Accounting, Professional Accounting, Accountant, Professional Accountant

Almanac • Accounting, Professional Accounting, Accountant, Professional Accountant

What is Accounting?

The process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information - American Accounting Association.

Organisations - Information

Organisations deal with information relating to the various activities carried on (transactions that take place) as part of their operations. Some of the important reasons for which the organisations deal with information are :

Achieving Objectives

All Organisations (business as well as others) have objectives. The main objective of business organisations is making profits. Even Organisations like WHO have objectives. WHO works towards ensuring proper health care for all human beings.

Organisations try to achieve their objectives in an efficient manner. Efficiency in achieiving organisational objectives implies achieving them with least possible cost/resource utilisation, which requires them to optimise their operations. The information relating to the various transactions in relation to an organisation would aid such optimisation.

Meeting Statutory Obligations

Organisations work within the purview of various statutes (laws) like company law, tax laws, mining laws etc. They, thus are under a statutory obligation to submit various kinds of information relating to their operations (incomes and expenses, financials, natural resource utilisations etc).
  • To tax authorities.
  • To regulatory authorities like company registrar, registrar of cooperative societies etc.
  • To the ownership (share holders, partners etc.).
The information relating to various organisational activities would thus help the organisation meet its statutory obligations.

Handling Information

The information relating to the various activities that take place in an organisation has to be collected and processed for being useful for the various purposes for which it is dealt with. The tasks would be:


In the process of collecting the information relating to the various organisational activities, only that information which is made use of is collected. What information is to be collected and what is to be left out is dependent on the needs of the organisation.

Cash Receipts, Payment Vouchers, Invoices, Attendance Time Sheets, Job Cards, Goods Received Notes, Delivery Challans, Stores Issue Slips, Point of Sale Terminals are some of the tools used for collecting information.


All the information collected, may not be required by all. Information that is needed may have to extracted/segregated from the collected information. Moreover, the information collected, in the format in which it is collected, may not be sufficient to meet all the needs. Additional information required may have to be derived from the collected information.

Say the tax authorities do not need the information relating to each transaction of expense and income. They only need to know the total figures relating to the various expenses and incomes (except when they have a doubt and would like to check). For this purpose, the totals of expenses and incomes should be derived.

The information collected should be processed so as to derive the information that is needed for being presented in discharge of the statutory obligations as well as for achieving the organisational objectives.


Making the best use of the information (collected as well as derived) requires presenting it in a format that is capable of being understood by the users of the information. It would be of little or no use unless its presentation aids understanding.

This is true both in case of submission of information in discharge of statutory obligations as well as in case of making use of the information for efficient achievement the organisational objectives.

Journal, Ledger, Trial Balance, Income Statement, Balance Sheet, Cash Flow Flow Statement, Funds Flow Statement, Cost Sheet, Flexible Budgets etc are some of the statements that are used in processing and presenting information.

Accounting - Collecting, Deriving, Analysing, Presenting information

Accounting is an activity that involves the acts of collecting information, processing the collected information to derive various other kinds of information, analysing the collected as well as derived information and presenting the same to the users of that information.
The terms accounting and accountancy are synonymously used.

Flavours/Flavors/Fields of Accounting

Financial Accounting, Cost Accounting, Managerial Accounting etc are all different flavours/flavors of accounting. They differ from one another in the kind of information collected and processed. All these use the information relating to the operations and finances of the organisation.

The method and system for collecting information, the information derived and the way it is presented, varies, depending on the flavour/flavor of accounting and the purpose for which accounting is done.

What is a Profession?


  • Meaning

    1. A calling in which one professes to have acquired specialised knowledge which is used in instructing, guiding or advising others.
    2. Any occupation by which a person earns a livelihood.
  • Synonyms

    1. line of work
    2. vocation
    3. occupation
    4. job
    5. career
    6. work
    7. business
  • Definitions

    1. Profession is a vocation requiring some significant body of knowledge that is applied with high degree of consistency in the service of some relevant segment of society — Hodge and Johnson
    2. Occupation especially one requiring advanced education and special training — A. S. Hornby

Profession » Attributes

The attributes of a profession as laid down by Dalton E. McFarland.

1.The existence of a body of specialised knowledge or techniques
2.Formalized method of acquiring training and experience
3.The establishment of representative organization with professionalism as its goal.
4.The formation of ethical codes for the guidance of conduct.
5.The charging of fees based on services but with due regards for the priority of service over the desire for monetary rewards.

Professional - Amateur


A professional (in an activity) is one who takes up something for the purpose of making money out of it and who has an expert knowledge in it. He is also proficient, skilled and has specialized knowledge in it. He is qualified certified or licensed for carrying on that activity by competent authority.


An amateur is a person who engages in something for the pleasure of it rather than for money.

Profession/Professional - Names

Special names relevant to the profession are used to identify a person taking up a profession i.e. professionals of some fields are called with special names.

Medical Profession [Medicine] Doctor
Engineering ProfessionEngineer
Legal ProfessionLawyer
Teaching ProfessionTeacher
Accounting ProfessionAccountant/Professional Accountant
Management ProfessionManager

What is Professional Accounting?

Professional accounting can be understood to be a field of accounting, specified by a statutory professional body of accountants, which is managed by the accounting professionals of that field. Some examples of professional accounting fields

  • Chartered Accountancy
  • Cost Accountancy
  • Company Secretaryship
  • Management Accountancy
Though, it is not a requirement that the bodies managing the profession should have a statutory recognition, we generally consider only the accounting fields pertaining to statutorily recognised bodies as professional accounting fields.

One of the main objectives of the professional body, is to conduct courses and periodical examinations, so as to enable, aspirants become professionals, in the field specified by the body, by taking up the course and qualifying in the examinations. The structure of the course, the frequency of examinations, qualification norms etc., are decided by the body itself.

They may also conduct more than one course, each of which represents a different level of proficiency in that field. They may also conduct various courses representing proficiency in different branches of the same field.

The professional bodies have many other functions and objectives all of which are directed towards enhancing the interests of the profession, professionals and the professional body.

Non-Professional/Formal Accounting

Non-professional or formal accounting would mean the fields specified by universities and non-professional bodies. The courses conducted by them are indicative of the fields. Unlike the professional bodies conducting professional accounting courses, these universities have very few objectives (in relation to the field) other than conduction of the course, examinations and award of certificates.

Who is a Professional Accountant?


A Professional accountant in a specified field is a candidate who has (or has acquired) the qualifications specified by the respective professional accounting body for being recognised as a professional in that field.

Acquiring qualifications

Acquiring the qualifications generally involves completing a course of study, getting through examinations at the end of the course, undergoing one or more kinds of practical training.

To become a chartered accountant, a candidate has to take up the chartered accountancy course, appear at and get through the chartered accountancy examinations at various levels, undergo practical training, computer training and management training. Upon completing all these a candidate would be eligible to become a chartered accountant (a professional accountant in field of chartered accountancy).


Candidates with certain specified qualifications may be exempt from one or more such requirements.

A company secretary intending to become a cost accountant would be exempt from appearing in few papers of the cost accountancy course that has to be taken up by candidates intending to become cost accountants.


Candidates with the requisite qualifications would then be eligible to become members of the respective body. All members of a professional accounting body are professional accountants in the specified field. Some bodies make it compulsory for candidates to take up membership for being recognised as a professional of the specified field. Some make it optional. Only members can play an active role in the affairs of the professional body.


Candidates pursuing the courses conducted by the professional accounting bodies are the students of the related professional accounting course.

Both Professionals and Non Professionals work at various levels

Accounting is a function that is carried on in almost all the business organisations by individuals either with or without the help of machines (computers). We find personnel working at various levels of the organisational hierarchies within the accounting and other departments (sections). People who are involved in the process of recording information (daily book keeping activities) whom we call accountants or book keepers or clerks or assistants, People who carry on activities relating to processing the information collected by book keepers whom we call accountants, managers, chief accounts etc., People who carry on the analysis of the accounting information who are generally positioned towards the higher levels of the hierarchy whom we call Chief Accounts Officer, Financial Manager etc.

All these need to have the knowledge of and be proficient in the area of accounting they deal with. It would be difficult to demarcate the knowledge as to non-professional level and professional level.

The level at which an accountant is working is not an appropriate guideline for deciding whether an accountant is a professional or not. We may find both professional as well as non-professional accountants at various levels of the organisation.

The depth of the knowledge required by people working in organisations at various levels depends on the level at which they are working, the accounting activity they handle as well as the informational needs of the organisation. We may find professional as well as non-professional accountants with the requisite knowledge and proficiency which may have been acquired through their academic curricula or through work experience.

Functions performed by Professional Accountants

The three courses of CA/CWA/CS which give an entry into the respective professions are called professional accounting courses in general. For the accomplishment of certain specialied functions, the specialised knowledge of the professional accountants is required.

The subjects that you study in all the three professional accounting courses (CA/CWA/CS) are the same to a considerable extent. But the area of specialisation would differ based on the profession in consideration. Therefore we notice that all the accounting professionals perform similar functions, except for the specialised areas that each professional deals with.

A CA specialises in accounting, taxation and auditing. A CWA/ICWA specialises in Costing and Management Accounting. A CS specialises in company law and related aspects.

The General Functions that are capable of being performed by all the professional accountants are:

Accounting [Book keeping]

Writing up of accounts and the preparation of financial statements ranging from simple Book keeping to making complex financial analysis.

Audit [review, check, inspection, examination, appraisal etc.]

Satisfying the users of financial statements that the statements which represent the accounts of organisations present a true and fair view of the state of affairs and are based on appropriate accounting principles.

Cost Accounting

Ascertaining the cost of production/processes at different levels of operations in the manufacture of a product or rendering a service. Providing costing information for the guidance of management, introducing cost control methods and assisting managements in establishing appropriate sale prices.


Since the tax laws are varied and complicated for a lay man to understand every one needs the services of a professional accountant for current and continuing tax information and getting general advice on taxes. Tax assessment is very closely linked with financial accounts. Therefore a professional accountant performs the functions of preparing returns for tax purposes, representing assessee's before Income-Tax authorities.

Special Company Work

Matters such as the formation of companies (registration work), designing the financial structure, liquidation etc the services of a professional accountant would be needed.

Shareholders representative - Company Directors

Working as a representative of the shareholders i.e. in the position of a director in the "Board of Directors" of the company. The professionals who hold senior positions in industry and commerce are best suited to this task. On account of their professional knowledge in one of the core functions i.e. accounting, they are capable of giving appropriate advices.

Secretarial Work

A secretary in addition to his regular secretarial work is an important link in the management chain. Small companies which may not need or are unable to afford the services of a full time secretary take the help of professional accountants for these. The growth of company as a form of business organisation creates a large scope in this area.

Almost every kind of organisation whose affairs are controlled by boards, councils and other corporate structures be it a co-operative , trust, society, association, federation, statutory authority, commission, board or the like finds it useful to utilize the services of the professional accountant for secretarial work.

Trustees - Executors

Professional accountants often are appointed as executors under a will or trust in order to carry on the administration of the estate or settlements. In such cases they work in tandem with legal practitioners. Solicitors or lawyers carrying out works of this kind usually take the help of professional accountants.

Management Accounting and consultancy

Professional accountants perform functions relating to management which have a direct accounting implication like formulation of policies, day to day control, performance evaluation, etc. They can assist business organisations in making the best use of the available resources in achieving their goals effectively.

Investigation - Share Valuation Work

Investigation is carried out to ascertain the financial position of business in connection with matters such as a new issue of share capital, the purchase or sale or financing of a business, reconstruction and amalgamations. Valuation of shares of public and private companies at the time of amalgamation or re-organisation and for the purpose of takeover bids and other acquisitions is being done by professional accountants.


The qualifications of the respective institutions are recognized at par with post graduate qualifications in commerce by many universities which enable them to take up a post as a lecturer in respective subjects where post graduation qualification is needed to be so appointed in the post.

Financial Market Services

A Professional accountant is well equipped with knowledge to provide expert level services with regard to Public Issue, Listing and Securities Management, Takeover Code, Insider Trading, Mergers, Acquisitions, and Joint Ventures Securities Compliance and Certification Services, Finance and Accounting Services, Taxation Services, International Trade and WTD Services.

Emerging areas

Other miscellaneous services and emerging new areas of work like (a) Work related to e - commerce in assessing the adequacy of the system (b) Risk management (c) Services as an arbitrator for the settling of disputes (d) Work connected with insolvency (e) measuring intellectual capital (f) Measurement of performance and system quality (g) Continuous assurance etc.