Financial accountancy (or financial accounting)
is the field of accountancy concerned with the
preparation of financial statements for decision
makers, such as stockholders, suppliers, banks,
employees, government agencies, owners, and
other stakeholders. The fundamental need for
financial accounting is to reduce
principal-agent problem by measuring and
monitoring agents' performance and reporting the
results to interested users.
Financial accountancy is used to prepare
accounting information for people outside the
organization or not involved in the day to day
running of the company. Managerial accounting
provides accounting information to help managers
make decisions to manage the business.
Financial accountancy is governed by both local
and international accounting standards.
Accounting Analyst
An
accounting analyst evaluates and interprets
public company financial statements. Public
companies issue these (10-K) annual financial
statements as required by the Security and
Exchange Commission. The statements include the
balance sheet, the income statement, the
statement of cash flows and the notes to the
financial statements. Specifically, the notes to
the financial statements contain considerable
quantitative detail supporting the financial
statements along with narrative information.
This individual has extensive training in
understanding financial accounting principles
for public companies based on generally accepted
accounting principles as provided by the
Financial Accounting Standards Board. Or, he/she
may have additional experience in applying
international accounting standards based on the
rules put out by the International Accounting
Standards Board.
As an example, the accounting analyst may work
for a financial research company evaluating
differing financial accounting principles and
how they influence the company's reported
wealth.
The accounting analyst will most likely hold a
Masters Degree in Accounting MSAcc and will have
specialized in the financial accounting area.
Or, the analyst may have a MBA degree with an
Accounting specialization.
In addition, the analyst may hold the Chartered
Certified Accountant (ACCA) or Certified Public
Accountant (CPA) or Chartered Accountant (CA or
ACA) designation.
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