The Federal Election was held in Australia on 21st of August 2010. During the rather boring election campaign there were questions raised by the major parties and everyone else for that matter, on how the elected government would go about accounting for the very large amounts of money they receive and spend. These people talk in billions of dollars. It is rather mind-boggling but the accounting system they use can also be applied to small business and personal finances.
Most households require some form of accounting to deal with their personal financial matters. You are probably aware of the saying that the only thing that is certain in this life is death and taxes. I think that it is fair to say that accounting affects the lives of everyone in some way in a modern society.
I have always thought of an accountant as someone who processed the financial data Ibprepared for them and submitted my annualbincome tax return required by the Australian Taxation Office (ATO). Their value was measured by the amount of money they could magically retrieve from the ATO by minimising the amount of tax I was required to pay. This view is shared by many who see accountants as nothing more than bookkeepers, ‘number crunchers’ or ‘bean counters’. Unfortunately accountants are not magicians and the reports they prepare must stand up to the scrutiny of the ATO. The accountant should therefore be perceived as a professional who is able to minimize income tax by applying his talent and know-how acquired through years of study and experience
The accounting must abide by the rules. There are no two ways about that. The terms of reference are spelt out in:
* Income Tax Assessment Act 1936 and 1997.
* Corporation Act 2001.
If the accountant fails to follow the laws made by our society, he/she will be punished. Accounting is a discipline and is extremely important to any financially healthy entity. Inadequate records normally accompanies business failure and in some cases bankruptcy. Accountants provide information to the owners and managers of a business or company so that appropriate decisions can be made on purchasesand investments. This is achieved by processing records, interpreting these records and reporting the findings from these records to these decision-makers in monetary terms.