A Graduate's Guide to Accountancy Jargon
The accountancy industry possesses, like all other industries, an exclusive pool of jargon and acronyms accessible only to those who have spent some time working in the field. Some terms are also company-specific, which means that only the company staff are privy to their meaning, and excludes outsiders and the newbies.
For this reason, graduates are usually discouraged from using jargon during their interviews due to the risk of misusing them. Applicants sometimes get ensnared by the false perception that they will sound more educated when they riddle their speech with corporate mumbo jumbo, but this only exposes them to the risk of sounding like someone who is trying too hard to impress the interviewer.
However, this does not mean that you should completely shun all traces of job-speak during your interview! Instead, feel free to sprinkle your replies with some industry-specific terms so that you come across as educated and updated, but not trying to butter up to your interviewer.
Here is a list of common accounting and financial management lingo that may help boost your level of confidence as you walk into the interview room:
Association of Chartered Certified Accountants.
Association of Taxation Technicians Singapore.
Accredited Tax Advisor. A professional certification awarded by the Singapore Institute of Accredited Tax Professionals (SIATP).
Accredited Tax Practitioner. Another professional certification awarded by the SIATP.
Accountancy revolves around the process of determining, evaluating, and conveying important economic findings to relevant parties so as to help them make informed decisions. It examines the interaction between various financial elements in order to produce a summary of an organisation’s commercial health.
The three main processes of accountancy are:
- Determining information: The accounting procedure begins with the collecting and the recording of data. Economic transactions are documented in a set of “accounts” that operate on a system known as “double-entry book keeping”
- Evaluating information: The accountant then assigns economic values to the data gathered, such as valuing available assets and calculating the amount of profit or loss that a business has made during a specified period of time, usually referred to as a fiscal/financial year
- Conveying information: Information is useless if not disseminated. Once the relevant data has been properly evaluated and documented, the accounting information obtained will be broadcasted and circulated amongst users of the information in a variety of ways, such as in management accounts and financial statements.
Acquisitions are a component of a business specialisation called mergers and acquisitions (M&A), the counselling of clients on the purchase and sales of other businesses. Acquisitions usually involve a wide variety of deals – from the buyouts of small- and medium-sized enterprises (SMEs) to multi-national takeovers.
An individual who contributes capital to the start-up of a company in exchange for non-cash returns, such as ownership equity and convertible bonds.
Audit is the examination and validation of the accuracy of a business’ financial statements, done primarily for tax purposes. Its primary purpose is to confirm that the financial statements of the corporation are a true and fair reflection of the organisation’s financial health.
Usually performed by an external accountancy firm in order to guarantee impartiality, audits are the main assignments of accountants working under assurance and advisory work, and are usually performed at a client’s premise.
The person in charge of organising and managing the audit teams – usually ranging from 2 to 20 people per team. Audit managers ensure all audits are properly completed, and must also build and maintain a good relationship with the client on the side. They are also responsible for guiding the audit team to its full potential.
The senior member or partner of an audit firm who gives the final confirmation during an audit process in order to certify the accuracy of the client’s financial statements.
Business recovery and insolvency
Business recovery experts are usually brought in when a troubled business can still be steered through its difficulties towards a revival and/or improvements.
Insolvency experts, on the other hand, are only brought in when the business is caught in a bad enough state that it has to wind up. It then falls upon the insolvency experts to help the proprietors through the liquidation process by selling off marketable assets to pay creditors.
A mixed package of accounting and auditing services generally offered to major companies as they tend to need additional services for their development, it may also entail advisory or consultancy services where financial recommendations are customised to suit the growth, goals and improvement of a company’s management systems.
Capital gains tax
Tax that is charged when a fixed asset is sold at a higher price than its acquisition price. While this specific form of tax is not applicable in Singapore, any gains a local company makes by selling off assets will still be taxed as incoming revenue.
Chartered Accountant of Singapore. This qualification is managed by the Institute of Certified Public Accountants of Singapore (ISCA).
The Chartered Institute of Management Accountants.
The Chartered Institute of Taxation. While accreditation from this organisation is not mandatory for tax practitioners in Singapore, its CTA certification is still recognised locally, and may be useful for those intending to work in tax outside of Singapore.
Chartered Institute of Public Finance and Accountancy. While this organisation is based in the United Kingdom, it does cooperate with global accounting bodies to advance the field of public sector accountancy worldwide.
An Australia-headquartered accounting body offering the Certified Public Accountant (CPA) qualification.
The last step during an audit process where auditors carry out a final check to ensure that the audit is satisfactorily completed and that sufficient audit evidence has been compiled for a sound audit opinion to be formed.
The process of preparing and compiling sets of financial statements.
This is the field of finance that business organisations turn to when they want to acquire other businesses. A firm of accountants – usually the purchaser’s auditors – will be appointed by the purchaser to evaluate the financial health of the target organisations prior to the actual acquisition. These auditors will also be responsible for communicating the takeover details and negotiating a decent purchase price with the target organisation.
Corporate recovery teams are usually roped in to assist companies in financial difficulties and get them back on track. They are usually engaged during the early stages of a company’s crisis as chances of recovery are typically higher at that point.
On the other hand, should a company be left with no option but to close up, the recovery team will assist with the selling of assets, the laying off of staff, and the winding up of the company in general.
A levy that is charged to a company’s profits. Managed by the Inland Revenue Authority of Singapore (IRAS), different rates of tax are charged for different types of businesses, and for different levels of profit.
Chartered Tax Advisor – an expert in taxation matters who has obtained certification from the Chartered Institution of Taxation (CIOT). In Singapore, tax specialists are governed by the Singapore Institute of Accredited Tax Professionals (SIAPT).
Debtors ledgers are used to document the details of an organisation’s debtors.
When a company trades off its asset(s), or when a corporation is liquidating part of their company.
The process of enquiries performed when a potential investor or buyer wants to invest in or acquire a company. They will want to check the previous records and financial statements of the target company so as to ascertain its exact value, or to unearth underhanded business deals.
This usually entails professional reports by accountants and solicitors, and the whole process must be treated with the utmost confidentiality.
Financial accounting is a catch-all term for the recording of economic transactions performed by a business, such as bookkeeping, and the subsequent preparation of financial statements from those accounts.
The financial information obtained from this form of accounting is usually targeted towards other user groups like the business owners, company shareholders, or IRAS, instead of the company’s executive management.
Also referred to as a financial year, it consists of a period of 12 consecutive months which a business selects as its accounting period, and doesn’t necessarily have to follow the calendar year.
Physical assets that are used in a company’s operations, usually lasting for more than a year.
Forensic accounting is a field of accountancy that caters to solving civil, criminal, and insurance issues. Those who work in this field employ their knowledge of accountancy and information technology alongside their investigative skills to aid in the examination of evidence in regards to an allegation made in court.
Their clients are mostly lawyers and insurance companies, although they may sometimes be approached by individuals seeking such services for personal disputes.
The Institute of Chartered Accountants in England & Wales.
A percentage of levies charged on net personal and business revenue.
Tax charged on the properties that a person receives through inheritance or legal succession, usually determined by the current value of the possessions. Singapore used to refer to this as estate tax, but abolished it in 2008.
Highly related to a company’s liquidity, insolvency occurs when an institution or individual is unable to meet its debts and financial commitments when they are due. Debts are paid through cash, so even if a company’s total assets surpasses its liability, the organisation will still be considered insolvent if the assets cannot be converted into immediate cash to pay off its liabilities.
Inland Revenue Authority of Singapore.
Institute of Singapore Chartered Accountants.
Management accounting is about providing financial information to the executive management of a business. Accountants are required to generate both regular and specially-requested reports to assist the management as they monitor the company’s performance and plan future business pursuits.
From an accountancy standpoint, management consultancy refers to the activity of engaging qualified accountants for their advice on other matters regarding the management of a company. This can range from financial strategy planning to human resource issues, as well as marketing and IT-related matters.
These accountants are usually expected to possess quite a bit of business experience so that they will be able to give more in-depth advice to their customers. As such, this is a role that only senior accountants with years of exposure to various businesses will be able to play.
Medium-tier businesses that are too big be considered an SME, but not big enough to be publicly-listed.
Non-profit organisations include clubs, societies,and associations that are created for the purpose of assisting social growth and improvement. They usually champion social welfare and charity issues, and rarely gain profit.
Even if they do make revenue from the activities they run, any money made must not be used for personal benefit of the proprietor. Rather, the money should be channelled back to the organisation to be used for the benefit of society.
Pay-As-You-Earn – an income tax payment system where an employee’s tax and other national insurance contributions are deducted from his or her wages before it is paid out to the employee.
Private client services
A service that caters to high net-worth individuals where the accountants engaged will manage the customers’ accounts and investments for them, as well as construct long-term financial planning that is personalised to their needs and goals.
Loosely termed as “freelancing” accountants. Such practices provide accountancy services to clients as independent professional consultants, instead of as employees of a firm.
Public sector accountancy
The practice of accountancy in the government, local authorities, and public corporations.
The initial funds used for the establishment of a company. It usually comes from the founder’s (or co-founders’) personal assets, but can also be made by banks, venture capitalists, or angel investors.
Singapore Qualification Programme – a compulsory programme to take if one wants to practise as a chartered accountant in Singapore.
Tax work is usually divided into two major disciplines:
- Tax compliance: This area of taxation work entails filling in and submitting tax returns on behalf of his or her clients. Duties include compiling the necessary documents required for fillings, ensuring compliance with tax agency requirements, and informing clients if there are any tax changes which affect them
- Tax advisory and planning: A consultancy-oriented area of work where tax professionals will analyse a company’s financial accounts and recommend changes as to how their clients can structure their finances for minimum taxation within the boundaries of local legislation.
These two tax disciplines are not isolated from each other. In fact, if they are to provide the best service for their clients, cooperation from both sides is necessary. Tax professionals working in tax compliance will sometimes need to refer to tax advisors for updated information during the course of their work, and vice versa.
Workload-wise, tax professionals tend to spend more time working in the office, and keep regular hours better than auditors do. There are also numerous sub-specialisations within the area of tax, each with their own specific set of jargon.
A person’s tax commitments, derived mainly from their owned properties and earned income.