What are accounting branches?

Accounting branches work to measure, process, and communicate financial and non-financial
information that affects a business's economic interests and associations. Most businesses and
corporations use accounting branches to measure the results of the organization's economic
activity. Accounting branches use various methods to compile and report results to investors,
creditors, management, regulators, or tax collectors.
Because of the increase of global business and the expansion of tax laws and regulations,
accounting evolved to expand its branches and develop specialties in a particular area of finance.
Developments in technology and the exchange of international currencies result in the expansion
of accounting specialties that place their focus on a particular economic interest.
What does an accounting branch do?
Accounting branches record business events and transactions, then translate that information and
present it to managers, stakeholders or whoever has a financial interest. The information assists
managers before, during and after projects, and helps stakeholders make business decisions.
Accounting branches follow certain sets of accounting standards put in place by organizations such
as the Financial Accounting Standards Board (FASB) in the US. These standards, known as the
generally accepted accounting principles (GAAP), are a set of concepts, conventions, assumptions
and principles followed by accountants. GAAP serves to remove confusion and encourage
uniformity and consistency in accounting practices.
Accounting branches use a variety of accounting practices to monitor and report on economic
activity and company health.
In addition to tracking the movement of money, accounting branches typically serve to:
 Keep and maintain financial records.
 Facilitate decision-making.
 Comply with laws and regulations.
 Protect business assets.
 Determine profit and loss.
 Monitor business health through multiple analyses.
The different branches of accounting
The world of accounting expanded into several branches that specialize in particular legal areas or focus on a certain aspect of business.
Here is a list of 12 branches of accounting along with a description of each area's focus:
* Financial accounting
Financial accounting involves recording and clarifying business transactions along with preparation and presentation of financial
statements. Financial accounting follows GAAP principles and focuses on historical data. For example, a financial accountant may
analyze the financial records of the previous quarter to make recommendations for changes in the next quarter. Financial accounting
analyses the company's balance sheet and prepares profit and loss statements that advise management or stakeholders in regard to
loans, investments, or acquisitions.
Financial accounting provides vital economic business information for:
 Creditors
 Banks or financial institutions
 Regulators
 Suppliers
 Tax professionals
++ Keeps track of the company’s financial transactions which are recorded, summarized, and presented in a financial report or
statements. Provides enough information of the company for others to evaluate the worth of business for themselves.

* Managerial accounting/ Management accounting

Managerial accounting provides information to a company's internal structure, namely management. Unlike financial accounting,
managerial accountants monitor the use of money, rather than amounts of money. Managerial accounting places the focus on the
needs of management and doesn't necessarily follow GAAP accounting rules. The Chartered Institute of Management Accountants
developed a set of accounting principles, known as Global Management Accounting Principles (GMAP) that relate directly to this
discipline.

Managerial accounting works to improve the company's administration, enhance its profit, and provide management with financial
reports that influence planning and budgets. This branch of accounting performs forecasting to advise management on the best business
practices to meet goals and maintain profit. Managerial accounting includes conducting internal examinations through cost to volume
profit (CVP) or break-even point (BEP) analysis, factors that affect decision making.

++ Partners in management decision-making, devising, planning and performance manages systems, and provide expertise in financial
reporting. Provides regular reports containing essential information which is vital to achieving company’s competitive advantages.

* Cost accounting

Cost accounting, considered a subset of management accounting, focuses on evaluating costs. This branch considers all factors of
manufacturing to accurately determine the cost of a project or venture. Cost accounting analyzes manufacturing costs to prepare and
present reports that inform decision-makers on how to reduce cost, or when to spend more. It monitors projects for waste and cost
control. Cost accounting regularly analyzes actual costs over budget to determine future monetary actions.
++ Determines the different costs of the firm, and verifies them, and suggest which costs to be reduced while maintaining optimum
quality. Helps the firm to control cost and maximize savings, and also to establish the right selling price of products and services.

* Auditing

Auditing is a branch of accounting that is usually done internally and externally. Auditors examine and monitor a business for accurate
reporting, compliance with tax laws and regulations, and financial integrity.
++ Reviews of firm’s accounting systems and financial statements to confirm that it follows the prescribed standards of GAAP. It is
conducted to evaluate and improve the effectiveness of the company’s risk management, control, and government processes.
There are two specializations for auditors:

External auditor
State or federal auditing takes place with an independent, outside auditor who examines a company's financial statements for accuracy.
Auditing complies with GAAP and evaluates the adequacies of a company's internal controls. External auditors may test the company's
segregation of duties, policies, authorizations and other management controls for efficacy and integrity.

Internal auditor
Internal auditing identifies and prevents tax issues or prepares the business for an outside audit. Auditors in this branch are typically
chosen by shareholders so their role doesn't present a conflict of interest and ensures their objectivity.

* Tax accounting
Tax accounting follows state and federal tax rules during tax planning or in the preparation of tax returns. This branch reports on the
effect of taxes on a business and may offer advisory services on minimizing taxes or the consequences of tax decisions. Tax accountants
calculate income and other taxes depending on the structure of the business. Since taxes and income brackets vary from entity to entity,
tax accounting is well-versed in tax laws surrounding sole proprietorships, corporations and limited liability corporations (LLC).
++ Undertakes tax computations, filing of tax returns and planning for future tax obligations. Minimizes tax liabilities, and ensures
business compliance with tax obligation.
* Fiduciary accounting
Fiduciary accounting handles the accounts entrusted to the person responsible for custody or management of property. The branch
tracks and reports receipts and disbursements from accounts to ensure proper fund allocations and is frequently used by guardians or
custodians.
Fiduciary accounting typically serves:
 Trusts
 Receiverships
 Estates
* Project accounting
Some industries, such as construction or engineering, work on large projects that require a dedicated accountant. Project accounting
falls under the project management umbrella. This accounting analyzes costs and prepares reports at regular intervals to track a
project's financial progress. It provides historical data to inform future project decisions including cost-saving measures or budget
adjustments.
* Forensic accounting
Forensic accounting, also known as legal accounting, handles legal matters related to bankruptcy, fraud or mismanagement. This branch
conducts investigations for court and litigation cases, calculates damages, and oversees dispute resolutions.
Forensic accounting serves:
 Lawyers
 Law enforcement
 Insurance companies
 Government organizations
 Financial institutions

* Fund accounting
Fund accounting works with non-profit organizations (NPO) to ensure the correct and accurate allocation of funds. Fund accountants
ensure NPO funds go where intended through the separation and distribution of funds according to the company's policies or in
accordance with laws governing NPOs.
Fund accounting is frequently used by:
 Charities
 Churches
 Educational institutions
 Hospitals
 Government agencies
 Clubs
* Not-for-profit accounting
Fulfills the accounting needs of not-for-profit organizations (also known as non-trading concerns). It is concerned with
recording events, preparing reports, and planning operations of not-for-profit organizations such as charities, churches,
educational institutions, hospitals, government agencies and clubs etc. The basic accounting principles and concepts used
while applying not-for-profit accounting are the same as used in regular or general purpose financial accounting.

* Government accounting
Government accounting oversees and records state and federal fund allocation and disbursement. This can include aspects of social
accounting and the measurement of cost to humans as it relates to federal land use, climate change or the use of welfare funds.
Government accounting tracks the movement of money through various agencies and ensures budget requirements are kept or met.
Government accountants work in state and federal programs such as healthcare, housing and education.

++ Audits tax accounts, monitor and allocates revenues, and investigates fraud. It makes sure that public funds and revenues are taken
into account.

* Political campaign accounting

Political campaign accounting oversees the development and implementation of a political campaign's finance systems. This may include
transaction accounting or donation monitoring to ensure compliance with federal and state laws governing political campaigns. Political
campaign accounting is practiced in local, state or nationwide political races.

* International accounting
As global business expands, so do international markets and the need for international accounting. This branch of accounting serves to
learn laws and regulations in other countries in order to conduct business honestly and fairly. International accountants not only follow
GAAP but are well-versed in International Financial Reporting Standards (IFRS), the accounting standard followed in most global
economies.
* Accounting Education
Teaches and trained future accountants, and learn at the same time

* Accounting Research
Research and conducts scientific methods for accounting practices
Why choose a career in accounting?
Those with a passion for numbers and a penchant for detail might enjoy a role in accounting. Accountants are methodical, organized and
display careful attention to detail. Since there are several branches of accounting, you can combine a love for numbers while upholding
tax laws, working for a non-profit or protecting interests or assets.
Some of the titles in accounting are:
 Certified public accountant (CPA)
 Certified management accountant (CMA)
 Certified internal auditor (CIA)
 Certified financial planner (CFP)
 Certified information systems auditor (CISA)
Jacinto, Glycel Angela A. (11 ABM-B)