Edmonton Tax Accountant

Huge budget deficits are forcing state governments to evaluate operating budgets and find ways to bring government spending in-line with government revenues. This exercise becomes increasingly difficult when governments must contend with plummeting revenues due to poor economic conditions. As a result, additional scrutiny should be applied to every tax dollar allocated in state budgets. By expanding accounting requirements, state legislators can save tax dollars, improve resource allocation, reduce fraud and waste, and increase efficiency by requiring government agencies to undergo regular audits and plan operations using managerial accounting principals.

Using the state of Pennsylvania as an example, the value of auditing government programs becomes very clear. When one looks at the auditing capabilities of state governments and the auditing requirements demanded by federal programs, it is not difficult to determine that auditors are stretched very thin and it is nearly impossible for them to conduct regular audits. This came to light in a performance audit conducted by the Pennsylvania Auditor General in August of 2009 titled Special Performance Audit of The Department of Public Welfare Special Allowance Program. This report outlined instances of departments not cooperating with auditors, wasteful spending, lack of internal controls, and significant opportunity for fraud and theft.

These findings are particularly alarming because the program in question has a budget of several hundred million dollars. The performance audit was released while the state legislature was trying to negotiate a new state budget that required significant cuts due to the poor economic environment. This report highlighted a place where legislators could save millions of dollars and forced budget negotiators to consider reductions in the allocation for this department. In addition to uncovering poor performance and waste, regular audits would presumably help prevent these negative outcomes if managers knew their operations would be subject to regular inspection by auditors. Once policymakers are able to identify poor management and inappropriate spending through regular audits, they can further improve efficiency and performance by incorporating the principals of managerial accounting.

The information that can be gained by utilizing the managerial accounting principals in the government services setting would prove to be invaluable. Most often the magnitude of any bureaucracy makes it very difficult to manage performance and cost at the micro level. As a result we come across egregious waste and sometimes fraud as discovered in the audit of the Pennsylvania Department of Public Welfare presented earlier. When policymakers require bureaucratic managers to utilize managerial accounting strategies they can accomplish several important objectives.  The internal evaluation and future planning associated with managerial accounting will require managers to develop long-term strategies that can improve the performance of the programs they oversee. In addition, the regular data collection associated with managerial accounting can provide many benefits in the government setting. The data recording and reporting will help managers and policymakers determine if programs are meeting intended goals. Moreover, the data reported under the managerial accounting model will help taxpayers better understand how their tax dollars are being used. However, the greatest value in this approach will be the information that is made available to policymakers. If budget negotiators have the wealth of information that is collected using managerial accounting practices, they would be able to identify areas that can achieve greater efficiency, and ensure that programs are accomplishing their intended mission, all of which would result is greater efficiency and an ultimate savings to the taxpayer.

This concept has had some success within the federal government as outlined in a report titled Managerial Cost Accounting in the Federal Government: Providing Useful information for Decision Making published by the Association of Government Accountants (AGA). This report presents several case studies of different federal departments and their utilization of managerial accounting and how it benefits each department. The common theme throughout the report is that more information results in greater awareness of the mission at hand which inherently fosters accountability and efficiency.

In the end, utilizing routine auditing and managerial accounting will result in several significant benefits. Most important is that routine audits uncover problems in many areas from managerial effectiveness to inappropriate use of tax dollars. Once these problems are identified by audits, policymakers can improve operations and efficiencies by incorporating managerial accounting principals. Clearly, to implement these strategies an increased investment in state government accounting capabilities would be necessary. This is an investment that policymakers should embrace. As we see by looking at some of the findings uncovered by state audits, as well as the success of the federal government managerial accounting requirements, there is tremendous opportunity to save taxpayers millions by expanding state government accounting requirements.

Article Source:http://www.articlesbase.com/accounting-articles/save-taxpayers-millions-by-expanding-state-government-accounting-requirements-1268228.html

Forensic accounting is a growing field, especially in the wake of recent financial scandals. Simply put, forensic accountants go over a business or individual’s financial records and analyze them for the client’s use. Forensic accounting evidence may be called for in situations as diverse as bankruptcy, inventory falsification, divorce, statutory audits or even major fraud. After analyzing the data of the situation, the forensic accountant will then compile reports or exhibits to be used in court or in other legal proceedings, and may be called upon to testify about their findings. This aspect of the job necessitates the forensic accountant being familiar with legal procedures and knowing what parts of their findings are relevant to the case.

Forensic accountants usually begin as general accountants, since the job requires a strong background in auditing and accounting. Other qualities that employers look for in a forensic accountant are exceptional organization, the ability to be creative in working methods, curiosity about things that seem “off”, and the persistence to sift through extraneous material and the professional judgement to find what matters.

A lot of forensic accounting training is experiential and on the job. However, many countries have forensic accounting organizations that can provide certification, and some universities also offer graduate courses in forensic accounting. Most universities require at least a bachelor’s degree in accounting and sometimes a CPA certification before they will accept a student for their forensic accounting courses. Some people do study forensic accounting on their own since there are many books on the subject, but most agencies recommend taking courses to learn forensic accounting since so much of it is experience-based. Many CPA firms, universities and even police stations offer internships in forensic accounting, which is highly recommended for gaining real world experience.

After gaining basic forensic accounting training, many forensic accountants will also go back to train to be a Certified Fraud Investigator or a Certified Forensic Accountant. Although these qualifications are not required to become a forensic accountant, they provide a definite leg up in the job market, and also provide a great deal of information about law enforcement, which is invaluable in a forensic accounting career.

Once a forensic accountant has their certification, their services can be called upon by many different people, including private investigators, who may need help analyzing the financial records of their clients in a divorce case, insurance companies that use a forensic accountant when valuing probates, or by businesses that are in shareholder disputes. Most forensic accounting assignments begin with a meeting with the prospective client to gain information about the case and check for any conflict of interests, then move on to an in-depth analysis and investigation, culminating in a report of the forensic accountant’s findings.

Because of its variable nature, forensic accounting is an excellent career for a talented accountant who thinks out of the box. Those interested in beginning a career as a forensic accountant can find more information about jobs and local regulations from their country’s forensic accounting organizations.

edmontontaxaccountant :: Sep.25.2009 :: Accounting :: No Comments »

Accounting is one of the most important internal aspects to any business that is to be financially successful in today’s market. It is the process of documenting all relevant economic information about a firm and communicating that information to key players. Managers and Executives need accounting information to make decisions and run their business to achieve maximum profitability. Shareholders need accounting information to make informed investments.

There are many types of accounting that all have different roles in the business world. Probably the best-known and most ‘classic’ type of accountant is a CPA, or Certified Public Accountant. A CPA has a very diverse client list. They can serve anyone including individuals, private firms, large publicly traded corporations, the government, or non-profit organizations. They can perform the role of an independent auditor, tax advisor, or financial consultant.

When performing an audit, a CPA will produce an independent auditor’s report that will tell the client four key pieces of information. First it identifies the documents that were audited and describes that the purpose of this report is to express an opinion about the documents in questions. Next it explains the standards used to analyze the data. Third is the actual opinion of the auditor in regards to the financial documents reviewed. Finally, the auditor elaborates on his opinion regarding the effectiveness of the financial reporting of the firm.

Another type of accountant is a CMA, or Certified Management Accountant. A CMA serves a smaller customer base, because they typically work for a single firm. The major role is to advise the company on their financial management, accounting processes, and budgetary issues. A CMA may work with individual employees of that company, but their main function is to advise the executives on the company’s complete financial structure. They are often involved in major decisions for the company.

A subset of managerial accounting is cost accounting. A cost accountant works closely with the budget structure of a company. They are typically involved with determining the internal costs of many functions and the profitability of the routine company operations.  Cost accountants have a very future-oriented job in that they are primarily concerned with using historical data to forecast what the prospective financial strength of the company will be.

A third major type of accounting is a financial accounting. Financial accountants are primarily responsible for the preparations of the financial documents for review by the corporate decision makers. Managerial accountants, cost accountants, top management, and shareholders use these documents to make major business decisions. Financial accountants assemble an annual report including balance sheets, income statement, statement of cash flows, and statement of change in owners’ equity (or retained earnings). These documents are usually targeted to an external audience.

Financial statements are vital to the success of any profitable business. Their purpose is to formally record all financial activities of the company or individual.  These statements summarize in a standard format the financial status of the company in both the short term and the long term. There are four main types of financial statements.

First, the balance sheet summarizes the company’s total assets, liabilities and owners’ equity at a given point in time. This report is also known as the statement of financial position. The balance sheet is used at the beginning of year as a starting point. At the end of the year a new balance sheet will conclude the fiscal cycle. The other financial statements that will be discussed are used to fill in the gap, because a lot can happen in a year.

The income statement summarizes the revenue and expenses for the year and highlights if the company operated at a profit or at a loss. It is in this report that the total gross income is defined as well as all of the expenses that were incurred along the way. The top line of the statement is net sales and the bottom line is net income.

The statement of change in owners’ equity, or statement of change in retained earnings also analyzes data over a time period. Typically this is over a fiscal year. The two major components of owners’ equity are paid-in capital, or cash investments, and retained earnings, or the net income less dividends. If retained earnings are negative because dividends have exceeded net income, this is considered a deficit.

The final major financial statement commonly used by shareholders is the statement of cash flows. The purpose of this report is to follow the company’s cash activities during the year. This is mainly concerned with cash transactions pertaining to operating, investing, and other financial activities.

Shareholders use the four major financial statements to make investment decisions and to see what the company is doing with their money. Executives and top management use statements to make internal budgetary decisions and forecast out for the future success of the business. There are many components that go into the financial reporting for a company, and all information is vital to its continued financial health.

edmontontaxaccountant :: Sep.24.2009 :: Accounting :: No Comments »

Before making a purchase or investing money in a company, a wise investor want to have more information about your competitive environment, i.e. the state of your company within your chosen industry. The first information you will be asked for is the business annual report. This is not a coincidence; the annual report can be used to get at the bottom of the following: Level of sales Return on capital Net operating margins

The annual report typically has all the current, past and future financial accounting information. This source is very useful in identifying different performance indicators relative to your competitors.

1. Level of sales The investor or probable business partner should be able to gain an insight from your sales figures and analyse whether your company is doing well compared to other companies or not. Is your market shares increasing or decreasing, and in which geographic locations you are making more sales? The sales figures are an indication of the business current state of health. However other information such as the overall size of the market and what is happening in your industry should help during analysis.

In the annual report, your investor will be able to understand the structure of your industry. For instance how many players are dominating the market and the prospect of it? If you are an investor interested in investing your money in a company, but need more information on a particular market, it is advisable to look for organisations such as the Competition Commission reports (UK). A business owner will also find valuable information on an industry and the major players within.

2. Return on Capital This performance indicator will provide a measure of your business competitive advantage. A for-profit organisation has for duty to make profits if it is to survive. Therefore the return on capital will show if the company is maintaining a realistic return on investment and measure it to competitors… This indicator is available in the annual report.

3. Net Operating Margins Also called net profit before interest and taxation, is an indicator of competitive pressures within an industry. An investor or business owner should pay great attention to this performance indicator, because it varies from industry to industry. A retail company could operate within 7-8%, when a telecom company could achieve 20%. Checking the trend of this performance, each year, will provide useful insight into what’s happening. If you want to invest in a start-up technology company, you do not want to compare it to a retail organisation. You should compare organisations within the same industry.

Recent corporate scandals have shown that relying on the annual report alone is suicidal. Companies could inflate these numbers or omit to show financial liabilities in the balance sheets. In the end you will end up purchasing a company full of debts. Always look into other companies annual reports before making a decision.

Also, when comparing companies within the same industry, people should use caution. For example, a company may be in software designs and the competitor organisation in IT services. They are in the same industry, but with major differences in activities and over time the volume of sales in each company could be distorted by inflation.

Finally, each country, UK, USA, or France has different accounting practices, particularly when it comes to return on investment and net operating margins. So it wouldn’t be wise to compare companies based in different countries, without taking into account those differential factors. Even tough some other national factors could play a big role (i.e. the growth of the telecom sector in Africa is different to that of Europe).

The annual report would contain other valuable information other than the three mentioned above. All of them are important in assessing the company competitive issues within a market; for example, the level of advertising budget. Some companies spend more money on advertising, hence the high level of sales, and others do not, but have a higher profit margin. A chocolate company in the Fast moving consumer goods (FMCG) market will tend to have a huge advertising budget, same for a pharmaceutical company.

edmontontaxaccountant :: Sep.24.2009 :: Accounting :: No Comments »

Accounting outsourcing is the new buzz word in today’s market. Many companies are employing this outlet for their accounting work. Hence we need to understand in depth what it means and how one can benefit from it knowing very well all the hidden pros and cons of the deal. The current economic scenario is not of a pleasant type. Many firms are shutting down business because costs are more than the profits they can earn. This directly hints at lowering down the investment expenses and concentrates on accumulation of capital. Cost cutting techniques are directly aimed at employees but there is one other way of cutting costs. If the company removes an entire department from its office not only will it cut costs from the salary perspective but it will also save office space and give a sort of motivation to the employees to work hard. This way the resources can be directed into other more useful and visionary ways.

For this you can seek assistance from accounting outsourcing firms. Accounting is not a function that directly helps the business promote goodwill or a higher clientele. It does this indirectly through statements and final accounts. But the important thing to consider is that the function can be done anywhere is the world and does not have a direct co relation with the customers. Customers do not need to interact with the staff in the accounts department. Hence getting this activity done away from the place of work in a more economical way would prove to be very advantageous for the company.

There are many firms that render services of accounting. They are not only in low income countries but are present in the United States as well. The cost factor however differs greatly between the two. Hence whatever company there is no matter the size big or small can take the advantage of this great cost cutting tool. There is no restriction on the sort of business the company undertakes. Accounting outsourcing can be done for a real estate company as well as a FMCG company by the same firm.

The accounting outsourcing services firms recruit professional CPAs with high talent and proficiency in executing their work. One professional can do more than four companies and hence the cost is reduced. Economies of scale can be beneficial in one more way. These firms are located in places where labor is cheap and the cost of setting up business is not very high. Hence the services generated are extremely economical but at the same time they are of the best quality since accounts are handled by professionals.

No more you have to get foul image by expelling accounting processionals out of your firm in pretext to cutting cost and managing downtrodden economy trend. Accounting outsourcing firm will take care of your all accounts related issues effectively.

You can also avail search engine optimization services for you business website with the help of outsourcing firms. An effective search engine optimization services will help in promoting your business in the Internet marketing world.

edmontontaxaccountant :: Sep.22.2009 :: Accounting :: No Comments »