The CPAs in the Accounting Profession Research Proposal

The CPAs in the Accounting Profession - Research Proposal Example In smaller organizations, there is less specialization and more combining of responsibility for the various accounting functions. Larger business enterprise typically employs internal auditors who review the work done by accountants and others within the enterprise and report their findings to management. In addition to auditing financial reports generated by the accounting system, they review the operational policies of the company and make recommendations for improving efficiency and effectiveness. Although internal auditors are employees of the enterprise, they must be independent with respect to the employees whose work they review. Some accountant known as Certified Public Accountants or simply known as CPAs, do not work for a single business enterprise. Rather, they provide a variety of services for many different individuals and business clients, which is categorized as external financial reporting.Certified Public Accountants perform public accounting and independent auditing . CPAs practice either individually or in firms. Due to the important of personal liability for professional conduct, public accounting firms are generally organized as professional corporations. These corporations provide many of the benefits of the corporate structure, but retain personal liability for the professionals involved. Almost all big and publicly held corporations are audited by a few large CPA firms; and numerous small businesses and non-public entities are serviced by regional and local CPA firms, including a large number of sole practitioners. In these firms, the role of auditing is often less important than the areas of tax reporting and planning and systems consulting. A CPA in a smaller firm is expected to be something of an accounting generalist, as opposed to the more specialized positions of CPAs in large regional and national firms. With respect to external financial reporting, the most important service provided by the CPAs is the independent audit of financial statements. As independent auditors, Certified Public Accountants play a critical role in the reporting of financial information to external users who make their decisions concerning their relationship to the enterprise, such as: creditors and potential creditors, investors and potential investors, financial analysts, government agencies, and other interested parties. In performing an independent audit, the CPAs responsibility is to examine the financial statements to be furnished to external users and to express an opinion as to the fairness of the statements in adhering to the generally accepted accounting principles (Nikolai and Bazely, p.10). The auditor's opinion is communicated in a report that accompanies the financial statements. The opinion is based on evidence gathered by the auditor from the detailed records and documents maintained by the com pany and from a review of the controls over the accounting system. The need for independent audits resulted from the emergence of the corporate form of business and the resulting separation of ownership and management. A significant proportion of the productive activity in the United States is conducted by publicly held corporations; that is, by corporations whose securities are sold to the general public. The stockholders who own the corporations are primarily investors and are generally not involved in the operations of the business. These investor-owners rely on management to operate the business and report periodically on the performance and financial