For an individual or family, it is pertinent to know how much is spent on overheads like food, home rent, and traveling (taught as part of the home science curriculum, popular among girls to-be-future housewives). For a business house, similar overheads can be catering, office rent, and business travel. The big difference between accounting records kept by an individual or family and a business house is that business house and proprietor of the business house are two distinct entities: money invested by the proprietor is kind of a loan received by the business house (termed capital) from proprietor to be returned back. Otherwise, whether it is accounting for a small internet cafe or a large multinational company, the basic concept remains the same, while denomination changes from bookkeeping to accounting.
Basic knowledge of accounting is helpful to all: housewives, teachers, college students, and freelance professionals. For someone in a job, bookkeeping records help to avail tax rebates available for your income slab. For the money spent on overheads like charity, you can get deductions on annual tax payable by backing your claim with documents. Up-to-date maintenance of accounts by meeting your debts timely helps you in terms of higher credit score. For future needs like buying a new home, investing in a new business, such creditworthiness is crucial. You can get loans for your business or personal needs on better terms from banks and other lending institutions.
In case you are operating a business, maintaining income and expenditure account systematically is almost a necessity irrespective of the scale. For a family-owned business or business in partnership, keeping financial records up-to-date dispels doubt and so appreciated even when there is no legal compulsion. This is important in terms of maintaining goodwill and trust.
Each business house needs to have its accounting records kept as they meet obligations of vivid stakeholders including customers, suppliers, partners, and government (submission of direct and indirect taxes). While most small proprietorship firms accomplish the task themselves, the rest and the larger partnership firms, societies, companies hire trained accountants. The article “Accounting Career Paths” in Monster, a popular job portal, reads, “If money is the language of business, then no one speaks it better than accountants”. According to Lisa Young, a partner at Ernst & Young, "When you come into public accounting, the most exciting thing is what you learn about commerce, the flow of business and understanding business overall.”
One of the most popular technical definitions of accounting is “Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events, which are, in part at least, of a financial character, and interpreting the result thereof” by The American Institute of Certified Public Accountants (AICPA). There are a number of esteemed universities offering Bachelors, Honors, and Masters courses in Commerce that specialize in finance and accounting. The salary depends on the level of responsibility and the qualification of the accountants starting from bookkeeping clerks (who can be trained in-house with zero qualification or commerce undergraduates) to accounts managers, CFOs or Chief Financial Officers (commerce graduates, professional qualification holders including chartered accountants, cost accountants, company secretaries, MBAs in finance).
It makes sense to go for professional qualifications (CA, ICWA, CS) as there are areas where only qualified professionals are allowed to work. Just like medical profession has bars, so is the case here when it comes to submission of annual reports of listed entities. Unlike other fields like software development where your work speaks, it is not possible to enter into the domain of certain types of auditing related with accounting without a qualification. As per the prevailing law, only CAs are allowed to sign off on the financial statements of companies. Chartered Accountants are finance professionals who have cleared examinations conducted by The Institute of Chartered Accountants of India, Cost Accountants are finance professionals who have cleared exam conducted by The Institute of Cost Accountants of India, Company Secretaries are finance professionals who have cleared the exam conducted by The Institute of Company Secretaries of India.
It is usual and often mandatory for manufacturing industries to hire a qualified cost accountant who takes care of controlling the cost of production. The designation can be cost controller, commercial manager. It is more often a CA who leads the role as finance manager taking care of preparing final accounts for the whole firm. As per Companies Act 2013, it is mandatory for a company to appoint a full-time company secretary in respect of a certain class of companies. A company secretary is responsible for making sure if the company adheres to the legal requirements, improving corporate governance and compliance.
Section 14A and 14AA of the Central Excise Act, 1944, related to special audits leading to detailed investigations on companies, put chartered accountants and cost accountants at par. However, according to an income tax office involved in the preparation of now abandoned draft direct tax code, “Especially in direct tax matters, chartered accountants have always had additional rights.” These CAs have the option to either start their own independent practice usually as auditing firm helping the government meet accounting norms or pursue job. The same goes with the cost accountants and company secretaries whereby cost accountants get involved as independent cost auditor and company secretaries as independent secretarial auditors. Not surprisingly, choosing to start your own auditing firm needs entrepreneurial spirit where failure rate is high.
The recent change in name of ICWAI (The Institute of Cost & Works Accountants of India) to ICAI (The Institute of Cost Accountants of India) in 2011 reflects their desperation to compete with The Institute of Chartered Accountants of India when it comes to lobbying the government for the accounting and auditing jobs. Not far is ICSI which too seeks statutory recognition for undertaking income tax-related work. According to news report dated April 23, 2014, in Business Line, R. Sridharan, President of the Institute of Company Secretaries of India is quoted as saying, “They (ICAI) should not feel we are competition.We should leave it to the market to decide who could do the tax audit work. If we (company secretaries) show competency, then we should also be allowed to doincome tax-related work.”
Also, there are a number of entry-level courses like Certificate in Accounting Technicians (CAT) Courseof one year for 12th (10+2) passed and undergraduates by The Institute of Cost Accountants of India. CAT is claimed to be designed “to equip students to become well versed with the maintenance of accounts, preparation of income tax return, service tax return, filling of return under Companies Act, filling of returns under Income Tax, VAT, Service Tax, Central Excise Custom Act, export & import documentation etc .”
Then there is V skills (A Govt. of India & Govt. of NCT Delhi JV Co.initiative) that hosts a number of courses (41 at the time of writing) under Accounting, Banking & Finance including Certified Business Accountant, Certified Financial Management Professional, Certified Financial Services Marketing Professional, Certified Tally ERP 9 Professional, Certified Wealth Manager, Certified Basel III Professional, Certified Corporate Financial Analyst, Certified Cost Accountant, Certified Financial Investment Professional, Certified GAAP(Generally Accepted Accounting Principles), Professional, Certified IFRS (International Financial Reporting Standards) Professional, Certified GST Professional. Here the charges are nominal starting with 4000 Rs.
A research report by PayScale states that the average salary for an accountant in India is Rs.2,33,899 per year. A Cost Accountant earns an average salary of Rs 448,913 per year, Corporate Secretary earns an average salary of Rs 519,620 per year. The average salary of CAs vary from Rs.3,67,035 for an entry-level CA upto Rs. 1,244,983 as Financial Analyst. Experience and SAP skill (enterprise software) increase their pay.
According to CFA Institute, “Our goal is to motivate and empower the world of finance to become an environment where investor interests come first, markets function at their best, and economies grow. Our Future of Finance work focuses on opportunities for change.” This should be true for any finance professional irrespective of his or her qualification. To conclude, as observed in the article “Career in Accounting” on indiaeducation.net, “Accounting deals with analyzing and summarizing financial records along with auditing and strenuous bookkeeping. It’s really the backbone of any organization so that they know where they’re headed in the financial scheme of things,” which is why “career in accounting holds high potential for a profitable future.”