What are the Types of Accounting Services?
Accounting has been described as the bloodline of any business. Whether you’re monitoring inventory, recording sales, or checking for inconsistencies, you are already applying basic accounting principles. But of course, professional accountants have been trained to perform the same routines but in a more organized, accurate, and effective way.
That is why when some business owners look at accounting as simple recording and computing, they get surprised by how complex it is watching a professional do it. Accounting’s flexibility allows it to be one of the most adaptable services. It can be applied anywhere between our personal lives up until government finance.
Here are some of the most common types of accounting services available in the market.
Major Types of Accounting Services
Accountants who are not exclusively tied to a single company are the ones that perform Public accounting. Some of the processes involved in public accounting are preparation, review, and audit of financial statements, tax preparation, and consultation or advisory services.
This type of service is often performed by Certified Public Accountants (CPA). CPAs often undergo rigorous training before they take examinations required to get them accredited. (1)
Management accounting is a process wherein accounting professionals analyze past and present accounting data to synthesize an effective and efficient business model for their client. Some of the processes under management accounting include budgeting, asset management, cost management, and performance evaluation.
Management accounting is also known as advisory services. Its primary function is to improve the client’s use of its capabilities and resources to achieve the objectives of the organization. In short, it aims to help internal users analyze management problems or opportunities. (2)
The largest finance body in any country is the government itself. That is why it should be no surprise that particular types of accounting services are formulated to cater to its needs. Accounting bodies created government accounting to tackle specific issues present in the government that is not in businesses.
The main objective of this service is to help government sectors properly budget and allocate their resources, making sure that each decision is in consonance to both local and national law. Hence, this type of service is one of the most flexible due to varying laws per locality.
Large companies often have issues assuring the accuracy and reliability of their financial statements. It is because, as much as we want it to be otherwise, there is always the possibility of mistakes, or worse fraud occurring in the preparation of financial statements.
Internal auditing aims to detect possible departures from set accounting standards. Managers of often employ this service at the end of financial cycles. This type of service does not involve the preparation of services since the responsibility of auditors is limited to giving opinions regarding the reliability and accuracy of financial statements. (3)
Other Types of Accounting Services
Accountants consider bookkeeping as one of the most basic accounting services. It is often the first step in the preparation of financial statement since it involves the recording of business transactions of the entity.
Many small and medium enterprises make use of this service since it is significantly cheaper and simpler in comparison to other services. You can check out Aldaris’ bookkeeping services here.
Tax accounting is a service focused primarily on the business’s tax liabilities or claims. It is another accounting service that is heavily affected by local and national codes.
A country’s Internal Revenue Code determines how an accountant applies tax accounting to a company. Tax accountants aim to minimize a business’s tax liability without violating any laws or accounting standards. (4)
Forensic accounting can be compared to auditing; however, its main focus is to detect malicious fraud. Forensic accountants are required to have an in depth knowledge of laws that could help them determine violations by concerned parties. Law enforcement agents often use this service when investigating financial related crimes.
External auditing follows the same processes of internal auditing. The difference lies with who uses the audit opinion created. Whereas internal audit opinions are used by internal users such as managers or board of directors, external audit opinions are used by external users such as investors. (3)
The financial sector is becoming more complex and fluid. Hence, it is only right that new and more specific services are created. This results in the Accounting field getting wider and wider as time passes by. This is to cater to the changing needs of businesses.
With this said, every manager or business owner must have at least a minimal knowledge of the differences of these services. So that they could choose which accounting service best fits their needs.