Accountancy students’ perceptions on public accounting

Published:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Accountancy students’ perceptions on public accounting

  1. Introduction

In public accounting, the Certified Public Accountant (CPA) serves many clients as an objective assistant and or in an advisory capacity. The public sector includes working in a public accounting firm (large, small or individual) and servicing clients as closely-held, family-owned businesses and small publicly-owned companies.

Clients operate in a broad range of industries, from manufacturing and distribution to real estate and financial services. Public accounting services generally include audit, compilation and review, tax planning and preparation, personal financial planning, management advisory services and litigation support services (“Public Accounting,” 2013). The purpose of this study investigated how graduating accountancy students in De La Salle Lipa view work in public accounting relative to other accounting areas.

A survey by the American Institute of Certified Public Accountants as cited in Warrick, Daniels and Scott (n.d.) identified the placement of 57.15% undergraduate and graduate accounting majors into the categories of public accounting (34.96%), private accounting (19.39%) and government accounting (2.8%). A large group of graduates (26%) were unidentified as to the area of accounting placement and some continued on to graduate school (17%). These findings show how a strong tendency for graduates to pursue public accounting while little attention directed toward government accounting. A study of Nelson, Vendrzyk, Quirin and Allen as cited in Warrick, Daniels and Scott (n.d.) found out that more accounting students are interested in taking the Certified Public Accountant (CPA) board examination and pursuing careers in public accounting while interest in the Certified Management Accountant (CMA) board examination and in pursuing careers industry are declining. These results are relevant to many currently debated topics in accounting education – including the effects of implementation of the 150-hour rule in many states. Another study of Milligan (2011) stated that “public accounting is probably the most difficult, yet rewarding path to follow in the field of accounting.” Public accounting is the frequently traveled career path because it offers excellent opportunities to gain multi-faceted business experience. It is normal to hear of managers, executives and even supervisors becoming a large corporation’s chief executive or financial officer.

This study was conducted to know and understand the opinions or point of view of graduating accountancy students of De La Salle Lipa on public accounting. This study will be beneficial to recruiters from public accounting firms, school academic advisors and professors by providing them a better understanding regarding the needs and perceptions of graduating accountancy students in De La Salle Lipa about working in this public accounting.

The scope of this study was only about the perceptions of the 5th year accountancy students who are graduating this S.Y. 2014-2015 on public accounting. The study was conducted within the vicinity of De La Salle Lipa and its respondents will only be the graduating accountancy students.

The remainder of this paper is organized as follows. The next section reviews literature followed by the methodology used. The last section presents research results and discussion.

According to American Accounting Association as cited in Valencia (2014), “Accounting is the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information.” For this reason, accounting is called the language of business (Ballada, 2010).

Since 3600 BC, the practice of record-keeping was already known and “clay tablet” of Mesopotamia that contains 90% commercial transactions, accounts payables and receivables. It is considered as the oldest evidence in this practice. Even though there are examples of evidence of early double-entry system, it still cannot be traced with much accuracy. “Massari Ledgers of Commune of Genoa” in 1340 is the oldest entry books and is known as a perfect double-entry form because debit and credit was written in separate pages. “Partnership and Association Contracts” are manuscripts in Florence that shows how partners’ capital, division of profit and losses were computed. Venice of Northern Italy had key influence in the use of the double-entry system in 1400s.

In addition, Luca Pacioli is known as the “Father of Modern Accounting”. He is an Italian monk and mathematician who wrote Summa de Arithmetica. In this book he introduced three important books of records: (1) Memorandum book – for all information on a transaction; (2) Journal book – for the original entry; and (3) Ledger book – for the final entry.

Through the Venetian method, the double-entry accounting became known to the world and became the standard not only for the Italians but also for the Dutch, German, and English authors of accounting books. The present Ledger Posting is the modern adaptation of the Venetian Method.

With the globalization of business and diverse accounting practice, efforts have been made to harmonize international accounting and reporting standards across countries (Valencia, 2014).

CMO No. 3 series of 2007 as cited in Valencia (2014) provides four (4) major specialized fields of accounting namely, (1) Public Accounting, (2) Private Accounting, (3) Government Accounting and (4) Accounting Education.

Accountancy is not only one of the most prestigious professions, but also one of the highest paid. It has a very high marketability because all businesses, whether profit or nonprofit, need the service of accountants. Without accounting, a business could not function optimally; it would not know where it stands financially, whether it is making a profit or not and it would not know its financial situation.

Moreover, the value of basic accounting knowledge in so many careers has made it a required course in almost all programs of study in a business field. A student who chooses this course is certainly making one of the greatest investments in his future.

As a profession, accountancy has evolved to the level of medicine, law, engineering and theology. Accountancy is a relative newcomer to the ranks of the professions, but it has achieved widespread recognition in recent decades (Valencia, 2014).

Enron, which became one of the world's dominant energy companies by reshaping the way natural gas and electricity are bought and sold, filed the largest corporate bankruptcy in American history and blamed the company that had presented itself as its rescuer.

The bankruptcy of Enron Corporation in 2001, an American energy company based in Houston, Texas, with its $62 billion in pre-filling assets, was the largest in U.S. history. It resulted in thousands of employees losing both their jobs and their retirement savings. In addition, Arthur Anderson, then one of the five largest audit and accountancy partnerships in the world, essentially ceased to exist in June 2002 after being found guilty of criminal charges relating to the firm’s handling of the auditing of Enron. Since Enron, accounting scandals have plagued U.S. business. In 2002, WorldCom filed for bankruptcy with $100 billion in pre-filling assets, making the Enron bankruptcy appear small in comparison. These scandals have resulted in changes in the regulatory environment surrounding bankruptcy.

As a result, the Sarbanes-Oxley Act of 2002 (SOX) also known as “Public Company Accounting Reform and Investor Protection Act” and “Corporate and Auditing Accountability and Responsibility Act” was enacted by the U.S. Congress on July 30, 2002 has dramatically affected the accounting and auditing professions. SOX led to the creation of the Public Company Accounting Oversight Board (PCAOB), whose role is to oversee the audits of the public companies in order to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports. SOX also increases management’s responsibility for financial reporting by requiring the chief executive officer (CEO) and the chief financial officer (CFO) of public companies to certify the quarterly and annual statements submitted to the Securities and Exchange Commission (SEC). Criminal penalties may be imposed on anyone who knowingly falsely certifies the financial statements and for certain misconduct. Another major change in SOX’s requirement that all public companies issue a report on internal control, acknowledging management’s responsibility for maintaining controls and assessing the effectiveness of the company’s internal control structure and procedures (Nichols, 2006).

In fact, the appearance of a public accountant’s independence from client manipulation is of critical significance to investor confidence. Yet notwithstanding recent financial scandals like Enron and WorldCom that have dishonored its reputation, the profession has done little to restore that confidence. Its overall performance rather indicates a continuation of acting in its clients and its own financial interests instead of the public interest. If the profession is to avoid public censure, perhaps an amendatory legislation or regulation would be well served to return on its previous accentuation on ethics, professionalism and independence from client influence (Strier, 2006).

In the Philippines, Republic Act No. 9298, otherwise known as the Philippine Accountancy Act of 2004 states the law of regulating the practice of Accountancy in the Philippines, their duties and responsibilities and the bodies in charge promulgating the rules, regulations and manner on how to be a Certified Public Accountant (CPA) in the Philippines. It was signed into law by President Gloria Macapagal-Arroyo on May 13, 2014. This law repealed Presidential Decree No. 692, otherwise known as the Revised Accountancy Law, which was enacted on May 5, 1975 (Ballada, 2010).

According to RA 9298 Article I Section 4, Practice of Public Accountancy as cited in Ballada (2010) shall constitute a person, be it his/her individual capacity, or as a partner, or as a staff member in an accounting or auditing firm, holding out himself/herself as one skilled in the knowledge, science and practice of accounting, and as a qualified person to render professional services as a certified public accountant (CPA); or offering or rendering, or both or more than one client on a fee basis or otherwise, services as such as:

  1. the audit or verification of financial transaction and accounting records; or
  2. the preparation, signing, or certification for clients of reports of audit, balance sheet, and other financial, accounting and related schedules, exhibits, statement of reports which are to be used for publication or for credit purposes, or to be filed with a court or government agency, or to be used for any other purposes; or
  3. to design, installation, and revision of accounting system; or the preparation of income tax returns when related to accounting procedures; or
  4. when he/she represent clients before government agencies on tax and other matters relating to accounting or render professional assistance in matters relating to accounting procedures and the recording and presentation of financial facts or data.

In addition, public accounting, in essence, is the practice of the accountancy profession. Individual practitioners, small accounting firms and large multinational organization render independent and expert financial services to the public such as auditing, taxation and management advisory services. An accountant who engages in public accounting is not an employee of a client company (Valix, 2013).

Therefore an accountant who render services on a fee basis and are not hired on employee-employer relationships are said to be engaged in public accounting. Public accountants, who practice individually or as members of public accounting firms, should be Certified Public Accountants (CPAs). They offer their professional services to the public. Their work includes auditing, taxation and management advisory services (Valencia, 2014).

The Certified Public Accountant (CPA) designation is a valuable credential for advancing a career in accounting and auditing. It attests to your in-depth knowledge of accounting principles and practices, including applicable laws and regulations. Because many holders of the CPA in private practice devote a considerable portion of their time to preparing and filing taxreturns, business and individual, many members of the general public erroneously assume that this is the major focus of the profession. A CPA license is widely respected as an indicator of quantitative skills and high standards of professionalism. As such, it can vastly enhance your credibility as a job applicant (Kolakowski, n.d.).

Some public accountants pool their talents and work together in a single firm. Most public accounting firms are called CPA firms since most of their professional employees are CPAs. Firms vary greatly in size. Some are sole proprietorship and others are large partnerships.

In the United States, some of the largest firms are as follows: Deloitte & Touché Tohmatsu Limited, Ernst & Young (E&Y), Klynveld Peat Marwick Goerdeler (KPMG) and PrincewaterhouseCoopers (PwC). Deloitte Touché Tohmatsu Limited is probably the biggest professional service organization in the world. It was founded by William Deloitte in 1845. Arthur Andersen & Co. is now history; it used to be the biggest but succumbed to pressures brought about by a lot of financial fiascos including that of Enron, Sunbeam, Waste Management and WorldCom. These firms employ only about 12% of the CPAs in the United States but they audit the financial statements of approximately 85% of the top corporations.

In the Philippines, the biggest firm with eight offices across the country is Sycip Gorres Velayo & Co. (SGV & Co.) with over 1,800 professionals from various disciplines, Certified Public Accountants (CPAs), legal professionals, economists, human resource professionals, engineers, statisticians, financial analysts and other business and technical experts. Since 1996, it has been the only ISO 9002-certified professional services firm in the country, becoming an affiliate of Ernst & Young International on June 6, 2002. The other bigger firms are Punongbayan & Araullo, Laya Mananghaya & Co., C.L. Manabat & Co., Isla, Lapana & Co. (Joaquin Cunanan & Co.), Constantino, Guadalquiver & Co. and Carlos J. Valdez & Co. among others.

Furthermore, the top partners in these large accounting firms earn about the same amount as the top executives of other large businesses. Public accounting is a frequently traveled career path because it offers excellent opportunities to gain multi-faceted business experience. It is normal to hear of managers, executives and even supervisors becoming a large corporation’s chief executive or financial officer.

In public practice, first, the entry-level positions are Audit Staff, Tax Staff and Management/Services Consulting Staff. Second, the middle-level positions are Audit Manager, Tax Manager and Consulting Manager. And lastly, the advanced positions are Partner, Senior Partner and Senior Consultant/Financial Advisor (Ballada, 2010).

Writing Services

Essay Writing
Service

Find out how the very best essay writing service can help you accomplish more and achieve higher marks today.

Assignment Writing Service

From complicated assignments to tricky tasks, our experts can tackle virtually any question thrown at them.

Dissertation Writing Service

A dissertation (also known as a thesis or research project) is probably the most important piece of work for any student! From full dissertations to individual chapters, we’re on hand to support you.

Coursework Writing Service

Our expert qualified writers can help you get your coursework right first time, every time.

Dissertation Proposal Service

The first step to completing a dissertation is to create a proposal that talks about what you wish to do. Our experts can design suitable methodologies - perfect to help you get started with a dissertation.

Report Writing
Service

Reports for any audience. Perfectly structured, professionally written, and tailored to suit your exact requirements.

Essay Skeleton Answer Service

If you’re just looking for some help to get started on an essay, our outline service provides you with a perfect essay plan.

Marking & Proofreading Service

Not sure if your work is hitting the mark? Struggling to get feedback from your lecturer? Our premium marking service was created just for you - get the feedback you deserve now.

Exam Revision
Service

Exams can be one of the most stressful experiences you’ll ever have! Revision is key, and we’re here to help. With custom created revision notes and exam answers, you’ll never feel underprepared again.