BUS 200 Lecture Notes - Lecture 17: Certified Public Accountant, Financial Accounting Standards Board, Institute Of Internal Auditors
Giselle De La Rua
Chapter 17: Understanding Accounting and Financial Information
1. Role of Accounting information
a. Accounting – the recording, classifying, summarizing and interpreting of financial
events & transactions in an organization to provide management and other
interested parties the financial information they need to make good operating
decisions
b. Major purposes – help managers make well-informed decisions and report
financial information about the firm to stakeholders
2. Accounting disciplines
a. Managerial accounting – provides information and analysis to managers inside the
organization to assist them in decision making
i. Concerned with measuring and reporting costs of production, marketing,
planning, controlling and design strategies to minimize taxes
ii. Certified management accountant (CMA) – profession accountant who has
met certain educational and experience requirements which include
passing an exam and being certified by the Institute of Certified
Management Accountants
b. Financial accounting – generates financial information and analyses for primarily
people outside the organization
i. Annual report – yearly statement of the financial condition, progress, and
expectations of an organization
ii. Private accountant – an accountant that works for a single firm,
government agency, or nonprofit
iii. Public accountant – an accountant who for a fee provides accounting
services to individuals or businesses
iv. Certified public accountant (CPA) – an accountant who passes a series of
examination established by the American institute of Certified Public
Accountants (AICPA) and meets the state’s requirement for education and
experience
c. The independent Financial Accounting Standards Board (FASB) defines the
generally accepted accounting principles (GAAP) to ensure accuracy
d. Profession suffered during the early 2000s due to scandals and thus the Sarbanes-
Oxley Act (Sarbox) was passed
e. Auditing – reviewing and evaluating the information used to prepare a company’s
financial statements
i. Private and public accountants can perform audits
ii. Independent audit – evaluation and unbiased opinion about the accuracy of
a company’s financial statements
iii. Certified Internal auditor – accountant with bachelor’s degree and two
years of experience in internal auditing who passes an exam administered
by the Institute of Internal Auditors
f. Tax accounting – Accountant trained in tax law and is responsible for preparing
tax returns or developing tax strategies
g. Government and no-for-profit accounting
3. The Accounting Cycle
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