Accounting is an all-encompassing term that can mean regular general ledger accounting, creating financial statements, performing audits, doing taxes, and much more. The two general categories of accounting are public and private.
Public accounting refers to a public accounting firm that performs accounting services that include:
- Financial accounting
- Tax accounting
- Forensic accounting
- Financial controller services
- Accounting audit
- Bank reconciliation
- Accounts payable
- Accounts receivable
- Payroll processing.
Public accounting firms are contacted by various corporations, governments, and non-profit organizations to perform specific services for them. Oftentimes, it is an external audit, which is a requirement for publicly traded companies. However, audits can also be done for privately held companies.
Bookkeeping and Accounting
In addition to more complex services such as auditing, consulting, and taxes, public accounting companies also do everyday bookkeeping. They can take care of invoices, bill payments, and even payroll. The accounting company employs professional accountants and financial specialists who, if necessary, are ready to assist the client in solving complex issues of organizing and running a business.
An audit of financial and economic activities should be understood as an audit of financial statements and accounting data and the expression, based on the results of such an audit, a substantiated independent opinion of the auditor on the reliability of such reports in the form of a written audit opinion (report) is made.
During the audit, the owner or head of the enterprise receives reliable information about their tax and other risks, about the professionalism of the company’s personnel, with all the necessary explanations and recommendations. An external audit is done mostly for the external readers of the financial information and people who invest in this company. Note that in the case of an external audit, the public accounting firm cannot perform auditing and accounting at the same time.
Conducting an audit before a scheduled tax audit will protect the company from possible penalties for violations of tax and accounting rules and laws, which can be corrected before the start of the tax audit. The auditor, expressing their independent professional opinion, will pay attention to all procedural and general errors in accounting and show the ways to correct them.
Taxes are another reason why companies contact public accounting firms. Taxes are a complicated topic for most business owners and the larger your business is the more things you have to take into account. Specialists working in public accounting firms are knowledgeable in the tax codes, requirements, and laws. They can apply them to your specific business and industry to help you not only avoid penalties and fees but also cut down your tax expense as much as possible.