Accounting is the method used to analyse the performance of an entity by collecting, recording, manipulating, analysing and communicating financial data. The field of accountancy is very broad and encompasses several areas which include financial accounting, management accounting, finance, internal auditing, external auditing and taxation or tax accounting. The pursuit of accounting certifications and the achievement of qualifying experience is a desirable trait that prospective Accountants should strive to achieve.
In This Accounting Guide:
Read about accounting principles, find out how accounting is used, learn about the different international accountancy bodies and choose from a list of highly desirable credentials.
There are rules and guidelines which must be followed when preparing and reporting financial information. The most popular accounting principles which have been adopted globally are known as Generally Accepted Accounting Principles (GAAP). Although accounting principles may vary around the world, countries usually have their own versions of GAAP. GAAP in the United States are enforced by the Financial Accounting Standards Board in the United States of America and by the Financial Reporting Council in the United Kingdom.
How Accounting Is Used
Accounting is primarily used to determine the financial stability of an entity. This is usually done via the analysis of financial statements. There are four basic financial statements noted in our accounting guide:
- Statement of Financial Position (Balance Sheet) – Gives the financial position of an entity at a specific date. It consists of three main elements, namely assets, liabilities and equity.
- Income Statement (Profit and Loss Statement) – Gives the financial performance in terms of net profit or loss for a specific period. It consists of two main elements, namely income and expenses.
- Cash Flow Statement – Details the movement of cash and bank balances for a specific period. It consists of three main elements, namely operating activities, investing activities and financing activities.
- Statement of Changes in Equity (Statement of Retained Earnings) – Presents the movement of owners’ equity for a specific period. It consists of five main elements namely, net profit or loss, share capital issued or repaid, dividend payments, gains or losses in equity and changes due to amended accounting policies and accounting corrections.
Accounting data can be helpful in creating budgets and forecasts for business and strategic planning. It can also be used to analyse the performance of the business over a period of time. Companies also use accounting information for bench-marking purposes to compare their performance with other companies in the industry.
International Accountancy Bodies
Professional accounting bodies highlighted in this accounting guide vary from jurisdiction to jurisdiction and administer a wide range of accounting certifications. Some bodies are unique to a particular country, but there are some bodies which are recognised globally. They are:
American Institute of Certified Public Accountants (AICPA)
The American Institute of Certified Public Accountants is one of the world’s largest accounting associations with over four hundred thousand members in one hundred and forty four countries. The AICPA administers the Certified Public Accountant exam, which confers the CPA designation on successful students. Its membership programme provides access to accounting resources, training and networking opportunities and expert guidance.
Association of Certified Fraud Examiners (ACFE)
The Association of Certified Fraud Examiners is a United States based anti-fraud organisation that provides anti-fraud training and education. It aims to reduce fraud and white-collar crime and equip members with the knowledge required to detect and deter fraud. Its premier qualification is the Certified Fraud Examiner is tailored towards training its credential holders to identify and implement processes to prevent fraud as well as identifying warning signs that indicate evidence of fraud and risk.
Association of Chartered Certified Accountants (ACCA)
The Association of Chartered Certified Accountants is a United Kingdom based organisation which has over one hundred and ten years of accounting expertise. Its strengths are in accountancy, finance and management and it has partnerships in these areas with over eighty entities. The ACCA administers the ACCA qualification, an Oxford Brookes degree, a Global MBA, the Foundations in Accountancy qualification, a variety of professional certificates and diplomas. Its membership is designed to increase your earning potential, enable career advancement and provide international mobility.
The CFA Institute is an association of investment professionals who are committed to excellence in investment theory, investment performance, risk evaluation, investment analysis and portfolio management. The institute offers two professional designations – the Chartered Financial Analyst (CFA) and the Certificate in Investment Performance Measurement (CIPM). It also provides a Claritas Program Certificate which is tailored to investment decision makers’ support staff. Membership in the CFA Institute enables members to advance professionally, stay updated with the latest industry news and connect and network with investment professionals all over the world.
Certified Financial Planner Board of Standards (CFP)
The Certified Financial Planner Board of Standards (CFP) is a United States based non-profit organisation dedicated to maintaining professional standards in personal financial planning. The board offers the Certified Financial Planner designation which includes training in budgeting, retirement planning, saving for education, tax management and insurance. The board provides opportunities for volunteers to become involved in its work through mentoring, participating in activities and working closely with the team to achieve the board’s mission and vision.
Chartered Institute of Management Accountants (CIMA)
The Chartered Institute of Management Accountants (CIMA) is one of the world’s largest professional body of management accountants. With over two hundred thousand members in one hundred and seventy-nine countries, the institute works to maintain public confidence in management accounting and management accounting practitioners. It offers the Chartered Global Management Accountant certification (CGMA) and a CIMA certificate in Business Accounting. Members of the CIMA are equipped with the knowledge and skills required to practice globally.
Chartered Institute of Public Finance and Accountancy (CIPFA)
The Chartered Institute of Public Finance and Accountancy (CIPFA) is a United Kingdom based public finance oriented institution with a specific focus on public services. It offers a professional qualification, an integrated audit qualification, international public financial management qualifications, and certificates for accounting, finance and public sector professionals. The membership programme is geared towards the maintenance of a global network of public finance specialists and exposure to training courses, networking and career development events, magazine subscriptions and academic research activities.
Accounting credentials range from entry level to professional level. The spectrum of qualifications ranges from basic introductory courses to competency and knowledge based designations. The top credentials highlighted in our accounting guide are:
Association of Chartered Certified Accountants Qualification (ACCA)
The Association of Chartered Certified Accountants (ACCA) qualification requires a maximum of fourteen exams (nine are eligible for exemption), 36 months’ experience in a relevant roles and successful completion of a Professional Ethics module. The path to the ACCA qualification has several milestones which include a Diploma in Accounting and Business, an advanced diploma in Accounting and Business and an undergraduate degree in Applied Accounting. For this qualification, the initial registration fee is GBP 79, the annual subscription fee is GBP 85 and exam fees range from GBP 71 to GBP 277. Please note that in some countries, additional subscription fees may apply. Click here for verified ACCA learning resources suggested by our accounting guide.
Certified Financial Planner (CFP)
The Certified Financial Planner (CFP) certification is characterised by the attainment of four initial certification requirements – education, examination, experience and ethics. Prospective candidates must have completed a college level program in an accredited financial plan development course and possess a bachelor’s degree. To be awarded the certification, you must then pass an examination, possess three years of professional experience in financial planning or two years’ apprenticeship experience and complete a CFP certification application. To maintain the certification, there is an annual fee of USD 325, a completed certification application and 30 hours of CFP Board approved continuing education over a two year period. Click here for verified CFP learning resources suggested by our accounting guide.
Certificate in Investment Performance Measurement (CIPM)
The Certificate in Investment Performance Measurement (CIPM) programme is tailored to meet the needs of investment, risk, finance, compliance and client relationship professionals. The credential covers topics in performance and risk evaluation such as measurement, attribution, appraisal and manager selection as well as topics in ethical and professional standards which include investment performance and reporting standards and ethics. Exam registration fees for first time applicants are USD 975 and include the cost of the study text and a mock exam. Scholarships are available, but are very competitive and consist of a reduced examination fee. Click here for verified CIPM learning resources suggested by our accounting guide.
Certified Management Accountant (CMA)
The Certified Management Accountant (CMA) designation is a globally recognised finance and accounting credential that demonstrates proficiency in financial planning, analysis, control, decision support and professional ethics. To become a CMA, you must first become a member of the Institute of Management Accountants and pay the CMA entrance fee. After successful enrollment, you will be required to pass two exams – Part one, which is Financial Reporting, Planning, Performance and Control consists of five topics and Part Two which is Financial Decision Making, consists of six topics. CMA fees are characterised as student/ academic member fees of professional member fees and range from USD 180- USD 240 for the entrance fees and USD 296.25 to USD 395 for each part of the exam.
Certified Fraud Examiner (CFE)
The Certified Fraud Examiner (CFE) credential has a specific focus on fraud prevention, detection and deterrence and trains credential holders to identify fraud and fraud risk and to implement robust anti-fraud processes. Eligibility for the CFE certification is based on a combination of a points system, your academic requirements and professional requirements. To become a CFE, you must be an associate member of the Association of Certified Fraud Examiners (ACFE). You will be required to prepare for the CFE examination, apply to take the CFE exam and achieve a minimum score of 75% in each of the four sections of the exam. The four sections of the exam which also comprise the fraud examination body of knowledge are Fraud Prevention and Deterrence, Financial Transactions and Fraud Schemes, Investigation and Law. The three levels of membership are student, associate and educator. Student members can purchase the student package for USD 350 and receive the CFE exam prep course, the CFE exam and one year of membership. Click here for verified CFE learning resources suggested by our accounting guide.
Certified Public Accountant (CPA)
The Certified Public Accountant (CPA) qualification is awarded to financial advisors who work closely with individuals, business and organisations to plan and achieve their financial goals. To become a licensed CPA, one must satisfy educational state requirements, achieve a minimum score score of 75% in a four section examination which covers Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting and Regulation and relevant experience. A CPA license, which confers the right to practice public accounting, must be maintained annually with continuing professional education and AICPA membership renewal. Student affiliates do not pay any dues and CPA exam candidate affiliates pay USD 55 per year. Click here for verified CPA learning resources suggested by our accounting guide.
Chartered Accountant (CA)
The Chartered Accountant (CA) qualification is usually awarded by recognised accounting bodies in a particular country or region. These bodies establish and administer qualification processes, admission criteria and membership requirements within their jurisdiction. Click here for verified CA learning resources suggested by our accounting guide.
Chartered Financial Analyst (CFA)
The Chartered Financial Analyst (CFA) credential is a globally recognised investment qualification that measures the expertise, experience and ethics of its practitioners. The program curriculum covers three levels of exams in Investment Tools, Asset Valuation and Portfolio Management over ten general topic areas. To earn the CFA charter candidates must enrol in the CFA programme, pass all three levels of the exams, possess at least four years of professional work experience in investment decision making and join the CFA institute as a regular member. The program enrollment fee is USD 450 and exam registration fees are USD 650 for early registration; USD 860 for standard registration; and USD 1,280 for late registration. Regular CFA Institute annual membership dues are USD 275, and CFA Society annual membership dues vary by location. Click here for verified CFA learning resources suggested by our accounting guide
Chartered Global Management Accountant (CGMA)
The Chartered Global Management Accountant (CGMA) is a management accounting designation that is affiliated with the AICPA and the CIMA. There are two pathways to become a CGMA designation holder. The obtain the CGMA through the AICPA pathway, candidates must pass the CGMA exam, meet the experience requirements and be a member of the AICPA. To obtain the CGMA designation through the CIMA pathway, candidates must complete the the CIMA examinations, meet the experience requirements and be a member of the CIMA. Click here for verified CGMA learning resources suggested by our accounting guide.
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