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1.12 Theoretical Framework Principles and Practices of Accounting Paper 1
1.11.1 CAs in Service
Maintenance of Books of Accounts: To achieve twin objectives of ascertaining profit
or loss and the financial position, it is important that all transactions are recorded in
a systematic manner, which can be done only by an accountant. Proper maintenance of
books of accounts assists in managerial functions.
Statutory Audit: It is mandatory that Chartered Accountants (CAs) or a firm of CAs
are required to be appointed as statutory auditors of every limited company and give
an opinion as to whether the balance sheet shows a true and fair view of the state of
affairs on the balance sheet date, and the profit and loss account shows a true and
fair view of the profit or loss for the year.
Internal Audit: Examination of the accounting transactions by the internal auditors
to ensure that the accounts are being properly maintained and whether there are
adequate safeguards to check any leakage of revenue or misappropriation of assets.
Also, check if the operations of the entity has been carried out in accordance with
the plans of the management.
Taxation: Chartered accountant can represent a business entity or a person before
the tax authorities and settle the tax liability and also assist its clients in proper
planning of tax affairs.
Management Accounting and Consultancy Services: Key role of management accoun-
tant is to perform advisory functions within the organisation. He reports to the
management and helps in planning and controlling operations, decision making and for-
mulating long term plans. Accountant also provides management consultancy services
in the area of Management Information System (MIS), expenditure control and eval-
uation of appraisal techniques for new investments and divestments, working capital
management, corporate planning, etc.
Financial Advice: Not everyone is expert in planning their finance. An accountant with
the knowledge of finace and taxation are well placed to give advice. Areas in which
chartered accountants can render financial advice are investments, insurance, busi-
ness expansion, investigations and pension schemes.
Other Services: Chartered accountants are also involved in rendering other services
such as secretarial work, registration work, company – formation, liquidations, arbi-
trations, accountant and information services.
1.12 Accounting Concepts, Principles and Conventions
The accounting concepts, principles and conventions are provided in Table 1.2.
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