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CHAPTER II
Review of Related Literature and Studies
Accounting is vital to ones daily activities; it has made its impact in the field of business,
from the small bakery to a multi-national corporation in Ayala or Makati Avenue. The baker in
the street corner has a problem of, what bread to bake, how much material (flour, milk, sugar and
yeast) to buy, and at what prices will the bread and pastries be sold. If San Miguel Corporation,
in answer to globalization, plans to expand operation and put up branches abroad, it must make
decisions regarding where to establish its branches, how much capital (cash and resources) to
invest, and what products to produce and at what prices will these be sold. Again, the decisions
regarding these matters require an understanding of accounting information (Vera Cruz Manuel,
1995).
All businesses, from a simple to the most complicated one, have one thing in common:
they need financial information before making decisions. Therefore knowledge of the accounting
language and how to use it is very important.
Many students now are choosing a career related in business because they are interested
in finding a job right after graduating from college. Many are unsuccessful in seeking for
employment after college but students with a business degree arent one of them. As the business
world continues to grow, there will always be a demand for business degree holders.
The demand for accountants is high and it probably will not change. According to the
website of Princeton Review, the accounting profession is to be growing very quickly and
because of all the different types of accounting needed to fulfill the needs of various businesses,
the need for an accountant will always be there. Another plus to obtaining a degree in
Accounting from most other business degrees is according to the AICPA, an accounting degree is
a degree that offers all ranges of possibilities in the business society. As well stated in the
publication by AICPA, Accounting opens doors in every kind of business coast to coast.
Accounting deals with the aspects of preparing financial statements and budgets for companies
as well as other career path opportunities, but because of the complexity in working with

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numbers, accounting is said to be the basic language of the business world and that is what
makes it a successful field (Griff, 2014).
Being a CPA gives an advantage though. A professional qualification is invaluable when
it comes to achieving long term personal security and there has never been a better time to
become a Certified Public Accountant.
According to the Professional Regulation Commission, the number of CPAs has grown to
over 100,689 by 1999. Several small accounting firms have been established by the CPAs, while
the big accounting firms include Sycip, Gorres and Velayo; Joaquin Cunanan and Company;
Punongbayan and Araullo; Diaz Murillo and Dalupan among others (Vera Cruz Manuel, 1995.)
The following articles show the benefits associated with the CPA qualification.
CPAs are often viewed as an elite group of professionals. After years of academic and
technical training and passing the rigorous CPA exam a CPA's ethics and character are further
tested with several years of extensive on-the-job training. For all of this, CPAs achieve a level of
expertise and proficiency beyond that of a "standard" accountant proudly earning them the
designation of CPA. Having a CPA license is a good way to stand out from the crowd to potential
employers, who are often impressed with accountants who have earned their CPA license.
Earning a CPA license demonstrates a commitment to the profession and often highlights
potential candidates for leadership and management positions. A CPA license is also necessary
for those who desire to rise to higher levels of authority and responsibility. It is not uncommon
for seasoned accountants to return to school to earn a Master's Degree in Accounting so they can
become a licensed CPA and get the promotion they deserve. Due to a shortage in experienced
accounting professionals in business today, CPAs are in more demand than ever before and that
doesn't seem to be changing any time soon. The main reason for this shortage is due to a dip in
accounting students in the 1990's when the Internet was booming and students sought jobs in IT
and online marketing. The Sarbanes-Oxley act, passed in 2002, also drove up the need for
qualified CPAs to enforce the new higher standards of public corporate accounting. The final

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straw is the Baby Boomers, who are retiring and leaving a tremendous gap in the market, which
is also felt in the academic world as more and more accounting professors retire. CPAs are
typically multi-talented professionals who perform a mix of highly-specialized job functions
including Auditing, Business and Management Consulting, Information Technology (IT),
International Financial Reporting and Tax Advisory Services, to name a few. Almost every
business encounters a financial situation at some point or another where it could benefit from the
services of a CPA. Furthermore, with the spread of globalization, the environment of accounting
is changing. As the U.S. prepares to adopt International Financial Reporting Standards, CPAs
face more opportunities to travel the world and gain international business experience and
those who are multi-lingual and multi-cultural will have an advantage over those without those
skills. When choosing a career, many people consider salary potential and benefits as important
criteria, next to passion for the job. For new college graduates, a CPA license can mean a
difference of 10% between them and their non-licensed peers (according to the 2009 Robert Half
Salary Guide). Salary ranges for experienced CPAs in public practice are even better, ranging
from $80,000 to $110,000(http://nasba.org/licensure/gettingacpalicense/whygetlicensed/fivepopular-reasons-for-earning-a-cpa-license/).
Today, the CPA credential equates to a world of possibilities. Gone are the days of backroom number-crunchers and in their place are a diverse group of professionals involved in
shaping the futures of the businesses and individuals they serve. Today's CPAs are the CEOs and
CFOs of major corporations, technology managers, forensic experts and much more. The
following are the top ten benefits of a career as a CPA:
Job Satisfaction. Considering the amount of time one spends building a career and then working
on the job, it pays to make sure you find something you enjoy doing and brings you a sense of
satisfaction. By earning your CPA certificate, you can position yourself for a rewarding and
broad-based career path. You also will find yourself part of a profession that is actively involved
in setting a course for its future.
Diversity of Career Options. CPA certification opens doors to a wide variety of career options.
Some current hot areas in accounting include:

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Assurance Services -- Think of a hot growth area in the economy and you will find a need for
Assurance Services. Electronic commerce, risk management, elder care are just a few areas
where CPAs use their analytical and information processing skills to ensure and improve the
quality of information for decision makers.
Information Technology Services -- The growth in information technology has created numerous
job opportunities for accounting professionals with strong computer skills who can design and
implement advanced systems to meet an organization's specialized needs.
Environmental Accounting -- As businesses take a greater interest in the environment, CPAs now
are involved in everything from performing environmental compliance audits, to handling claims
and disputes, to setting up preventative systems to ensure compliance and to avoid future claims
and disputes.
Forensic Accounting -- Forensic accountants look beyond the surface of accounting records to
determine if fraud has been committed and search for evidence of criminal conduct. As such,
forensic accountants also often assist legal professionals in the litigation process.
International Accounting -- As the world has become more global, cross-border transactions have
become more common place. This has created a need for accountants possessing a knowledge
and understanding of international trade rules, government regulations and tax laws.
Consulting Services -- CPAs are engaged by individuals, businesses, financial institutions, notfor-profit organizations and government agencies to provide objective advice and technical
assistance on a variety of business and financial situations.
Tax and Financial Planning -- CPAs offer assistance to individuals, companies and organizations
in identifying financial objectives and counseling them on the risk, liquidity and management
and tax characteristics of investments. As tax and financial planning specialists, CPAs are
involved in everything from preparing tax returns, to helping restructure a multinational
corporation's investment portfolio, to minimize its tax liability.
Some of the other positions held by CPAs include financial analysts, FBI special agents, security
sale representatives and revenue agents.

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Creativity. Catalyst, rainmaker, the translator who turns vision into reality. These are just a few
of the terms that convey the range of creativity exercised by today's CPAs. By pursuing a CPA
career path, you are provided with a means for developing your communications, leadership and
strategic thinking skills, as you also learn how to interpret converging data, anticipate and create
opportunities, and translate complex information into critical knowledge. More than just
numbers, a CPA career path allows you to make sense of a changing and complex world.
Challenging and Rewarding Work. What do Philip Knight, CEO of Nike and Arthur M. Blank,
former President and CEO of Home Depot, all have in common? Both are CPAs and each has
become successful in large part because of the business knowledge and distinction their
certification has given them. Ask just about any CPA and you'll discover that the world of
accounting is a challenging and rewarding one. It's a world that involves looking beyond the
numbers to discover how best to shape financial futures. It's a world filled with opportunities and
the chance to specialize. It's a world where you can work in sports and entertainment, the
legislative arena, a specific industry, or even go out on your own as an entrepreneur.
Employment Stability. The Labor Department projects that employment of accountants and
auditors is expected to grow 16 percent from 2010 to 2020, with more than 190,000 new
accounting positions becoming available between 2010 and 2020. And, according to Forbes.com,
times have never been better for accounting majors, not just in New Jersey but nationwide. This
is partly because the government is calling for greater oversight of the financial markets creating
new positions in the private sector and in government. In addition, since baby boomers make up
a large portion of NJs and the nations workforce, many are retiring. That's more good news for
young accountants.
Opportunity to Contribute to Society. CPAs make an immediate and lasting difference in the
lives of the people and the businesses they serve. CPAs help people to set and reach their
financial goals from paying for a child's college education to funding a retirement. They assist
businesses with identifying new markets and opportunities. They help with solving and
preventing fraud. And they even get involved with cleaning up the environment as environmental
auditors.

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Involvement with People. There is hardly an aspect of a CPA's work that does not involve
working with people. As advisors to individuals and businesses, CPAs serve as strategic partners
to a range of people and personalities. They serve as team members in all sorts of business and
financial environments, helping to solve such problems as identifying and building the best
technological format for a major corporation, to exploring and developing new markets for a
global corporation, to investigating and prosecuting cases of white- collar crime. They are the
professionals people and businesses trust. Survey after survey has shown that the public rates the
CPA profession among the most trusted professions, while small-business owners provide the
CPA with a 95-percent trust factor.
Financial Security. Accounting salaries are pretty hard to beat. The major CPA firms are
offering salaries of more than $55,000 right out of college. A junior partner at a Big 4 accounting
firm earns an average of $300,000 a year and a CFO at a large company earns upwards of
$350,000. The variation in salaries reflects differences in the size of a firm, the location, level of
education and professional credentials.
Intellectual Development. To train as an accountant is to develop your critical thinking skills,
analytical abilities and problem-solving capabilities. To earn your CPA is to also commit to
lifelong learning and to be continually broadening your horizons. The CPA commitment to
continuing education provides a definite competitive edge as you work along in your career.
Employers value those professionals who not only keep their skills and knowledge base fresh,
but who also are devoted to learning and developing new competencies.
Prestige. To be a CPA is to count yourself among one of the most highly respected and
prestigious professions. Along with doctors, lawyers and bankers, those who hold their CPA are
viewed as having obtained a high level of success and accomplishment
(http://www.njscpa.org/index/students/career-path/benefits-of-a-cpacareer#sthash.jdUYY5HT.dpuf).

How Becoming a CPA will indeed change your life? is the drastic question an
individual is asking to himself every once in a while. My decision to become a CPA has proven

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to be one of the best Ive ever made. All the hard work, sacrifice, and sweat I put into passing the
CPA exam seem trivial compared to the many benefits it produced. It has landed me multiple job
offers from both private and public companies as well as given me new opportunities that I
couldnt even fathom just a few short months ago. Right now I am typing this from the 84th floor
of the Baiyoke Tower, the tallest building in Bangkok, Thailand. This amazing city is now the
place I call home, at least for the next year or so. This life changing experience is a direct result
of getting my CPA license, which gave my clients the confidence to let me take my work and do
it anywhere in the world. I realize that I am very blessed and not everyone has this kind of
flexibility with their job, then again, I didnt either until I became a CPA.
(http://crushthecpaexam.com/becoming-a-cpa/)
Traveling is only one of the many perks that come with the territory. Here are some more
reasons why I think you should consider joining the ranks as a CPA:
Stack that Paper
Many companies offer their employees a large bonus upon receiving their CPA license,
generally anywhere from $2k-5k. Thats a pretty nice chunk of cash especially for you recent
college graduates out there. However, a bonus is only the tip of the iceberg when compared to
the long-term gains from having a CPA salary versus having a normal accounting salary. A
recent survey conducted by smartpros.com revealed that the average staff accountant salary is
$40,000 while that same position held by a CPA received an average of $49,000!
Skyrocket Up The Ladder
The problem with climbing up the ladder at work is that it takes too long. By becoming a
CPA you can launch yourself past all those climbers and into the promotional spotlight. It
proves to your boss that you are willing to work harder and sacrifice more than your co-workers.
Work For Yourself
If working for the man doesnt fit your personality then becoming a CPA is your path to
freedom. Once licensed you can open up shop and start a firm of your own! A couple of my
friends who have gone this route recently told me that although they are only scraping by with

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business from a handful of friends and family, they are absolutely loving it compared to the
corporate jobs they just left.
High Demand
You will be able to sleep better at night knowing that your CPA title is something
required by almost every business in America. This consistent demand of highly skilled workers
provides you with one of the most secure occupations in the country.
What Are You Waiting For?
If you have already started down your path to be a CPA then keep at it, work hard, and
know that the reward is much greater than the sacrifice. If you are still undecided then perhaps
the King of Rock n Roll himself can point you in the right direction, I have no use for
bodyguards, but I have very specific use for two highly trained certified public accountants.
-Elvis Presley (http://crushthecpaexam.com/becoming-a-cpa/).
Above mentioned article is the point of view of one of the millions CPA in the world, it doesnt
refer that all CPA goes with the same workload. In line with this, the researcher conducted
further research of what is a day in the life of a public accountant. Workday will perhaps differ
in the environment you are into, the aspects of accounting you specialize in and whether it could
be in tax season. (http://www.investopedia.com/articles/professionals/052813/day-life-publicaccountant.asp). On the subsequent pages is the typical day of two public accountants namely,
Richard Melancon, CPA, from Metairie, Los Angeles and Amy Zhang, CPA, from San Francisco.
Richard Melancon runs his own CPA firm in Metairie, La. He has been a CPA since 1985
and started his firm in 1989. His company emphasizes helping small and mid-sized companies to
grow and establish themselves in the market. He has also helped start-ups with business plans,
loan applications and venture capital funding. Along with business tax planning, financial
planning and income-tax preparation, his firm offers business training, consulting services and
computer security assessments. He also teaches and speaks about personal money management
and is a professional member of the National Speakers Association. He earned bachelor's degrees
in

management

and

accounting

and

holds

an

MBA.

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Melancon typically works from 9 a.m. to 5 p.m., Monday through Friday, except during
tax season when he also works Saturdays. But as a business owner and someone who has
reached an advanced level in his field, each day is different.
Most people think that accountants perform the same activities every day in the office,"
he says. This can be true for entry-level positions and for paraprofessional positions."
Repetition builds experience, skill and efficiency in new employees, he says. But once an
employee becomes experienced, their daily skills become more diverse as they develop skills to
address their clients' needs.
Practitioners who develop a strong focus on tax planning will become the first resource
for clients with tax challenges, Melancon says. "Other CPAs in the industry will develop skills in
the area of management consulting, fraud investigation, litigation support or financial auditing.
Within each of these disciplines, the daily activities will be dictated first by the tickler system in
place at that firm and then by the telephone calls received from clients each day," he says.
Melancon's daily activities include answering numerous phone calls from clients,
salespeople, prospects, peers and other people in the community. He always makes time for these
calls because they either lead directly to more paid work or they lead to greater community
involvement, which may lead to more paid work in the future. He also tries to stay on top of the
100-plus emails he receives each day. In addition, some days Melancon will attend a meeting for
one of the outside organizations he is involved with, such as the local chamber of commerce, a
trade organization or a community nonprofit. These meetings might extend his workday past 5
p.m.
Once a week he processes payroll, and monthly he closes payroll and prepares sales tax
returns. When clients submit financial documents to his firm, he performs bookkeeping services
for them within two days of receipt. Another recurring, but not necessarily daily, activity is
business development, also known as sales. He also has quarterly and annual tasks related to
payroll.

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"No CPA will become an expert in all areas, so each practitioner will develop a unique
practice in the market," Melancon says. A firm can offer a range of skills in several industries by
adding partners with different areas of expertise and each firm will be unique because of its
skills, size, location and target market, he says.
"For those who are considering a career in public accounting, I strongly believe that the
industry holds an opportunity for almost any area of interest that you may have. There are CPA
experts in any industry that you can name," Melancon says. One should not assume that
accounting is limited to adding numbers and compiling tax returns, he adds. "CPAs are often
requested to perform services that are not readily associated with accounting." These include
verifying research results, confirming product quality standards, substantiating historical
renovation compliance and assessing computer security risk. "While each engagement is unique
and may require different procedures, the profession provides a standard environment and
approach to ensure the quality of the finished product," he says.
Amy Zhang is the founder and a managing member of San Francisco-based hedge-fund
accounting firm Affinity Fund Services, started in 2010. Zhang holds both a bachelor's degree
and a master's degree in accounting. Earlier in her career, she worked for 10 years as an auditor
and accountant for two companies, PricewaterhouseCoopers and a regional accounting firm. "To
pursue my dream of becoming that go-to person for accounting professionals in the alternative
investment space, I am building up my career path from Big Four to regional firm to now my
own," she says.
As a business owner, Zhang's experience as a public accountant is different from that of
a public accountant employed by a firm. In addition, her daily tasks differ depending on the time
of month and time of year. During the first week of each month, she spends 90% of her time on
month-end closing activities for her hedge fund clients. These activities include downloading
monthly bank and broker statements, reviewing capital transactions, calculating management or
performance fees and performing reconciliations of net asset value. After her clients approve

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these draft accounting records, she sends them official final copies along with an invoice.
During the last three weeks of the month, Zhang's workload changes significantly. Her
first task of the morning is to check for emails from clients or from the service providers who
work with her clients. Next, she dedicates one to two hours to technical training, which consists
of reading industry news such as CalCPA Daily Clips, HFMWeek and FINalternatives. She
shares interesting news through her business social media accounts. She also attends continuing
education classes for accounting.
Zhang typically dedicates another two to four hours of her day to marketing and public
relations. She attends hedge fund seminars and conferences to meet with prospects at least once a
week and has coffee meetings with existing clients and referrals at least once a month. She also
speaks at industry conferences such as the Alternative Asset Summit in Las Vegas.
Monthly, Zhang attends board meetings of the San Francisco chapter of the California
Society of CPAs, and every other month she hosts a financial entrepreneurs forum in the city's
financial district. These volunteer activities help her stay in touch with her accounting peers since
she's no longer with a large firm. These occasions also offer an opportunity to brainstorm with
fellow entrepreneurs on operational strategies, business development and related issues.
While Zhang works regular hours during the week, she also works weekends, which she
says is her choice as a business owner. She responds to all client requests for advice or assistance
within 24 hours. "Most of my clients are start-up fund managers, and I want to make their
already hectic life as easy as possible," she says.
Despite working weekends, Zhang says she has a great work-life balance since she can
work from anywhere as long as she has her laptop, phone service and Internet access. She once
spent a month overseas for family events while continuing to work for her clients.
Tax season is a different story. This hectic time of year requires her to work 10 to 12

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hours a day on weekdays and another five or so hours over the weekend. She spends 90% of her
time on audit and tax projects, where her daily tasks consist of collecting information,
performing audit and tax procedures and preparing financial and audit reports. Administrative
issues, like project planning and billing, take up additional time.
Zhang says that in a firm environment, staff accountants are usually allowed to take a
long vacation after tax season, especially if they have accrued paid time off from working
overtime. She says accountants may still have audit or tax projects during the rest of the year, but
one-third of their time may be spent attending trainings and conferences, recruiting on campus
and in office, performing internal quality reviews, engaging in marketing activities, such as
visiting clients, and attending office functions such as picnics, ballgames and charity activities.
Different firms have different practices and priorities, and whether you are staff, senior staff, a
manager or a partner will determine how you spend your work hours, she says.
Zhang's job allows her to work with various clients and teams - such as auditors, tax
preparers, lawyers and prime brokers - while remaining focused on one key skill set, accounting.
"I love my life as a public accountant," Zhang says
(http://www.investopedia.com/articles/professionals/052813/day-life-public-accountant.asp).
As in conditions of job security, as they say, every business, organization, and overpaid
celebrity needs a public accountant. CPAs are consistently well paid because theyre in high
demand. And when youre in high demand, you can count on career stability, a competitive
salary and lots of chances to advance. Just how popular will CPAs be in the future? The
Department of Labor and Statistics predicts employment of accountants and auditors will grow
faster than average for all occupations through the year 2016, mainly because accounting and
auditing regulations are getting stricter and the economy will continue to expand around the
globe. The best job opportunities will be for accountants and auditors who have an accounting
degree

and

demand/).

CPA

license

(http://www.startheregoplaces.com/why-accounting/salary-and-

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As to the income of a CPA, here is the average salary of a public accountant

(http://www.startheregoplaces.com/why-accounting/salary-and-demand/).
Table 1.1 Average Salary Guide
Employer

Jr. Level
(0-3 yrs.)

Sr. Level
(4-6 yrs.)

Public Accounting
(large firm)

$54,250-$80,000

$75,750-$130,500

Public Accounting
(medium firm)

$47,750-$71,750

$67,750-$115,250

Public Accounting
(small firm)

$45,500-$64,750

$61,000$100,250

Corporate Accounting
(large co.)

$43,250-$67,250

$65,250-$113,750

Corporate Accounting
(medium co.)

$40,000-$62,750

$58,750-$94,500

Corporate Accounting
(small co.)

$38,000-$57,750

$54,000-$86,000

Displayed

below

is

the

average

salary of

accountants

in

the

Philippines

(http://www.salaryexplorer.com/salary-survey.php?loc=171&loctype=1&job=1001&jobtype=3).

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This study shows that there are many perks, advantages and benefits to being a CPA.
People treat CPAs differently. Their profession is held in such esteem that it sets them aside.
This study just confirmed that CPA designation certainly holds a lot of weight. It implies
how it has been invaluable in every aspect of business career.