending out invoices, and coping with tax. Trainee accountants can expect to spend time carrying out the full range of basic accounting tasks, and go on to, for instance, interpreting accounts; later to supervising, controlling and organising expenditure and income, etc. It includes compiling daily, monthly and yearly management accounts for directors.
Auditing
An important part of the work of most Chartered Accountants consists of examining and verifying the accounts of their employers or clients and then certifying that the accounts are a true and fair account of the company’s financial state.
Statutory Audit
Statutory audits are required as per the Company Act by both the private and public sector. Statutory auditors are appointed by share holders for private companies and by the central government on advice of the Comptroller & Adjutant General for the public sector, LIC, financial institutions etc.
Internal Audit
Internal auditing is rapidly growing in importance. As computer systems make information available when required, decisions can be based on actual data. Internal auditors examine and evaluate their firms’ financial and information systems. They keep track of management procedures, and internal controls to ensure that records are accurate and controls are appropriate to protect against fraud and waste. They also review - evaluating the efficiency, effectiveness of company operations and compliance with corporate policies and procedures.
Compulsory tax Audit
Tax auditors review financial records and other information provided by taxpayers to determine the appropriate tax liability. Government departments have tax auditors who may be appointed to audit the taxpayers accounts. All income tax assessees require to get a tax audit by a chartered accountant.
Certification & Audit
CA’s audit the accounts of those who are given loans by banks, issue certificate for tax purposes, and involve themselves in import export certification.
Computers are widely used in accounting and auditing. Accountants summarize transactions in standard formats for financial records, calculate projected financial ratios, or organize data in special formats for financial analysis.
Cost accounting
Cost accounting deals with the complex business of working out what particular operations, jobs, products really cost to produce, taking into account all the relevant factors and not just labour and materials, all the ‘overheads’ and less obvious costs too. It extends to budgeting and budgetary control, forecasting further needs and costs (for instance, looking ahead to rising or falling energy prices), monitoring expenditure to see that costs are not over-shooting, and providing reports, etc., for management accounting. It involves analysing and comparing costs, translating information from non-financial managers into financial terms, and explaining financial information for them.
Tax management
Tax managers specialize in optimising the firm’s financial structure, to ensure the company pays as little as is legal in terms of taxes. Increasingly they have to cope with taxation on an international scale, and with the tax laws of different countries. They look at the tax implications of new plans, changes in company structures, in fact any major decision. They advise on the tax effect of performance goals, which includes pricing policies.
Tax management relates not only to direct taxes e.g income tax but to indirect taxes such as sales tax, agricultural income tax, entertainment tax etc.Tax planning is an important component of this function.
Consultancy
Consultancy is a challenging opening for bright and ambitious young CAs. Business today needs right information and CAs can provide effective information management related to accounting. Consultancy may involve management accounting, aspects of accounting which are used to formulate policies and for assessing resource utilization. Internal audits, often required statutorily, are also done by consulting firms for either determining operational efficiency of the departments or for ensuring that capital purchases are economical.
Consultant’s functions relate to the following areas :
Corporate law advice - CAs carry out company audits and are experts at corporate law. While in some firms company secretaries deal with corporate legal advice, many firms get advice on company formation and structure, liquidation and financial aspects from CAs.
Project planning and finance - Procuring finances for business needs expertise ; CAs are trained to advise on financial sources and prepare project reports.
Investigation - Firms need assessment on specific aspects of business, e.g., share valuation for takeovers, issue of capital shares, amalgamation with other firms. Consultant CA’s undertake this function too.
Business advice - When a company wishes to expand and acquire larger shareholding, there is need for expert analysis of the profitability of such a venture, as well as its long term benefits. CAs have a fair judgement of this and are often asked for advice on these matters as well as profit improvement, joint venture programmes, etc.
Secretarial Work- Since business enterprises today have to comply with many legal regulations secretarial practice and procedures become important for the enterprise. Chartered accountant form an integral part of this function.
Information Systems- Data processing in business enterprises has become critical to efficient functioning. Chartered accountants specialising in information systems management seem to have become popular in the business sector.
CA in the industry
In the industry you will find MBAs, technologists and CAs as well. In the industry the work of a CA varies according to the size of the firm. CAs are generally found in the higher positions of the accounting department and in the finance division at all levels, In the accounting section they are involved with book keeping, ledgers, vouchers, maintaining budgetary controls, depositing excise tax, sales tax and income tax for the industry, payments and collections, and bank and financial institutional dealings etc. In the finance department the CAs are involved with planning and financial strategies. In small firms the account and finance functions are performed by the same department.
Management accounting
Management Accounting is a task senior chartered accountants perform. They collect, organize, collate and analyse information from all parts of the organization, including the financial departments. This data helps them to make regular critical analysis of past and present financial performance with projections for the future.
Other functions
Finance departments, in large organizations, have to prepare prospectuses for share issues. Finance departments may also be responsible for managing pension funds and long-term investments, investigate prospective investments, and do the preparatory work on the possibility of taking over another company. In some, usually smaller, organizations, the chartered accountant may carry out the legal responsibilities of the Company Secretary. Appointment can be as financial controller also - in a small unit first, and later in large units and organizations.
Work Environment
Accounting is essentially a desk job. Although computer work has replaced paperwork to a considerable extent the job yet can be routine. Concentration and attention to detail are critical. Public accountants experience considerable pressure as deadlines have to be met during the tax period. The job involves considerable stress as they are responsible for managing finances with no margin for error. Self employed accountants and those working for private firms work for longer hours. Public accountants visit the offices of clients while conducting audits. Accountants and auditors employed by large firms and government agencies travel to clients’ places of business, branch or government offices. Self-employed accountants work at home. The majority of accountants, auditors and tax specialists often work long hours.
Personal Characteristics
Accountants must have good numerical ability and should enjoy working with numbers. An analytical mind to interpret data, a logical and methodical approach helps them present their findings accurately. An ‘innovative’ approach towards performance and presentation of work goes a long way in ensuring success. The ability to think differently and to work out newer solutions is required. High standards of professional conduct or ‘ethics’ in the performance of duties is expected. This is because there is a great amount of responsibility on a CA, towards the society, shareholders and the government, hence integrity is one of the most desirable qualities. A CA has to be ‘insightful’. He should have the ability to find the underlying truth and the capacity to take both, a macro and micro view of things. Good verbal and written expression helps while discussing financial matters with people who do not have a financial background. During financial year closing work hours could be demanding. Business acumen to generate clientele is vital. Accountants must be attentive to detail, patient and industrious.
Employment Avenues
The opportunities in this profession are related to the economic growth of the country. Chartered ered Accountants have varied work options:-
---Independent professional practice is one of the most popular options
-- Employment with a Chartered Accountants firm
-- Capital market services
-- Employment with business houses and industry
-- Employment with consultancy firms
70% Chartered Accountants work in public practice and the remaining are engaged in services in trade and industry. Chartered accountants are engaged in the following kinds of activities in varied set ups:-
-- Preparing project reports and feasibility studies
-- Market research
-- Management accounting, cost analysis
-- Budget planning, working capital management, and inventory control
-- Salary structures and incentive plans
-- Policy planning, organisational planning, growth and diversification
-- Securities consultancy
-- Registrar for an issue of shares and other securities
-- Auditing for quality, energy and environment.
Rapid economic change has led to the opening up of new avenues for CAs. Areas such as technology , risk consulting ( forex, treasury and commodity risks), management information system and management consultancy are offering employment. With the coming of multinationals, the demand for CAs has increased.
Today sucess in the accounting field calls for understanding of broader areas such as e-commerce, business application development and information systems' security. CAs are required to guide the firm/employer through financial systems conversion, upgrades and enterprise application and development.
Earnings
A fresh CA in a medium sized CA firm can earn Rs.1.2- 1.8 lakhs a year while the scales can be higher(4-6lakhs) in the industry.
Experience of 10-15 years can fetch Rs 35-40lakhs
Senior CAs with over 15 years of experience in Private companies get Rs 40- 50 lakhs.
Government scales are standard.
Note: Payscales can change from time to time and job to job.
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