Chapter 1

Introduction to
Professional Research
 Learning Objectives

 Importance of research to professional

accountants
 Definition and nature of professional
accounting research
 US Securities & Exchange Commission’s
view of research
 Learning Objectives (cont.)

 Role of research within a public

accounting firm
 Basic steps of the research process

 Importance of critical thinking and

effective communication
 Importance of Research on CPA Exam
 Research importance

 Changes in law, new services,

technologies, professional standards.
 Accounting, attestation, tax compliance,
forensic accounting, fraud examinations,
tax planning.
 Research Importance (contd.)

 Must have a clear definition of the

problem, using professional databases to
search for relevant authorities, reviewing
authoritative literature, evaluating
alternatives, drawing conclusions, and
communicating results.
 Develop critical thinking skills
 What is Research?
 The act of conducting research is a systematic
investigation of an issue or problem utilizing the
researcher’s professional judgment.

Accounting & Auditing Research

 The act of a systematic and logical approach and
documenting evidence underlying a conclusion
relating to an accounting or auditing issue or
problem currently confronting the accountant or
auditor.
 Accounting & Auditing
Research
 Theoretical research
 Attempt to create new knowledge or add to a
body of knowledge
 Applied research
 Investigates an issue of immediate practical
importance
 A priori – before the fact – should a client open
a store at a certain location
 A posteriori – after the fact – tax return
 Nature of Research

 Most important step is problem identification!

 Must be able to conduct effective and efficient
research
 Effective – proper recording, classification,
and disclosure, in compliance with
authoritative pronouncements
 Efficient – meet deadlines and managerial
costs
 Critical Thinking and Effective
Communication

 Critical Thinking
 Must know how to think

 Be able to identify a problem, gather

relevant facts, analyze the issue,
synthesize and evaluate alternatives,
and develop appropriate alternatives.
 Critical Thinking and Effective
Communication (contd.)

 Effective Communication
 Coherence, conciseness, good use of
standard English, and achievement of
the purpose for the intended reader
(memo if internal, report if external)
 Research on the CPA Exam

 Each part except for BEC currently has a

research component consisting of a
simulation.
 Must be able to research a database and
to identify the exact citation/answer to a
posed problem.
 The Research Process

 1. Investigate and analyze a clearly definable

issue or problem
 2. Use an appropriate scientific approach
 3. Gather and document adequate and
representative evidence
 4. Employ logical reasoning in drawing
conclusions
 5. Support the validity or reasonableness of the
conclusions
 1. Identify Relevant Facts

 Must define the problem!!!!!!

 Why and what

 At first, it is better to gather too many

facts than too little as you are learning the
research process.
 Exact source of the issue, justification for
the issue, and scope
 2. Collect the evidence

 Review relevant authoritative accounting

or auditing literature and survey present
practice.
 Be familiar with available resources

 You may have to develop your own

resolution based on a series of facts, if a
clear cut answer does not exist
 Must evaluate cost/benefits
 3. Analyze the Results and
Identify the Alternatives

 Support each alternative with

authoritative literature or theoretical
justification with concise documentation.
 Properly document alternatives from
organized, collected information.
 4. Develop Conclusion

 After analyzing alternatives, including

economic consequences, develop
conclusion.
 Often, only the final conclusion will be
presented to the client (alternatives may
be in the appendix)
 5. Communicate the Results

 Often in the form of a research memo

 Statement of facts; clear, precise
statement of the issue; brief
straightforward conclusion; discussion
of authoritative literature; explanation
of how it applies to set of facts
 Avoid excess
 Research Navigation Guide
Functional Areas
Financial Accounting & Reporting
SEC Issues
Taxation
Managerial Accounting
Audit/ Attestation
Governmental/ Not-for-profit Accounting
Topic (Issue)
Other Areas
Assets
Liabilities
Equity
Sub-Topics
Revenues
Expense Cost of Sales
Compensation
R&D
Etc.
Section
Recognition
Measurement
Disclosure