Association of Accounting Technicians
Association of Chartered Certified Accountants
Association of Taxation Technicians
Accounting is the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information. The three important ingredients in the accounting process are:
- Identifying information. Information has to be gathered and recorded. This means that economic transactions are recorded in a set of ‘accounts’, based on a system of accounting known as ‘double-entry book keeping’.
- Measuring economic information. Accounting also involves measuring economic values, such as putting a value to assets and the measurement of how much profit or loss a business has made during a given period of time.
- Communicating economic information. Accounting information is provided to users of the information in a number of ways, including management accounts and financial statements.
Part of mergers and acquisitions, the area involves advising people and companies on buying and selling other businesses. Acquisitions can be anything from buyouts of small or medium-size businesses through to multinational takeovers
Audit is generally the core activity in wider ‘assurance and advisory work’ undertaken by firms of accountants. An audit can be described as an independent check as to whether an organisation’s financial statements are a true and fair reflection of the financial condition of that organisation. An audit is normally conducted at a client’s premises by a team of auditors who will be at different stages in their professional training. The team will be overseen by a partner and/or senior manager. Typical activities that auditors will carry out include risk analysis, getting to know the client’s business, building relationships with the client and checking the items that appear in the financial statements. A significant part of the checking process involves reviewing the organisation’s systems to assess whether there are sufficient relevant controls (checks) in place to ensure that the accounting process operates correctly. In this respect auditors are adding value to a client. As a result of their audit work they will make suggestions about how the business could improve its controls and business processes – this may involve recommending other services the audit firm could offer.
The person responsible for coordinating teams when out on audits. Teams can range in size from 2 to 20. Key responsibilities are management of completion of all audits, maintaining client relationships and developing the audit team to its full potential.
Senior member/partner responsible for ‘signing off’ audits as confirmation that they give a true and fair reflection of the client’s accountants.
Bubble (economic or financial)
Trade in high volumes at prices that are considerably at variance with intrinsic values.
Business recovery and insolvency
From time to time a business may encounter problems – for example it may find itself short of capital or it may need to reorganise its operations in order to improve cash flow. In some cases a business recovery expert steps in to help steer the business through its difficulties and back towards a successful future, whereas in other situations an insolvency expert will be needed to guide the business through the insolvency or winding-up process, selling off the business’s assets and paying creditors. Both areas of work involve high levels of diplomacy and robustness and a good level of legal and commercial understanding.
Business services are a combination of accounting and auditing, generally but not always undertaken for smaller businesses. This type of work tends to involve much in the way of business advice designed specifically to help clients grow their business and to develop accounting and management systems that can keep pace with this growth.
Capital gains tax
When a fixed asset is sold at a profit, the profit may be liable to a tax called capital gains tax.
The Chartered Institute of Management Accountants
The Chartered Institute of Taxation
Chartered Institute of Public Finance and Accountancy
The work carried out to ensure that an audit is complete and that sufficient audit evidence has been gathered to be able to draw reasonable conclusions on which to base the audit opinion.
Preparation of and putting together sets of financial statements
Successful businesses will often want to acquire (buy) other businesses. In situations like this the management of the acquiring business is likely to engage a firm of accountants, often their auditors, to assess the financial health of the target company and to help negotiate a fair purchase price.
Companies that are underperforming or in financial difficulty are often turned around by the intervention of a corporate recovery team. Early stage recovery can see the company returned to a profitable state. The other end of the spectrum will see the corporate recovery team selling off assets, dealing with staff redundancies and winding the company up.
A levy placed on the profit of a firm – different rates are used for different levels of profits.
The Institute of Certified Public Accountants in Ireland
CTA – chartered tax adviser
A chartered tax adviser is a specialist in tax who has passed the Chartered Institute of Taxation (CIOT) qualification. Members practise under the title ‘chartered tax adviser’ using the letters CTA, FTII and ATII.
The debtors ledger is used to keep track of which customers owe money.
When a company sells off an asset(s), or a group of companies selling off an entire company.
The process by which a purchaser of or an investor in a company or business investigates the records of the target to support its value and find out whether there are ‘skeletons in the cupboard’. Professional reports from accountants and solicitors may be included. The due diligence process is covered by confidentiality undertakings and supported by warranties.
Financial accounting is concerned with maintaining a set of accounting records of economic transactions by a business (bookkeeping) and preparing financial statements from those accounts. The emphasis of financial accounting is on providing accounting information to user groups other than management, for example the owners of the business and the Inland Revenue.
A period of 12 consecutive months chosen by an entity as its accounting period, which may or may not be a calendar year.
Any tangible asset with a life of more than one year used in an entity’s operations.
Forensic accountants deal with civil, criminal and insurance matters. They use their accounting, information technology and investigation skills to help lawyers, insurance companies and other clients resolve legal and technical disputes.
Her Majesty’s Inspector of Taxes.
The Institute of Chartered Accountants of Ireland
The Institute of Chartered Accountants in England & Wales.
The Institute of Chartered Accountants of Scotland
A tax levied on net personal or business income.
A tax imposed on the privilege of receiving property by inheritance or legal succession and assessed on the value of the property received.
The inability to pay one’s debts as they come due. Even though the total assets of an organisation may exceed its total liabilities, the entity is insolvent if the assets cannot be converted into cash to meet its current obligations.
Management accounting is concerned with the provision of accounting information to management within a business. Accountants produce regular and specially requested reports to help managers monitor current performance and plan future activities.
In addition to advising on financial matters, accountants with their range of general business experience are often called upon to advise clients on anything from IT to human resources, strategic planning and marketing.
Owner managed companies/medium tier businesses
Not for profit
A non-profit organisation includes a club, society or association organised and operated solely for social welfare, civic improvement, pleasure or recreation, or for any other purpose except for profit, no part of the income of which is payable to, or is otherwise available for the personal benefit of, any proprietor, member or shareholder.
Owner managed business.
Pay As You Earn. The name given to the income tax system where an employee’s tax and national insurance contributions are deducted before the wages are paid.
Private client services
Individually managed accounts for high net worth individuals, offering comprehensive long-term planning and personalised financial management to provide superior results.
Individual accountant or partnership of accountants that provides accountancy services to a number of clients as independent professional advisers and not as employees.
Accounting in central government, local authorities and public corporations.
Initial investment made for a start-up company. Can be made by a bank, venture capitalist or ‘business angel’.
There are two main areas of taxation work:
- Tax compliance, which involves completing and submitting tax returns for both individuals and companies.
- Tax advisory and planning, which involves analysing and recommending changes in how individuals and companies structure their finances so as to minimise their tax payments within the framework of legislation.
Both areas of taxation are very much linked and require an ongoing relationship with clients. From the point of view of somebody working in tax this usually means more regular working hours and more office based work than for the equivalent person working on audits. There are many specialist areas in taxation, so you are likely to see terms such as indirect taxation (covering VAT), corporate tax for tax work focusing on companies and corporation tax, and personal tax for tax work focusing on the taxation of the wealth and income of individuals.
Legal obligation to pay taxes associated with owning property or earning income.
TARGETjobs Finance would like to thank the ICAEW for providing us with this glossary.