Sung Shin Cho
ENG 302
Adam Webb
May 1, 2015
Accounting major
Accounting is normally referred as “Language of Business” because it fills needs the
communication within business and with outer parties. Actually accounting and languages
have many common things. The one of them is purpose of each thing. At first, people wanted
to make accounting principle needed one standard for reporting their financial information
and clear economic figures. It is same purpose of declaring the official languages in one
country. These days, as globalization is getting usual, the accounting standards and principles
are also adjusted or unified in one standard like English has been used and have been getting
official languages in worldwide. IFRS stands for International Financial Reporting Standard
is one of the results of this trend. IFRS is very effective to apply same accounting principle to
each country. However, because it cannot be applied every financial situations in every
country, many countries are partly using this standard of accounting principle. For instance,
large amount of transactions like trading between countries are usually reported by using
IFRS because most of transactions are required to satisfy both countries standard.
Furthermore, globalization of accounting services has been accelerated by FTA which stands
for Free Trade Agreement. As it is getting normal things for trading between countries, it is
increased that the demand of the precise audits using credible principle in developing
countries like China where had tightly limited trading with other countries. This is because
that accounting is the one of the most efficient methods to understand or evaluate one
country’s or one company’s financial information. Furthermore, as a result of several audit
failures triggered by ignoring account principle which brought about devastate economy
crisis on global economy, every countries has required strict standard of reporting audit by
accountants who ensured by country or state. These things mentioned above are clear reasons
why accounting major has quite prospective study in the future and are needed to be
understood deeply.
What can you do with a degree in it?
Most of all, accounting degree relatively ensure a job opportunity more than other
degree did, even while domestic economy is being recessed. Ironically, financial management
is more required during recession, bad time of economy, than boom, because companies
would struggle to look for cost accounts which are able to reduce and ways to report their
income less for reducing tax amount they supposed to pay. Because an accounting is one of
quite practical study that handling real tasks, companies usually prefer candidates who highly
educated in accounting degree. Students are also able to get easily internships for their
academic improvement and work experience.
Also CPA test for being certified public accountant approved by state is requiring for
applicants to have over the 150 education hours in undergraduate or graduate school. The
reason needed the additional academic work is to acquire the technical competence and
develop the skills required by today's CPA is best obtained by lots of studying and work
experience. Most of university also has well organized graduate-level programs are an
excellent way to more fully develop skills such as communication, presentation, and
interpersonal relations, and to integrate them with the technical knowledge being acquired.
At last, almost everyone has been thought that deeply studying in accounting is only
qualification for teaching accounting, but studying and research accounting are only one
aspect of a professor's career, who actually worked in accounting business. As I mentioned
above, teaching accounting is needed to high working experience because accounting is quite
practical study. For example, every audit report which needs accounting knowledge to fully
understand always has a ‘foot note’ which is additional reference to offer specific information
to outer parties. Because a footnote is able to diversely applied and related to practical topic,
related work experience would be essential to teach it successfully.
What kind of overlap does this major or job have with other majors and jobs?
Finance major is quite relevant to Accounting major in many ways although the
purposes of both majors are quite different. Finance is the study of how to optimally allocate
assets and fundamentally a forward looking field, concerned with what an asset will be worth
in the future. Accounting is the process of communicating financial information about a
business and fundamentally a backward-looking field. However, the essential knowledge or
skills for the both major’s purposes are came from similar principles to evaluate financial
information like asset, liability and stock holder’s equity. Discount and premium on the bond
are a viable example. Once a company issues a bond, the bond must have its value which is
stated. This stated value means the amount of money that the bond will pay when it is
matured. However, since the value of money is going to decrease in usual, it’s easy to
understand considering how many Big Mac we are able to have with 10 dollars ten years ago,
every bond also has its present value how much this bond the point of issue. Using this
information of present value, finance major might conclude whether a company should
receive or purchase the bond or not. On the other hand, accounting is correctly able to figures
out the present value of bond in order to report precise value on audit. If this evaluation is
wrongly done or failed to figure out information precisely, it will cause severe loss on
financial affairs, especially large companies where handle great amount of money.
What key or important individuals and/or businesses are associated with this major or job?
Any success stories?
For this question, it must be explained that ‘the Big 4 accounting firms’ which take
large proportion in the accounting service market. Their names are Deloitte, PriceWaterhouse
Coopers (PwC), Ernst & Young and KPMG. These companies are kind of dream jobs of
students who are studying accounting major. Because these companies handle a wide range
of projects from great numbers of companies in diverse area, a student who starts to work for
these companies would pass through higher experience than their peers who work other
companies. By employing the most qualified candidate and competing themselves, these
firms have increased their influence in the accountant market. Furthermore, these firms have
benefits for international students because these companies are expanding their market into
foreign countries cooperated local accounting firms offering maintaining their competitive
system.
Also, Free Trade Agreement is the one of good guarantee for prospective accounting
future. People usually think that only tangible ‘goods’ are targets of FTA, however, most of
FTAs signed with U.S have included many service areas like accounting consulting, medical
service and law in their treaty. For instance, The FTA which was forged between South
Korea and U.S included that South Korea will apply free tariff on agricultural product and
many services like accountant services or medical and U.S will apply it on manufactured
products. This treaty will make U.S major accounting firms expand to other countries easier
than before FTA is signed when the level of expansion to foreign market was limited at
cooperation only. With FTA, U.S competitive accountant firms including Big 4 will be able
to offer accountant services under IFRS and international standard.
Finally, the accounting market will be growing because the demand of accountants
has been being steeply increased in China. This is because Chinese government that usually
has quite strong systemic power, especially imposing tax is applying a strict standard of
taxation to Chinese companies and organizations as Chinese government are keeping lots of
infrastructure projects which led to lack of budget. Large numbers of companies without
proper partnership are suffering from overstated tax and looking for improved partnership.
The problem is that few accounting firms in China don’t have enough qualification for
government’s standard. This is the reason that China government are extraordinarily willing
to accept foreign accounting firms and accountant. Considering the developing rate of China
that maintained high and the shortage of accountants in China, the demands for foreign
accountants and service will be continued for a while.
What kinds of challenges do you face?
Accounting is the language of business, however language itself is one of the biggest
challenges that accounting major face. For example, between countries, the standards of
evaluating or reporting information are getting unified but it is still problem that terms and
titles of account should be still written by each country’s languages. This is led to have
accountant pass each countries’ CPA test. Most of all, most of countries where are not using
English as official language are offering test only via their own language. Furthermore,
unlike AICPA test done in the U.S which is relatively easy to pass, other countries’ test has
quite low pass rate.
Also, accounting has proved that it has problem of unclearness and the probability in
abusing. This is result of its characteristic of accounting which has been constantly changed
its rule or terms reflecting economy and law. This constant change means that accounting
will never be perfect and always have chance to be abused. The one of the worst case of
abusing is ‘creative accounting’. The word ‘creative’ sounds nice, but considering the
principle of accounting that accounting must report using correct and precise information,
‘creative’ cannot have good meaning. The main purpose of ‘creative accounting’ is illegally
manipulating reports and hiding information for companies’ revenue. Although Creative
accounting has been regarded inevitable and natural for companies’ high revenue or low tax,
it has always caused devastating results on economy. It is one of them that The Enron scandal,
revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an
American energy company based in Houston, Texas. In addition to being the largest
bankruptcy reorganization in American history at that time, Enron was cited as the biggest
audit failure. The biggest audit failure of Enron corporation was possible because of
accomplice relations from Arthur Andersen, which ‘was’ one of the five largest audit and
accountancy partnerships in the world. Enron corporation had been hidden their astronomical
debt on the financial statements, as a result of misleading of investor like banks or other
corporation. Arthur Andersen which was responsible to external audit ignored this abusing
and even helped to hide it. As a consequence of the scandal, Enron corporation went through
a bankruptcy process and Arthur Andersen also met the ‘de facto’ dissolution. The reason
why they are ‘de facto’ dissipated is Arthur Andersen totally lost their credential in the
accounting market. Also new regulations and legislation were enacted to expand the accuracy
of financial reporting for public companies. Sarbanes-Oxley Act, increased penalties for
destroying, altering, or fabricating records in federal investigations or for attempting to
defraud shareholders is one of result of Enron scandal. Despite these new regulations and
legislations, there are still potential factors that might be used to mislead investors, failure of
audit and negligence of principle. Whenever audit failures like Enron scandal were happened,
a lot of efforts for preventing it were following. However, every single audit failure has
imprints on global economy which are not easy to return to normal statue whenever they
were happened.