Branches of Accounting and Job Skillsets & Competencies

 

Main Branches of Accounting 

Accounting is a diverse field with several specialized branches, each serving unique purposes. Here, let's introduce and discuss the main branches of accounting: financial, managerial, and forensic accounting.

Financial Accounting

Financial accounting is a field that involves preparing and presenting financial statements for external stakeholders like investors, creditors, regulators, and the public. It involves recording transactions using GAAP or IFRS, preparing financial statements like balance sheets, income statements, and cash flow statements, and ensuring compliance with legal and regulatory requirements (Weiss and Weigandt, 2008). This systematic and standardized approach helps businesses understand their financial performance and position.

Managerial Accounting

Managerial accounting, or cost accounting, is a financial tool managers and executives use to support planning, control, and decision-making. It involves cost analysis, budgeting, performance measurement, and strategic planning. Managerial accountants analyze the costs of products, services, and activities, helping in pricing decisions and cost control. They also provide metrics and KPIs to evaluate business processes' efficiency and effectiveness (Jackson and Sawyers, 2002). Overall, managerial accounting is crucial for long-term planning and decision-making.

Forensic Accounting

Forensic accounting is a field that combines accounting, investigative skills, and legal knowledge to identify financial irregularities, fraud, or misconduct. It is often used in legal proceedings and investigations. Essential functions include fraud detection, litigation support, dispute resolution, and due diligence in mergers and acquisitions. Forensic accountants analyze financial data to detect fraudulent activities, provide expert testimony, and assist legal professionals in financial disputes, damages calculation, and asset tracing (Mazumder, 2011).

These accounting specialties serve various functions and target various clientele. While managerial accounting aids in internal decision-making and forensic accounting examines financial irregularities, financial accounting conveys a company's financial health to external stakeholders. They work together to ensure accountability, transparency, and good organizational management. 

Job Skillsets

Financial Accounting

Financial accountants require technical accounting skills to accurately record business transactions, such as revenue and expenses, and prepare financial statements like balance sheets, income statements, and cash flow statements. Attention to detail is crucial for reconciling accounts across different currencies and subsidiaries, ensuring accuracy in consolidated financial statements. Regulatory compliance is also essential, as accountants must stay updated with accounting standards and regulatory changes, such as tax laws, to avoid potential issues (JIE, 2017). In a real-world scenario, a financial accountant in a publicly traded company must ensure compliance with the latest accounting standards, such as revenue recognition rules, to avoid potential regulatory issues.

Managerial Accounting

Managerial accountants play a crucial role in various aspects of business, including cost analysis, budgeting, and communication. They analyze costs to make informed pricing, production, and cost control decisions. A manufacturing company analyses product cost structures to identify profitable products and areas for cost reduction. They also create budgets and forecasts to allocate resources efficiently and track performance against projections (Virgil Ion Popovici and Ana Maria Malaescu, 2014). In a retail chain, they prepare annual budgets for store expansions, merchandise purchases, and staffing levels. Effective communication is essential for conveying complex financial information to non-financial managers and executives.

Forensic Accounting

Forensic accountants use analytical thinking to uncover financial irregularities, detect fraud patterns, and trace hidden assets. They examine a company's financial records to identify unusual transactions and embezzlement. They need legal knowledge, such as anti-money laundering laws, to ensure compliance during investigations. They are hired as expert witnesses in court cases involving financial disputes and must testify to legal requirements. They meticulously examine financial documents, contracts, and emails to gather evidence, such as invoices and correspondence, to find evidence of kickbacks or bribery (Estralita Trisnawati, 2010).

Professionals need a specific set of skills and competencies suited to their particular roles and responsibilities in each branch of accounting. These abilities are essential for dealing with the difficulties and complexities of real-world accounting situations, whether it is making wise managerial decisions, ensuring regulatory compliance, or identifying financial misconduct. 

References

Estralita Trisnawati (2010). AKUNTANSI FORENSIK SEBAGAI SATU ALAT MENDETEKSI KECURANGAN. [online] Available at: https://api.semanticscholar.org/CorpusID:166823313.

Jackson, S. and Sawyers, R.B. (2002). Managerial accounting: A focus on decision making. [online] Available at: https://api.semanticscholar.org/CorpusID:108800473.

JIE, Z. (2017). Exploration and Analysis on Professional Financial Skill Teaching of Applied Undergraduate Accounting Specialty. DEStech Transactions on Economics, Business and Management, (eced). doi:https://doi.org/10.12783/dtem/eced2017/9843.

Mazumder, M.M.M. (2011). Forensic Accounting – An Investigative Approach of Accounting. SSRN Electronic Journal. doi:https://doi.org/10.2139/ssrn.1864346.

Virgil Ion Popovici and Ana Maria Malaescu (2014). MANAGER AND ACCOUNTING MANAGER - SIMILARITIES AND DIFFERENCES. [online] Available at: https://api.semanticscholar.org/CorpusID:166608542.

Weiss, S.Z. and Weigandt, J.J. (2008). Accounting principles and concepts. [online] Available at: https://api.semanticscholar.org/CorpusID:6449409.