C Laws, rules and standards
A Accounting
· Accounting involves recording and summarizing an organization’s transactions or business deals, such as purchases and sales, and reporting them in the form of financial statements. In many countries, the accounting or accountancy profession has professional organizations which operate their own training and examination systems, and make technical and ethical rules: these relate to accepted ways of doing things.
· Bookkeeping is the day-to-day recording of transactions.
· Financial accounting includes bookkeeping and preparing financial statements for shareholders and creditors (people or organizations who have lent money to a company).
· Management accounting involves the use of accounting data by managers , for making plans and decisions.
B Auditing
Auditing means examining a company’s systems of control and the accuracy or exactness of its records, looking for errors or possible fraud: where the company may have deliberately given false information.
· An internal audit is carried out by a company’s own accountants or internal auditors.
After book keepers complete their accounts, and accountants prepare their financial statements, these are checked by internal auditors. An internal audit is an examination of a company’s accounts by its own internal auditors or controllers. They evaluate the accuracy or correctness of the accounts, and check for errors. They make sure that the accounts comply with, or follow, established policies, procedures, standards, laws and regulations (Lections 8, 9a) . The internal auditors also check the company’s system of control, related to recording transactions, valuing assets and so on. They check to see that these are adequate or sufficient and, if necessary, recommend changes to existing policies and procedures.
· An external audit is done by independent auditors: auditors who are not employees of the company.
The external audit examines the truth and fairness of financial statements. It tries to prevent what is called ‘creative accounting’, which means recording transactions and values in a way that producers a false result –usually an artificially high profit.
Public companies have to submit their financial statements to external auditors – independent auditors who do not work for the company. The auditors have to give an opinion about whether the financial statements represent a true and fair view of the company’s financial situation and results.
During the audit, the external auditors examine the company’s systems of internal control, to see whether transactions have been recorded correctly. They check whether the assets mentioned on the balance sheet actually exist, and whether their valuation is correct. For example, they usually check that some of the debtors recorded on the balance sheet are genuine. They also check the annual stock take – the count of all the goods held ready for sale. They always look for any unusual items in the company’s account books or statements.
Until recently, the big auditing firms also offered consulting services to the companies whose accounts they audited, giving them advice about business planning, strategy and restructuring. But after a number of big financial scandals, most accounting firms separated their auditing and consulting divisions, because an auditor who is also getting paid to advise a client is no longer totally independent.
There is always more than one way of presentation accounts. The account of British companies have to give a true and fair view of their financial situation. This means that the financial statements must give a correct and reasonable picture of the company’s current condition.
C Laws, rules and standards
In most continental European countries, and in Japan, there are laws relating to accounting, established by the government. In the US companies whose stocks are traded on public stock exchanges have to follow rules set by the Securities and Exchange Commission (SEC), a government agency. In Britain, the rules, which are called standards, have been established by independent organizations such as Accounting Standards Board (ASB), and by the accountancy profession itself. Companies are expected to apply or use these standards in their annual accounts in order to give a true and fair view.
Companies in most English-speaking countries are largely funded by share holders, both individuals and financial institutions. In these countries, the financial statements are prepared for shareholders. However, in many continental European countries businesses are largely funded by banks, so accounting and financial statements are prepared for creditors and the tax authorities.
VOCABULARY STUDY
1. fraud – нарушение, мощеничество
2. deliberately – умышленно, сознательно
3. an artificially – искусственно
4. apply – применять, использовать
5. manufacturing company- компания – производитель
6. submit –представлять, утверждать
7. genuine – подлинный
8. division -подразделение