Businesses conduct transactions through cash sales to customers, payment to suppliers, and invoice generation. It is important for companies to keep track of these transactions to generate financial documents and for tax purposes.
Most businesses employ in-house accounts that help to record and report a business’ financial transactions. These professionals are usually trained in a particular field of accounting that provides them with skills that allow them to aid corporations in making strategic decisions.
In this article, we will cover the different types of accounting, emerging trends in this field, and how students can pick the right type of accounting to practice.
Table of Contents
What is Accounting?
Accounting is essential for companies to make decisions, prevent fraud, and meet regulatory compliance. Together with other departments, accounting helps to ensure financial stability and long-term growth of a business.
It is the process of recording, analysing, and reporting a company’s transactions over the financial year. It is an integral part of business, as it helps to determine a company’s financial health.
The various types of accounting help provide internal and external stakeholders with information that allows them to make informed decisions. This is the backdrop that leads external stakeholders and internal management to make decisions that can lead to long-term strategic growth.
Most accounts in South Africa are part of the South African Institute of Professional Accountants (SAIPA), which represents professional accountants, professional accounting technicians (sa), professional tax technicians, professional tax specialists, and professional tax practitioners in South Africa.
What are the Different Types of Accounting?
Accounting is a professional field that requires individuals to record and study vast amounts of data. Future accountants must undergo four years of rigorous undergraduate study in an accredited programme.
Accountant is a generic term used to describe all accountants irrespective of the field that they are specialising in.
Let us define the different types of accounting that professionals can practice.
- Financial Accounting: This is a branch of accounting that deals with recording, organizing, and reporting a company’s financial state to external stakeholders. These stakeholders can be investors, regulatory bodies, customers, and creditors.
- Managerial Accounting: This form of accounting deals with financial reporting for the company’s executive management. Management accountants help to prepare budgets and financial forecasting statements that allow company executives to assess risk, operational cost, preventable overheads, etc.
- Cost Accounting: Accountants who practice this type of accounting help identify the direct and indirect costs of doing business. They also help evaluate how the cost impacts operations, efficiency, and profits.
- Tax Accounting is another essential aspect when discussing different types of accounting in business. Companies require tax accounting to ensure that they declare accurate income, pay taxes on time, and avoid penalties.
- Auditing: Auditors are highly valued accountants who are registered as Chartered Accountants in South Africa. When we discuss types of accounting, this is one of the most in-demand professions in the country. They help to study financial documents and provide an independent and objective analysis of a company’s finances.
- Forensic Accounting is a form of accounting that helps to study the financial documents of companies and large corporations suspected of fraudulent activities. Government agencies usually hire forensic accountants to help them assess a company’s financial records.
- Government Accounting: When most people think of types of accounting, they assume it is only required for business. However, governments must also guarantee that budgets are allocated efficiently for projects and programmes. It also helps to offer transparency in government workings.
- Environmental Accounting: This is a unique type of accounting that helps manage the costs and expenses related to a project or operation’s environmental impact. This can include waste management, pollution control, and compliance with regulations.
Read more on Management Accounting vs Financial Accounting
What are Some Emerging Trends in Accounting?
Initially accounting documents were prepared by hand by physically scanning receipts and invoices. But over time, accounting software and automation process have helped to ease recording of transactions. This helps to make accounting a more seamless practice and reduces the chances of missed transactions.
Accounting software also makes it easy for all types of accounting practices to track and effectively record all financial transactions.
However, as companies shift their accounting online, it also increases cyber security and hacking risks. Corporations must take extra precautions to help protect sensitive financial data.
Awareness of environmental impacts has led to an increase in environmental accountants who help companies measure the financial impact of their steps towards sustainability.
Choosing the Right Type of Accounting
All types of accounting in South Africa, require practitioners to complete SAICA-accredited undergraduate degree in accounting. They can follow this with an an accredited postgraduate qualification. This can be a diploma or an honours programme.
As students complete their programme and gain experience at a training institute, they can begin to gain experience in a particular type of accounting. They can also speak to registered accountants to gain their insights and experience.
Future accountants should also consider their skills and interests and which of the types of accounting best aligns with them. At a later stage in their career, accountants can also opt to practice privately.
Gain insights on How to Choose a Career That is Right For You
Conclusion
Accounting is an important aspect of business that helps to determine a company’s financial health. In its core, accounting helps to record, analyse, and report financial transactions. Many different types of accounting help in decision-making, compliance, and cost management.
It is important for future accountants to enrol in accredited programmes that teach them the theoretical knowledge and skills required to excel in an accounting role.
Check out Regenesys for more information and insights on some of the most in-demand programmes and careers.
Different Types of Accounting – FAQs
What is accounting?
Accounting is the process of recording, analysing, and reporting financial transactions. It helps businesses track their financial health, make informed decisions, ensure regulation compliance, and prevent fraud.
How many types of accounting are there?
There are various types of accounting, such as financial, managerial, cost, environmental, and forensic.
What qualifications are needed to become an accountant in South Africa?
To become an accountant in South Africa, students must complete an undergraduate degree in SAICA-accredited accounting. This is followed by a postgraduate qualification and practical experience in the form of training at an accounting firm or institute.
Are auditors accountants?
Auditors are trained Chartered Accountants in South Africa. They have undergone rigorous training and passed several examinations before they begin practicing.
How do accounting software help?
Accounting software helps accountants better manage and track financial transactions. It also makes it more efficient for them to generate reports and financial documents that are required periodically.
