Main branches of accounting, job skillsets and competencies of accountants

a.     Main branches of accounting

1.     Financial accounting and reporting

Financial Accounting and Reporting provides financial information of an entity to external users in order to enable them to take relevant decisions based on the entity’s financial performance and position. The information is provided to the external parties by means of general purpose financial reports – income statement, balance sheet, statement of changes of equity and a cash flow statement.

Financial accounting and reporting provides vital economic business information for:

-       Creditors

-       Banks or financial institutions

-       Regulators

-       Suppliers

-       Tax professionals

2.     Management accounting

The process of creating organization goals by identifying, measuring, analyzing, interpreting and communicating information to managers is call management or managerial accounting.

Management accounting focuses on all accounting aimed at informing management about operational business metrics. It uses information relating to costs of products or services purchased by the company. Budgets are often used to quantify the decisions made in operational planning. Management accountants use performance reports to note variances between actual results from budgets.

3.     Taxation  

Tax accounting follows state and federal tax rules during tax planning or in the preparation of tax returns. This branch reports on the effect of taxes on a business and may offer advisory services on minimizing taxes or the consequences of tax decisions. Tax accountants calculate income and other taxes depending on the structure of the business. Since taxes and income brackets vary from entity to entity, tax accounting is well-versed in tax laws surrounding sole proprietorships, corporations and limited liability corporations (LLC).

4.     Financial management

Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise.

5.     Auditing

Auditing is a branch of accounting that is usually done internally and externally. Auditors examine and monitor a business for accurate reporting, compliance with tax laws and regulations, and financial integrity. There are two specializations for auditors:

External auditor

State or federal auditing takes place with an independent, outside auditor who examines a company's financial statements for accuracy. Auditing complies with GAAP and evaluates the adequacies of a company's internal controls. External auditors may test the company's segregation of duties, policies, authorizations and other management controls for efficacy and integrity.

Internal auditor

Internal auditing identifies and prevents tax issues or prepares the business for an outside audit. Auditors in this branch are typically chosen by shareholders so their role doesn't present a conflict of interest and ensures their objectivity.

b.     Skills for accountant

1.     Analytical skills

One of the primary skills accountants need is the ability to analyze records and data. They need to have a keen eye for spotting errors and coming up with financial solutions and advice. They might need analytical skills to detect and prevent fraud or to ensure taxes are done correctly.

2.     Critical thinking

Using critical thinking skills can help in real world applications to navigate through complexity, deal with various uncertainties, and to help estimate probabilities.

3.     Organization

Accountants work with a lot of document, files, and information. They need to be able to accurately and effectively organize all of this information. Organization is especially important for accountants because their main job is to ensure accuracy in their files.

4.     Mathematics

Accountants need to be able to do math. They work with analyzing, comparing, interpreting, and calculating numbers all day long. Their math skills particularly need to be geared toward finances and accuracy.

5.     Time management

Many accountants work on multiple projects at once. The ability to multitask and effectively manage one’s time ensures accountants can meet deadlines and provide satisfactory results for their clients.

6.     Industry knowledge

Accountants should have extensive knowledge about financial statements and how they work. Technical expertise in specific areas of accounting can shed light on different topics.

7.     Spreadsheet proficiency

Today’s accountants rely on a variety of software programs to complete different tasks. Spreadsheets are particularly common, and accountants are encouraged to familiarize themselves with Microsoft Excel and other spreadsheet platforms.

8.     Team collaboration

Contrary to the stereotype of accountants working alone at a desk, many accounting professionals work on teams. By participating in team projects and collaborating with colleagues, accountants can generate positive results for their organization and pave the way for valuable advancement opportunities.

c.     Competencies of accountants

Accounting competencies are the technical competencies of the profession that add value to business and contribute to a prosperous society.

1.     Risk Assessment, Analysis and Management

Assess, analyze and manage risk using appropriate frameworks, professional judgment and skepticism for effective business management.

2.     Measurement Analysis and Interpretation

Identify and apply appropriate, reliable, and verifiable measurements to analyze data for a given purpose and intended use.

3.     Reporting

Identify the appropriate content and communicate clearly and objectively to the intended audience, the work performed and the results as governed by professional standards, required by law or dictated by the business environment.

4.     Research

Identify, access and apply relevant professional frameworks, standards, and guidance, as well as other information for analysis and to make informed decisions.

5.     Systems and Process Management

Identify the appropriate businesses processes and system(s), related frameworks and controls to assist in the design and use of systems for efficient and effective operations.

6.     Technology and Tools

Identify and utilize relevant technology and tools to analyze data, efficiently and effectively perform assigned tasks as well as support other competencies.