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Will Accountants Exist in the Future?

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Many of you who may be researching a future in accounting might be scared of the potential for computers and other automated systems to take over the accounting industry in the coming years. While the truth of the matter is that computers are involved more and more in the everyday life of an accountant, accountants will still play a critical role in the lives of individuals and companies for a long time to come.

A current trend in accounting systems is something called “zero-entry” accounting. Imagine a company which no longer requires the manual input of accounting data each month in order to understand their cash flow. This approach is highly prone to error and consumes critical time during which an accountant could be analyzing the results for the company thereby helping them make more money, rather than wasting it on just understanding where their business stands. In other words, accountants of the future will be responsible for making sure that the output from accounting systems is accurate and matches current accounting procedures, but most importantly, they will be trusted with advising the company on the best financial decisions to make, with more up-to-date data than ever before.

On an individual level, many people in the United States have a brush with accounting at least once a year when they file their tax returns to Federal and State governments. Here too “robotization” is ubiquitous with the proliferation of tax preparation software for individuals and small businesses. However, even the most sophisticated software can not fully understand one’s financial picture through a standard questionnaire. While guaranteed to be accepted by the government, there is no guarantee that they have saved you the most money. Only a qualified tax accountant will be familiar with all of the possible tax breaks and will take the time to fully understand your personal financial situation. And while even these accountants may in the end of the day use a computer or “robot” to file your returns, it is they, not the computers who have the final word.

CPA vs. ACCA

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As with many things in life, there are choices when it comes to deciding which kind of accounting certification to pursue. There are two major players in this area, the CPA accreditation, and the ACCA accreditation. In accounting circles, the CPA is considered the gold standard, and, if you plan to work in the United States as an accountant, is pretty much your only choice when it comes to being a trusted accountant. In the rest of the world, the ACCA is generally respected, though a CPA is also a revered status as well.

The major difference between the two accreditations are the requirements surrounding testing. For the CPA, as mentioned in previous posts, one must generally have a Master’s degree in accounting and two years of experience. For the ACCA, one does not need a Master’s degree and one can theoretically begin sitting for the exams following high school. However, work experience is necessary in both accreditations, though the length of time varies.

The formats of the examinations vary as well, with the CPA comprised of four parts: Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). The ACCA has 14 parts in total, split into 9 “fundamentals” categories and 7 “professional” categories of which three are mandatory and then two more which can be the choice of the individual.

One interesting factor to consider are the “Pass Rates” for either exam. Pass rates for neither test are “high”, and in fact they are lower than 50% in each. Through the 2nd quarter of 2016, the pass rate for the CPA exam is 49.25% when averaging the pass rates for all four sections. The pass rates for the ACCA is slightly higher. For fundamentals, the latest round of all 9 tests had a 58.11% pass rate and the professional papers had a 41% pass rate (this is the average of all 7 tests, even though one must only complete 5 of the exams). These pass rates point directly to the need for one to enlist professional assistance when preparing for the exams. Park Avenue CPA Review is here to help you decide which path to take, and then prepare you properly for the exams which will determine your future.

The Olympics

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An Olympic Sized Accounting Problem

Hosting the Olympics is not an inexpensive affair. But just how do the numbers that get reported (for example $50 billion in Sochi) get calculated? Is there any ever controversy around the “official” number. Accounting has the answers and like most things in life, the answer isn’t easy.

Let’s first discuss some common buckets used to tally up the money: infrastructure, operations, and construction. It is often up to the entity reporting the amount to choose which or any of these get reported. This is a similar situation in the business world, there is the operating budget, which is everything needed to run a company day-to-day, and then there are the additional assets the company holds that can have a more fluid value, such as property holdings and other investments. At the the olympics, the operations budget, which covers only the time which games are being played, is often the smallest number of the three.

What are the consequences of reporting one number over another? Well, when cost overruns are basically a given for an olympic games, understanding where the amount over the budget is coming from is critical. The amount of the cost overrun is also important. These numbers can have real-world ramifications. The most direct outcome of the cost overruns here might be the paralympic games, which follow the olympics games each olympic year. According to the Wall Street Journal, because the accounting has been such a controversial topic, it is now being deliberated in the courts how best to determine the deficit. In turn, this is holding up crucial funds typically used to help subsidize the travel costs of the para-olympic athletes, putting their ability to attend in jeopardy.

At Park Avenue Review CPA, we make it our job to teach students the finest skills to learn all the ins and outs of accounting. Take 50% off Fall BEC Classes! https://t.co/YSUiOdlSHR. Share with your friends and open the door to success.

Auditors

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What is an Auditor?

In the final segment discussing different types of accountants, we will discuss auditors. You may best know auditors as the “scary” people from the Internal Revenue Service that no one wants to hear about. Yes, auditors are “those people” but not all auditors are bad, and in fact, an auditor can be your best friend (ok, that might be pushing it)!

So what DO auditors do? They can be considered a “final check” on your (or your company’s) financials. While an accountant might be favorable to you and your financial needs, an auditor knows how the people you’re submitting your financials to (most often the government) are going to view what you’ve done with stating and reporting your income. If you’re familiar with kosher, auditors make sure everything on your balance sheet is “kosher” and that it will pass through the filing and approval processes without any hiccups. Often times auditors are “third parties” or paid to not be biased towards the people hiring them, either way, they have incentive to be diligent, because if they miss something then their reputation in the field is diminished. Furthermore, accountants who serve as accountants for one group can be auditors for another, making this yet another area in which the different types of accountants are not mutually exclusive.

Some companies have “in-house” auditing, just like they have “in-house” accounting. This can be viewed as being similar to a newspaper having an ombudsman, or someone who has independence to sort and sift through whatever they need to in order to make sure everything is on the up-and-up. Then of course, there are the famous “auditors” at the IRS whose jobs are to make sure people aren’t cheating on their taxes.

Hopefully you’ve enjoyed this quick overview of the different kinds of accountants. We will revisit these in more depth in later posts, but for now, in the early stages of your accounting career, begin to think about which kind of accountant might be the best fit for you.

Accountants

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Types of Accountants – Part II

The second type of accountant described in the previous post is that of a business accountant. These types of accountants can either be employed “in-house” that is they are employees of the company they are doing accounting for, or like personal accountants, can work on their own be contracted or hired by a company to do their accounting for them.

There are advantages to each kind of arrangement. When working as an employee, you are not required to continuously search for additional business and you are guaranteed a steady income. With contracted business accounting, you are able to set your own rates and attract as many clients as you desire, possibly even growing your own accounting business.

In terms of what a business accountant does, he/she can be responsible for part, or all, of the accounting needs in a company. Most often these roles relate to areas of “accounts payable”, the bills the company needs to pay, and accounts receivable, which handles the collection of money owed to the company. An accountant in this role would be charged with making sure that enough money is coming in in order to cover the money going out. The business accountant may also be involved in setting the company’s budget for the year and, of course, filing the company’s taxes each year. As you can imagine, learning all of the intricacies of each of these areas is tedious but important work, and Park Avenue CPA Review is with you along the way to make sure you are prepared for the challenges you will face in these roles.

Often times, money tells the story of a company. As a business accountant, you would be one of the first people to know how the company is performing financially, as well as relied upon to brainstorm creative ideas to money problems (including good ones!) facing the company.

Calling All CPAs

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CPAs are needed everywhere, as they are trained and certified professionals in understanding how money flows through different accounts as well as the the tax codes surrounding income and profit.Working with a CPA, as opposed to a regular bookkeeper, can save yourself and/or business considerable money.

While the types of CPA specialties are numerous, accounting jobs can be broken down into three categories:

  • Personal Accountants
  • Business Accountants
  • Auditors

These categories are not mutually exclusive, and many CPAs do work in all three fields at the same time. Successfully studying for and passing the CPA exam prepares a prospective CPA for work in any of these fields.  In today’s post, we will discuss Personal CPAs.

Personal CPAs help individuals with their money. Many young individuals and small families, have quite simple financial arrangements and tax returns. However, as individuals grow older, possibly accruing multiple retirement accounts, investments and business ventures, having an accountant you can rely on can simplify one’s money world and help them save on taxes. It is important to consult with a CPA any time you are involved in a large financial decision.

The same is often true for growing families. While both parents will hopefully have many of the same money situations as mentioned above, there is the additional need to understand all of the many deductions available when raising children. A CPA will know exactly which deductions and credits are available to you and will maximize your return, allowing you to “invest” even more in your children.

Stay tuned for our next post on Business Accountants!

What is the general path for becoming a CPA?

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Certified Public Accountants are entrusted with some of a person or company’s most sensitive information. As such, the schooling, testing, and training required in becoming a CPA are rigorous. However, many CPAs find the career rewarding and that the commitment required at the beginning is well worth it in terms of future earning potential. Here at Park Avenue Review we make at least part of this process easier and more navigable so that you can start your accounting career even quicker!

Current regulations for becoming a CPA require a Bachelor’s degree in accounting followed by at least another 30 class-hours of graduate-level or equivalent study. For prospective accountants, this typically calculates into a Master’s degree in accounting.

The next step is finding work which will contribute to the 2-years of field training necessary to attempt the CPA exam. Entry level accounting positions can often be found with accounting firms or with companies that have in-house accounting departments.

After at least two years in the profession, prospective CPA can sit for the exam, which consists of four parts. While it is possible to study for these exams on your own, many CPA candidates find it beneficial to take a review course, such as the one offered by Park Avenue Review. In these courses, participants get insight into the exam from knowledgeable instructors who themselves are CPAs. Having an outside commitment to keep you honest about your studying is one of the best ways to prepare for the CPA exams.

After passing the CPA exam, accountants receive their license and then only need to complete continuing education courses to maintain their license.

Good luck on your journey to becoming a CPA and we hope to see you at Park Avenue Review soon!

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