Accounting

{{main article|History of accounting}}

File:Pacioli.jpg, painted by Jacopo de' Barbari, 1495 (Museo di Capodimonte)]]

Accounting is thousands of years old and can be traced to ancient civilizations.Robson, Keith. 1992. "Accounting Numbers as 'inscription': Action at a Distance and the Development of Accounting." Accounting, Organizations and Society 17 (7): 685–708.{{Citation | url =http://www.nysscpa.org/trustedprof/archive/1103/tp24.htm | title =A History of ACCOUNTANCY | publisher =New York State Society of CPAs | date =November 2003 | access-date =28 December 2013 | archive-date =1 January 2015 | archive-url =https://web.archive.org/web/20150101061851/http://www.nysscpa.org/trustedprof/archive/1103/tp24.htm | url-status =live }}{{Citation | url =http://www.library.unisa.edu.au/about/exhibitions/historyacc.aspx | title =The History of Accounting | publisher =University of South Australia | date =30 April 2013 | access-date =28 December 2013 | archive-url =https://web.archive.org/web/20131228180919/http://www.library.unisa.edu.au/about/exhibitions/historyacc.aspx | archive-date =28 December 2013 | url-status =dead }} One early development of accounting dates back to ancient Mesopotamia and is closely related to developments in writing, counting and money; there is also evidence of early forms of bookkeeping in ancient Iran,{{cite book|last=کشاورزی|first=کیخسرو|title=تاریخ ایران از زمان باستان تا امروز (Translated from Russian by Grantovsky, E.A.) | year=1980 | pages=39–40 | language=fa}}Oldroyd, David & Dobie, Alisdair: Themes in the history of bookkeeping, The Routledge Companion to Accounting History, London, July 2008, {{ISBN|978-0-415-41094-6}}, Chapter 5, p. 96 and early auditing systems by the ancient Egyptians and Babylonians. By the time of Emperor Augustus, the Roman government had access to detailed financial information.{{Cite journal|last=Oldroyd |first=David |title=The role of accounting in public expenditure and monetary policy in the first century AD Roman Empire |journal=The Accounting Historians Journal |volume=22 |issue=2 |date=December 1995 |pages=117–129 |publisher=Academy of Accounting Historians |doi=10.2308/0148-4184.22.2.117 |jstor=40698165}}

Many concepts related to today's accounting seem to be initiated in medieval's Middle East. For example, Jewish communities used double-entry bookkeeping in the early-medieval periodParker, L. M., "Medieval Traders as International Change Agents: A Comparison with Twentieth Century International Accounting Firms", The Accounting Historians Journal, 16(2) (1989): 107–118.Medieval Traders as International Change Agents: a Comment, Michael Scorgie, The Accounting Historians Journal, Vol. 21, No. 1 (June 1994), pp. 137–143 and Muslim societies, at least since the 10th century also used many modern accounting concepts.{{cite journal |last1=Hamid |first1=Shaari |last2=Craig |first2=Russell |last3=Clarke |first3=Frank |title=Bookkeeping and accounting control systems in a tenth-century Muslim administrative office |journal=Accounting, Business & Financial History |date=January 1995 |volume=5 |issue=3 |pages=321–333 |doi=10.1080/09585209500000049 }}

The spread of the use of Arabic numerals, instead of the Roman numbers historically used in Europe, increased efficiency of accounting procedures among Mediterranean merchants,{{cite journal |last1=Danna |first1=Rafael |title=The spread of Hindu-Arabic numerals in the tradition of European practical mathematics: A socio-economic perspective, thirteenth-sixteenth centuries |journal=Conference: The Economic History Society |date=5–7 April 2019}} who further refined accounting in medieval Europe.{{cite web |last=Heeffer |first=Albrecht |title=On the curious historical coincidence of algebra and double-entry bookkeeping |work= Foundations of the Formal Sciences |publisher=Ghent University |date=November 2009 | page=11 |url=http://logica.ugent.be/albrecht/thesis/FOTFS2008-Heeffer.pdf |archive-url=https://ghostarchive.org/archive/20221009/http://logica.ugent.be/albrecht/thesis/FOTFS2008-Heeffer.pdf |archive-date=2022-10-09 |url-status=live }} With the development of joint-stock companies, accounting split into financial accounting and management accounting.

The first published work on a double-entry bookkeeping system was the Summa de arithmetica, published in Italy in 1494 by Luca Pacioli (the "Father of Accounting").{{Cite web|url=https://www.huffingtonpost.com/steve-mariotti/so-who-invented-double-en_b_3588941.html|title=So, Who Invented Double Entry Bookkeeping? Luca Pacioli or Benedikt Kotruljević?|last=Mariotti|first=Steve|date=12 July 2013|website=Huffington Post|language=en-US|access-date=3 August 2018|archive-date=10 September 2017|archive-url=https://web.archive.org/web/20170910062611/http://www.huffingtonpost.com/steve-mariotti/so-who-invented-double-en_b_3588941.html|url-status=live}}{{Cite journal|last1=Lauwers |first1=Luc |last2=Willekens |first2=Marleen |title=Five Hundred Years of Bookkeeping: A Portrait of Luca Pacioli |journal=Tijdschrift voor Economie en Management |year=1994 |volume=XXXIX |issue=3 |page=302 |format=PDF download |publisher=KU Leuven |url=https://lirias.kuleuven.be/bitstream/123456789/119065/1/TEM1994-3_289-304p.pdf |archive-url=https://web.archive.org/web/20110820033441/https://lirias.kuleuven.be/bitstream/123456789/119065/1/TEM1994-3_289-304p.pdf |archive-date=20 August 2011 |url-status=live}} Accounting began to transition into an organized profession in the 19th century,{{Citation | url =https://www.icaew.com/en/library/subject-gateways/accounting-history/resources/timeline | title =Timeline of the History of the Accountancy Profession | publisher =Institute of Chartered Accountants in England and Wales | year =2013 | access-date =28 December 2013 | archive-date =11 October 2014 | archive-url =https://web.archive.org/web/20141011141621/http://www.icaew.com/en/library/subject-gateways/accounting-history/resources/timeline | url-status =live }}{{citation |url=http://www.ruf.rice.edu/~sazeff/PDF/Horizons,%20Part%20I%20(print).pdf |title=How the U.S. Accounting Profession Got Where It Is Today: Part I |author=Stephen A. Zeff |journal=Accounting Horizons |pages=189–205 |volume=17 |issue=3 |date=2003 |doi=10.2308/acch.2003.17.3.189 |access-date=16 May 2020 |archive-date=21 July 2022 |archive-url=https://web.archive.org/web/20220721003409/http://www.ruf.rice.edu/~sazeff/PDF/Horizons,%20Part%20I%20(print).pdf |url-status=live }} with local professional bodies in England merging to form the Institute of Chartered Accountants in England and Wales in 1880.{{cite book |author=Perks, R. W. |year=1993 |title=Accounting and Society |publisher=Chapman & Hall |location=London |isbn= 978-0-412-47330-2 |page=16 }}

File:Hauptbuch Hochstetter vor 1828.jpg]]

Both the words "accounting" and "accountancy" were in use in Great Britain by the mid-1800s and are derived from the words accompting and accountantship used in the 18th century.Labardin, Pierre, and Marc Nikitin. 2009. "Accounting and the Words to Tell It: An Historical Perspective." Accounting, Business & Financial History 19 (2): 149–166. In Middle English (used roughly between the 12th and the late 15th century), the verb "to account" had the form accounten, which was derived from the Old French word aconter,Baladouni, Vahé. 1984. "Etymological Observations on Some Accounting Terms." The Accounting Historians Journal 11 (2): 101–109. which is in turn related to the Vulgar Latin word computare, meaning "to reckon". The base of computare is putare, which "variously meant to prune, to purify, to correct an account, hence, to count or calculate, as well as to think".

The word "accountant" is derived from the French word {{lang|fr|compter}}, which is also derived from the Italian and Latin word {{lang|la|computare}}. The word was formerly written in English as "accomptant", but in process of time the word, which was always pronounced by dropping the "p", became gradually changed both in pronunciation and in orthography to its present form.Pixley, Francis William: Accountancy—constructive and recording accountancy (Sir Isaac Pitman & Sons, Ltd, London, 1900), p4

Accounting has variously been defined as the keeping or preparation of the financial records of transactions of the firm, the analysis, verification and reporting of such records and "the principles and procedures of accounting"; it also refers to the job of being an accountant.{{cite web |url=http://dictionary.cambridge.org/dictionary/business-english/accounting |title=accounting noun – definition in the Business English Dictionary |year=2013 |website=Cambridge Dictionaries Online |publisher=Cambridge University Press |access-date=30 December 2013 |archive-date=2 July 2015 |archive-url=https://web.archive.org/web/20150702062650/http://dictionary.cambridge.org/dictionary/business-english/accounting |url-status=live }}{{cite web |url=http://dictionary.cambridge.org/dictionary/british/accounting?q=accounting |title=accounting noun – definition in the British English Dictionary & Thesaurus |year=2013 |website=Cambridge Dictionaries Online |publisher=Cambridge University Press |access-date=30 December 2013 |archive-date=2 November 2014 |archive-url=https://web.archive.org/web/20141102082918/http://dictionary.cambridge.org/dictionary/british/accounting?q=accounting |url-status=live }}{{cite web |url=http://www.merriam-webster.com/dictionary/accounting |title=accounting |year=2013 |website=Merriam-Webster |publisher=Merriam-Webster, Incorporated |access-date=30 December 2013 |archive-date=23 July 2022 |archive-url=https://web.archive.org/web/20220723235833/https://www.merriam-webster.com/dictionary/accounting |url-status=live }}

Accountancy refers to the occupation or profession of an accountant,{{cite web |url=http://www.merriam-webster.com/dictionary/accountancy |title=accountancy |year=2013 |website=Merriam-Webster |publisher=Merriam-Webster, Incorporated |access-date=30 December 2013 |archive-date=29 July 2022 |archive-url=https://web.archive.org/web/20220729092830/https://www.merriam-webster.com/dictionary/accountancy |url-status=live }}{{cite web |url=http://dictionary.cambridge.org/dictionary/business-english/accountancy?q=accountancy |title=accountancy noun – definition in the Business English Dictionary |year=2013 |website=Cambridge Dictionaries Online |publisher=Cambridge University Press |access-date=30 December 2013 |archive-date=19 October 2014 |archive-url=https://web.archive.org/web/20141019020532/http://dictionary.cambridge.org/dictionary/business-english/accountancy?q=accountancy |url-status=live }}{{cite web |url=http://dictionary.cambridge.org/dictionary/british/accountancy?q=accountancy |title=accountancy noun – definition in the British English Dictionary & Thesaurus |year=2013 |website=Cambridge Dictionaries Online |publisher=Cambridge University Press |access-date=30 December 2013 |archive-date=19 October 2014 |archive-url=https://web.archive.org/web/20141019014728/http://dictionary.cambridge.org/dictionary/british/accountancy?q=accountancy |url-status=live }} particularly in British English.

Accounting has several subfields or subject areas, including financial accounting, management accounting, auditing, taxation and accounting information systems.Weber, Richard P., and W. C. Stevenson. 1981. "Evaluations of Accounting Journal and Department Quality." The Accounting Review 56 (3): 596–612.

{{main article|Financial accounting}}

Financial accounting focuses on the reporting of an organization's financial information to external users of the information, such as investors, potential investors and creditors. It calculates and records business transactions and prepares financial statements for the external users in accordance with generally accepted accounting principles (GAAP).{{Citation

| last1 = Horngren

| first1 = Charles T.

| author-link1= Charles Thomas Horngren

| last2 = Datar

| first2 = Srikant M.

| author-link2= Srikant Datar

| last3 = Foster

| first3 = George

| title = Cost Accounting: A Managerial Emphasis

| place = New Jersey

| publisher = Pearson Prentice Hall

| year = 2006

| edition = 12th

}} GAAP, in turn, arises from the wide agreement between accounting theory and practice, and changes over time to meet the needs of decision-makers.

Financial accounting produces past-oriented reports—for example financial statements are often published six to ten months after the end of the accounting period—on an annual or quarterly basis, generally about the organization as a whole.

{{main article|Management accounting}}

Management accounting focuses on the measurement, analysis and reporting of information that can help managers in making decisions to fulfill the goals of an organization. In management accounting, internal measures and reports are based on cost–benefit analysis, and are not required to follow the generally accepted accounting principle (GAAP). In 2014 CIMA created the [https://www.cgma.org/resources/reports/globalmanagementaccountingprinciples.html Global Management Accounting Principles (GMAPs)]. The result of research from across 20 countries in five continents, the principles aim to guide best practice in the discipline.{{cite news|last=King|first=I.|title=New set of accounting principles can help drive sustainable success|newspaper=Financial Times|date=23 October 2014|url=http://www.ft.com/cms/s/0/0b595a98-59fa-11e4-8771-00144feab7de.html?siteedition=uk#axzz3Q8Lp1OP9|publisher=ft.com|access-date=28 January 2015}}

Management accounting produces past-oriented reports with time spans that vary widely, but it also encompasses future-oriented reports such as budgets. Management accounting reports often include financial and non financial information, and may, for example, focus on specific products and departments.

{{main article|Intercompany accounting}}

Intercompany accounting focuses on the measurement, analysis and reporting of information between separate entities that are related, such as a parent company and its subsidiary companies. Intercompany accounting concerns record keeping of transactions between companies that have common ownership such as a parent company and a partially or wholly owned subsidiary. Intercompany transactions are also recorded in accounting when business is transacted between companies with a common parent company (subsidiaries).{{Cite web |title=What is Intercompany Accounting? {{!}} F&A Glossary {{!}} BlackLine |url=https://www.blackline.com/resources/glossaries/intercompany-accounting/ |access-date=2024-08-16 |website=www.blackline.com}}{{Cite web |last=Beaver |first=Scott |date=2024-04-03 |title=What Is Intercompany Accounting? Best Practices and Management |url=https://www.netsuite.com/portal/resource/articles/accounting/intercompany-accounting.shtml |website=www.netsuite.com}}

{{main article|Financial audit|Internal audit}}

Auditing is the verification of assertions made by others regarding a payoff,Baiman, Stanley. 1979. "Discussion of Auditing: Incentives and Truthful Reporting." Journal of Accounting Research 17: 25–29. and in the context of accounting it is the "unbiased examination and evaluation of the financial statements of an organization".{{cite web |url=http://www.investopedia.com/terms/a/audit.asp |title=Audit Definition |year=2013 |website=Investopedia |publisher=Investopedia US |access-date=30 December 2013 |archive-date=26 July 2022 |archive-url=https://web.archive.org/web/20220726065345/https://www.investopedia.com/terms/a/audit.asp |url-status=live }} Audit is a professional service that is systematic and conventional.{{cite journal|last1=Tredinnick|first1=Luke|title=Artificial intelligence and professional roles|journal=Business Information Review|date=March 2017|volume=34|issue=1|pages=37–41|doi=10.1177/0266382117692621|s2cid=157743821|url=http://repository.londonmet.ac.uk/3812/3/OOTB-AI.pdf |archive-url=https://ghostarchive.org/archive/20221009/http://repository.londonmet.ac.uk/3812/3/OOTB-AI.pdf |archive-date=2022-10-09 |url-status=live}}

An audit of financial statements aims to express or disclaim an independent opinion on the financial statements. The auditor expresses an independent opinion on the fairness with which the financial statements presents the financial position, results of operations, and cash flows of an entity, in accordance with the generally accepted accounting principles (GAAP) and "in all material respects". An auditor is also required to identify circumstances in which the generally accepted accounting principles (GAAP) have not been consistently observed.{{cite web |url=http://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-00110.pdf |title=Responsibilities and Functions of the Independent Auditor |date=November 1972 |website=AICPA |access-date=30 December 2013 |archive-date=23 April 2021 |archive-url=https://web.archive.org/web/20210423141039/https://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-00110.pdf |url-status=dead }}

{{main article|Accounting information system}}

An accounting information system is a part of an organization's information system used for processing accounting data.{{cite web|title=1.2 Accounting information systems|url=http://labspace.open.ac.uk/mod/resource/view.php?id=365833|work=Introduction to the context of accounting|publisher=OpenLearn|access-date=3 February 2014}}

Many corporations use artificial intelligence-based information systems. The banking and finance industry uses AI in fraud detection. The retail industry uses AI for customer services. AI is also used in the cybersecurity industry. It involves computer hardware and software systems using statistics and modeling.{{cite journal|last1=Pathak|first1=Jagdish|last2=Lind|first2=Mary R.|title=Audit Risk, Complex Technology, and Auditing Processes|journal=EDPACS|date=November 2003|volume=31|issue=5|pages=1–9|doi=10.1201/1079/43853.31.5.20031101/78844.1|s2cid=61767095}}

Many accounting practices have been simplified with the help of accounting computer-based software. An enterprise resource planning (ERP) system is commonly used for a large organisation and it provides a comprehensive, centralized, integrated source of information that companies can use to manage all major business processes, from purchasing to manufacturing to human resources. These systems can be cloud based and available on demand via application or browser, or available as software installed on specific computers or local servers, often referred to as on-premise.

{{main article|Tax accounting}}

Tax accounting in the United States concentrates on the preparation, analysis and presentation of tax payments and tax returns. The U.S. tax system requires the use of specialised accounting principles for tax purposes which can differ from the generally accepted accounting principles (GAAP) for financial reporting.{{ Citation | last1 = Droms| first1= William G.| last2= Wright| first2= Jay O.| title= Finance and Accounting for nonfinancial Managers: All the Basics you need to Know| publisher= Basic Books| year= 2010| edition= 6th}} U.S. tax law covers four basic forms of business ownership: sole proprietorship, partnership, corporation, and limited liability company. Corporate and personal income are taxed at different rates, both varying according to income levels and including varying marginal rates (taxed on each additional dollar of income) and average rates (set as a percentage of overall income).

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{{main article|Forensic accounting}}

Forensic accounting is a specialty practice area of accounting that describes engagements that result from actual or anticipated disputes or litigation.{{Cite web |title=What is a Forensic Accountant? {{!}} Forensic CPA Society |url=https://www.fcpas.org/about-us/what-is-a-forensic-accountant/ |access-date=2023-08-02 |language=en-US}} "Forensic" means "suitable for use in a court of law", and it is to that standard and potential outcome that forensic accountants generally have to work.

{{main article|Political campaign accounting}}

Political campaign accounting deals with the development and implementation of financial systems and the accounting of financial transactions in compliance with laws governing political campaign operations. This branch of accounting was first formally introduced in the March 1976 issue of The Journal of Accountancy.{{cite journal |id={{ProQuest|198258865}} |last1=Wagman |first1=Barry E. |title=Political campaign accounting—New opportunities for the CPA |journal=Journal of Accountancy |volume=141 |issue=3 |date=March 1976 |pages=36 }}

{{Category see also|Accounting organizations}}

{{main article|Professional accounting body}}

Professional accounting bodies include the American Institute of Certified Public Accountants (AICPA) and the other 179 members of the International Federation of Accountants (IFAC),{{cite web|url=http://www.ifac.org/about-ifac/membership/members|title=IFAC Members|publisher=ifac.org|access-date=25 March 2016|archive-date=10 March 2016|archive-url=https://web.archive.org/web/20160310092205/http://www.ifac.org/about-ifac/membership/members|url-status=dead}} including Institute of Chartered Accountants of Scotland (ICAS), Institute of Chartered Accountants of Pakistan (ICAP), CPA Australia, Institute of Chartered Accountants of India, Association of Chartered Certified Accountants (ACCA) and Institute of Chartered Accountants in England and Wales (ICAEW). Some countries have a single professional accounting body and, in some other countries, professional bodies for subfields of the accounting professions also exist, for example the Chartered Institute of Management Accountants (CIMA) in the UK and Institute of management accountants in the United States.{{cite web |url=http://www.accountingforsustainability.org/international_network/accounting-bodies-network |title=Accounting Bodies Network |website=The Prince's Accounting for Sustainability Project |access-date=3 January 2014 |archive-url=https://web.archive.org/web/20140103155739/http://www.accountingforsustainability.org/international_network/accounting-bodies-network |archive-date=3 January 2014 |url-status=dead |df=dmy-all }} Many of these professional bodies offer education and training including qualification and administration for various accounting designations, such as certified public accountant (AICPA) and chartered accountant.{{cite web |url=http://www.aicpa.org/BecomeACPA/GettingStarted/Pages/default.aspx |title=Getting Started |year=2014 |website=AICPA |access-date=3 January 2014 |archive-date=7 January 2014 |archive-url=https://web.archive.org/web/20140107234214/http://www.aicpa.org/BECOMEACPA/GETTINGSTARTED/Pages/default.aspx |url-status=live }}{{cite web |url=http://www.icaew.com/en/qualifications-and-programmes/aca |title=The ACA Qualification |year=2014 |website=ICAEW |access-date=3 January 2014 |archive-date=4 January 2014 |archive-url=https://web.archive.org/web/20140104034737/http://www.icaew.com/en/qualifications-and-programmes/aca |url-status=live }}

{{main article|Accounting networks and associations}}

Depending on its size, a company may be legally required to have their financial statements audited by a qualified auditor, and audits are usually carried out by accounting firms.{{cite web |url=https://publications.parliament.uk/pa/ld201011/ldselect/ldeconaf/119/11904.htm |title=Auditors: Market concentration and their role, CHAPTER 1: Introduction |year=2011 |website=UK Parliament |publisher=House of Lords |access-date=1 January 2014 |archive-date=29 July 2022 |archive-url=https://web.archive.org/web/20220729092827/https://publications.parliament.uk/pa/ld201011/ldselect/ldeconaf/119/11904.htm |url-status=live }}

Accounting firms grew in the United States and Europe in the late nineteenth and early twentieth century, and through several mergers there were large international accounting firms by the mid-twentieth century. Further large mergers in the late twentieth century led to the dominance of the auditing market by the "Big Five" accounting firms: Arthur Andersen, Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers.{{cite web |url=https://publications.parliament.uk/pa/ld201011/ldselect/ldeconaf/119/11905.htm |title=Auditors: Market concentration and their role, CHAPTER 2: Concentration in the audit market |year=2011 |website=UK Parliament |publisher=House of Lords |access-date=1 January 2014 |archive-date=28 March 2022 |archive-url=https://web.archive.org/web/20220328230040/https://publications.parliament.uk/pa/ld201011/ldselect/ldeconaf/119/11905.htm |url-status=live }} The demise of Arthur Andersen following the Enron scandal reduced the Big Five to the Big Four.{{cite web |url=http://lexicon.ft.com/Term?term=big-four |title=Definition of big four |year=2014 |website=Financial Times Lexicon |publisher=The Financial Times Ltd |access-date=1 January 2014 |archive-date=2 January 2014 |archive-url=https://web.archive.org/web/20140102195935/http://lexicon.ft.com/Term?term=big-four |url-status=dead }}

{{See also|Accounting standards|Convergence of accounting standards}}

Generally accepted accounting principles (GAAP) are accounting standards issued by national regulatory bodies. In addition, the International Accounting Standards Board (IASB) issues the International Financial Reporting Standards (IFRS) implemented by 147 countries. Standards for international audit and assurance, ethics, education, and public sector accounting are all set by independent standard settings boards supported by IFAC. The International Auditing and Assurance Standards Board sets international standards for auditing, assurance, and quality control; the International Ethics Standards Board for Accountants (IESBA){{cite web|url=http://www.ifac.org/ethics|title=IESBA | Ethics | Accounting | IFAC|publisher=ifac.org|access-date=25 March 2016|archive-date=26 May 2016|archive-url=https://web.archive.org/web/20160526235439/http://www.ifac.org/ethics|url-status=dead}} sets the internationally appropriate principles-based Code of Ethics for Professional Accountants; the International Accounting Education Standards Board (IAESB) sets professional accounting education standards;{{cite web|url=http://www.ifac.org/education|title=IAESB | International Accounting Education Standards Board | IFAC|publisher=ifac.org|access-date=25 March 2016|archive-date=16 May 2016|archive-url=https://web.archive.org/web/20160516184718/http://www.ifac.org/education|url-status=dead}} and International Public Sector Accounting Standards Board (IPSASB) sets accrual-based international public sector accounting standards.{{cite web|url=http://www.ifac.org/public-sector|title=IPSASB | International Public Sector Accounting Standards Board | IFAC|publisher=ifac.org|access-date=25 March 2016|archive-date=27 May 2016|archive-url=https://web.archive.org/web/20160527045153/http://www.ifac.org/public-sector|url-status=dead}}

Organizations in individual countries may issue accounting standards unique to the countries. For example, in Australia, the Australian Accounting Standards Board manages the issuance of the accounting standards in line with IFRS. In the United States the Financial Accounting Standards Board (FASB) issues the Statements of Financial Accounting Standards, which form the basis of US GAAP, and in the United Kingdom the Financial Reporting Council (FRC) sets accounting standards.{{Citation | url =http://www.icaew.com/en/library/subject-gateways/accounting-standards/knowledge-guide-to-uk-accounting-standards | title =Knowledge guide to UK Accounting Standards | publisher =ICAEW | year =2014 | access-date =1 January 2014 | archive-date =18 November 2018 | archive-url =https://web.archive.org/web/20181118172337/https://www.icaew.com/en/library/subject-gateways/accounting-standards/knowledge-guide-to-uk-accounting-standards | url-status =live }} However, as of 2012 "all major economies" have plans to converge towards or adopt the IFRS.

A bachelor's degree or a master's degree in accounting or a related field is required for most accountant and auditor job positions, and some employers prefer applicants with advanced qualifications.{{cite web |url=http://www.bls.gov/ooh/Business-and-Financial/Accountants-and-auditors.htm#tab-4 |title=How to Become an Accountant or Auditor |year=2012 |website=U.S. Bureau of Labor Statistics |publisher=United States Department of Labor |access-date=31 December 2013 |archive-date=9 July 2022 |archive-url=https://web.archive.org/web/20220709084813/https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm#tab-4 |url-status=live }} A degree in accounting may also be required for, or may be used to fulfill the requirements for, membership to professional accounting bodies. For example, the education during an accounting degree can be used to fulfill the American Institute of CPA's (AICPA) 150 semester hour requirement,{{cite web |url=http://www.aicpa.org/becomeacpa/licensure/requirements/pages/default.aspx |title=150 Hour Requirement for Obtaining CPA Certification |year=2013 |website=AICPA |access-date=31 December 2013 |archive-date=29 July 2022 |archive-url=https://web.archive.org/web/20220729094716/https://www.aicpa.org/becomeacpa/licensure/requirements/pages/default.aspx |url-status=live }} and associate membership with the Certified Public Accountants Association of the UK is available after gaining a degree in finance or accounting.{{cite web|url=http://www.acpa.org.uk/criteria-for-entry.aspx |title=Criteria for entry |year=2013 |website=CPA UK |access-date=31 December 2013 |url-status=dead |archive-url=https://web.archive.org/web/20130819184954/http://acpa.org.uk/criteria-for-entry.aspx |archive-date=19 August 2013 }}

A doctorate is required in order to pursue a career in accounting academia, for example, to work as a university professor in accounting.{{cite web |url=http://www.aicpa.org/interestareas/youngcpanetwork/resources/career/pages/acareerineducation.aspx |title=Want a Career in Education? Here's What You Need to Know |year=2013 |website=AICPA |access-date=31 December 2013 |archive-url=https://web.archive.org/web/20140101002919/http://www.aicpa.org/interestareas/youngcpanetwork/resources/career/pages/acareerineducation.aspx |archive-date=1 January 2014 |url-status=dead }}{{cite web |url=http://www.byuaccounting.net/mediawiki/index.php?title=Main_Page |title=PhD Prep Track |year=2013 |website=BYU Accounting |access-date=31 December 2013 |archive-date=5 May 2019 |archive-url=https://web.archive.org/web/20190505181108/http://www.byuaccounting.net/mediawiki/index.php?title=Main_Page |url-status=live }} The Doctor of Philosophy (PhD) and the Doctor of Business Administration (DBA) are the most popular degrees. The PhD is the most common degree for those wishing to pursue a career in academia, while DBA programs generally focus on equipping business executives for business or public careers requiring research skills and qualifications.

{{Main|Chartered accountant|Certified Public Accountant}}

{{See also|Professional certification #Accountancy, auditing and finance}}

Professional accounting qualifications include the chartered accountant designations and other qualifications including certificates and diplomas.{{cite web |url=http://www.accaglobal.com/gb/en/qualifications/glance.html |title=Accountancy Qualifications at a Glance |year=2014 |website=ACCA |access-date=4 January 2014 |archive-date=6 January 2014 |archive-url=https://web.archive.org/web/20140106005500/http://www.accaglobal.com/gb/en/qualifications/glance.html |url-status=live }}

In Scotland, chartered accountants of ICAS undergo Continuous Professional Development and abide by the ICAS code of ethics.{{Cite web|url=https://www.icas.com/ethics/icas-code-of-ethics|title=ICAS code of ethics|last=Kyle|first=McHatton|website=www.icas.com|language=en|access-date=18 October 2018|archive-date=18 October 2018|archive-url=https://web.archive.org/web/20181018201603/https://www.icas.com/ethics/icas-code-of-ethics|url-status=live}} In England and Wales, chartered accountants of the ICAEW undergo annual training, and are bound by the ICAEW's code of ethics and subject to its disciplinary procedures.{{cite web|url=http://www.icaew.com/en/qualifications-and-programmes/better-qualified/ |title=ACA – The qualification of ICAEW Chartered Accountants |year=2014 |website=ICAEW |access-date=4 January 2014 |url-status=dead |archive-url=https://web.archive.org/web/20131011082948/http://www.icaew.com/en/qualifications-and-programmes/better-qualified/ |archive-date=11 October 2013 }}

In the United States, the requirements for joining the AICPA as a Certified Public Accountant are set by the Board of Accountancy of each state, and members agree to abide by the AICPA's Code of Professional Conduct and Bylaws.

The ACCA is the largest global accountancy body with over 320,000 members, and the organisation provides an 'IFRS stream' and a 'UK stream'. Students must pass a total of 14 exams, which are arranged across three levels.{{Cite news|url=https://www.careersinaudit.com/article/european-accounting-qualifications-explained/|title=European Accounting Qualifications Explained {{!}} CareersinAudit.com|work=CareersinAudit.com|access-date=13 December 2017|language=en-GB|archive-date=7 October 2018|archive-url=https://web.archive.org/web/20181007223203/https://www.careersinaudit.com/article/european-accounting-qualifications-explained/|url-status=live}}

{{Main article|Accounting research}}

Accounting research is research in the effects of economic events on the process of accounting, the effects of reported information on economic events, and the roles of accounting in organizations and society.{{Citation|url=http://www.accaglobal.com/content/dam/acca/global/PDF-technical/human-capital/rr-120-002.pdf |title=The Relevance and Utility of Leading Accounting Research |publisher=The Association of Chartered Certified Accountants |year=2010 |access-date=27 December 2013 |url-status=dead |archive-url=https://web.archive.org/web/20131227111624/http://www.accaglobal.com/content/dam/acca/global/PDF-technical/human-capital/rr-120-002.pdf |archive-date=27 December 2013 }}{{cite journal |last1=Burchell |first1=S. |last2=Clubb |first2=C. |last3=Hopwood |first3=A. |last4=Hughes |first4=J. |last5=Nahapiet |first5=J. |title=The roles of accounting in organizations and society |journal=Accounting, Organizations and Society |date=1980 |volume=5 |issue=1 |pages=5–27|doi=10.1016/0361-3682(80)90017-3 }} It encompasses a broad range of research areas including financial accounting, management accounting, auditing and taxation.Oler, Derek K., Mitchell J. Oler, and Christopher J. Skousen. 2010. "Characterizing Accounting Research." Accounting Horizons 24 (4): 635–670.

Accounting research is carried out both by academic researchers and practicing accountants. Methodologies in academic accounting research include archival research, which examines "objective data collected from repositories"; experimental research, which examines data "the researcher gathered by administering treatments to subjects"; analytical research, which is "based on the act of formally modeling theories or substantiating ideas in mathematical terms"; interpretive research, which emphasizes the role of language, interpretation and understanding in accounting practice, "highlighting the symbolic structures and taken-for-granted themes which pattern the world in distinct ways"; critical research, which emphasizes the role of power and conflict in accounting practice; case studies; computer simulation; and field research.Coyne, Joshua G., Scott L. Summers, Brady Williams, and David a. Wood. 2010. "Accounting Program Research Rankings by Topical Area and Methodology." Issues in Accounting Education 25 (4) (November): 631–654.{{cite journal |last1=Chua |first1=Wai Fong |title=Radical developments in accounting thought |journal=The Accounting Review |date=1986 |volume=61 |issue=4 |pages=601–632}}

Empirical studies document that leading accounting journals publish in total fewer research articles than comparable journals in economics and other business disciplines,{{cite journal |last1=Buchheit |first1=S. |last2=Collins |first2=D. |last3=Reitenga |first3=A. |title=A cross-discipline comparison of top-tier academic journal publication rates: 1997–1999 |journal=Journal of Accounting Education |year=2002 |volume=20 |issue=2 |pages=123–130|doi=10.1016/S0748-5751(02)00003-9 }} and consequently, accounting scholars{{cite journal |last1=Merigó |first1=José M. |last2=Yang |first2=Jian-Bo |title=Accounting Research: A Bibliometric Analysis: Accounting Research: A Bibliometric Analysis |journal=Australian Accounting Review |date=March 2017 |volume=27 |issue=1 |pages=71–100 |doi=10.1111/auar.12109 |url=https://pure.manchester.ac.uk/ws/files/47006681/Nerigo_Yang_AAR_CTA.docx |access-date=3 December 2022 |archive-date=30 December 2022 |archive-url=https://web.archive.org/web/20221230103214/https://pure.manchester.ac.uk/ws/files/47006681/Nerigo_Yang_AAR_CTA.docx |url-status=live }} are relatively less successful in academic publishing than their business school peers.{{cite journal |last1=Swanson |first1=Edward |title=Publishing in the majors: A comparison of accounting, finance, management, and marketing |journal=Contemporary Accounting Research |year=2004 |volume=21 |pages=223–255|doi=10.1506/RCKM-13FM-GK0E-3W50 }} Due to different publication rates between accounting and other business disciplines, a recent study based on academic author rankings concludes that the competitive value of a single publication in a top-ranked journal is highest in accounting and lowest in marketing.{{cite journal |last1=Korkeamäki |first1=Timo |last2=Sihvonen |first2=Jukka |last3=Vähämaa |first3=Sami |title= Evaluating publications across business disciplines |journal=Journal of Business Research |year=2018 |volume=84 |pages=220–232 |doi=10.1016/j.jbusres.2017.11.024 |doi-access=free }}

{{Main article|Accounting scandals}}

{{See also|Accounting ethics}}

The year 2001 witnessed a series of financial information frauds involving Enron, auditing firm Arthur Andersen, the telecommunications company WorldCom, Qwest and Sunbeam, among other well-known corporations. These problems highlighted the need to review the effectiveness of accounting standards, auditing regulations and corporate governance principles. In some cases, management manipulated the figures shown in financial reports to indicate a better economic performance. In others, tax and regulatory incentives encouraged over-leveraging of companies and decisions to bear extraordinary and unjustified risk.Astrid Ayala and Giancarlo Ibárgüen Snr.: "A Market Proposal for Auditing the Financial Statements of Public Companies" (Journal of Management of Value, Universidad Francisco Marroquín, March 2006) p. 41, [https://web.archive.org/web/20110721084545/http://www.mba.ufm.edu.gt/journalofmanagement/content/ENG_MarketProposal.pdf UFM.edu.gt]

The Enron scandal deeply influenced the development of new regulations to improve the reliability of financial reporting, and increased public awareness about the importance of having accounting standards that show the financial reality of companies and the objectivity and independence of auditing firms.

In addition to being the largest bankruptcy reorganization in American history, the Enron scandal undoubtedly is the biggest audit failureBratton, William W. "Enron and the Dark Side of Shareholder Value" (Tulane Law Review, New Orleans, May 2002) p. 61 causing the dissolution of Arthur Andersen, which at the time was one of the five largest accounting firms in the world. After a series of revelations involving irregular accounting procedures conducted throughout the 1990s, Enron filed for Chapter 11 bankruptcy protection in December 2001.{{cite news | title = Enron files for bankruptcy | work = BBC News | date = 3 December 2001 | url = http://news.bbc.co.uk/1/hi/business/1688550.stm | access-date = 15 March 2008 | archive-date = 24 March 2022 | archive-url = https://web.archive.org/web/20220324223251/http://news.bbc.co.uk/1/hi/business/1688550.stm | url-status = live }}

One consequence of these events was the passage of the Sarbanes–Oxley Act in the United States in 2002, as a result of the first admissions of fraudulent behavior made by Enron. The act significantly raises criminal penalties for securities fraud, for destroying, altering or fabricating records in federal investigations or any scheme or attempt to defraud shareholders.Aiyesha Dey, and Thomas Z. Lys: "Trends in Earnings Management and Informativeness of Earnings Announcements in the Pre- and Post-Sarbanes Oxley Periods (Kellogg School of Management, Evanston, Illinois, February, 2005) p. 5

Accounting fraud is an intentional misstatement or omission in the accounting records by management or employees which involves the use of deception. It is a criminal act and a breach of civil tort. It may involve collusion with third parties.{{Citation | title =2018 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements | publisher =The International Auditing and Assurance Standards Board | date =December 2018 }}

An accounting error is an unintentional misstatement or omission in the accounting records, for example misinterpretation of facts, mistakes in processing data, or oversights leading to incorrect estimates. Acts leading to accounting errors are not criminal but may breach civil law, for example, the tort of negligence.

The primary responsibility for the prevention and detection of fraud and errors rests with the entity's management.

• Accounting information system
• Accounting records
• Outline of accounting

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• {{Library resources about |onlinebooks=no |label=accounting }}
• [https://www.informs.org/About-INFORMS/History-and-Traditions/OR-Application-Areas/Accounting Operations Research in Accounting] on the Institute for Operations Research and the Management Sciences website

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