Question

Knowing that the company's former CFO and CEO not only got in trouble for fiduciary responsibility violations but IRS issues as well, you plan to write a report with your senior accountants to go over the main differences between the roles of financial accounting, cost accounting, and tax accounting as some of the prior accounting department misdeeds seemed to come from not keeping these separate.

1. In chart form, distinguish between these 3 segments of the accounting function, each of them along these 4 criteria:
   • The legal or regulatory bodies and guidelines that must be abided by.
   • Typical kinds of reports created and the stakeholders interested in each report.
   • Issues that, if not addressed properly, could land the company in trouble again.
   • The particular kinds of training/education that employees in each of these departments should have.

Answer 1

Answer:

	Financial Accounting	Cost Accounting	Tax Accounting
The legal, regulatory bodies and guidelines that must be abided.	The regulatory bodies include: Securities and Exchange Commission Financial Industry Regulatory Authority Municipal Securities Rule Making Board Guidelines that must be abided with include: Authorizations Consider the time of opening new bank accounts New suppliers and the procedures on how to choose them New customers and how to manage them Buying and purchasing of business products Debt collection procedure Insurance and risk management	Regulatory bodies include; Federal Accounting Standards Advisory Board Guidelines; Accounting practices Cost centers Costs included in the billing rates Basis for direct charges Separate billing rates Capital depreciation Internal service center overhead Frequency of billing rate calculations	The regulatory body is the Internal Revenue Code Guidelines: Accounting and reporting Auditing Governance Regulations Strategy and operations tax
The typical kinds of reports created and the stakeholders interested in each report.	Financial Reports; Balance sheet Income Statement Statement of changes in equity Cash flow statement Stakeholders; Investors Creditors Employees Local community	Cost Accounting Reports; Cost-centered reports Distribution reports Cost accounting summary reports Budget versus cost accounting Cost accounting reconciliation report Stakeholders; Employees Investors	Tax accounting reports; Complication of tax rates by code area Equalized rolls- District valuation reports Equalized values by tax rate area Direct levy district listings Secured- Unitary tax collection Stakeholders; Chief
Issues that could land the company in trouble again if not addressed properly.	Mistakes; Failing to categorize income and expenses in a right manner Failing to follow accounting procedures Making data entry errors	Mistakes; Working without a budget If cost data is not accurate If cost data is too limited in scope If cost data is inaccessible If cost data is not actionable	Mistakes; Closing the books early Not adhering to state and city tax regulations Failing to use best tables resulting in not maximizing depreciation Saving tax data to personal devices Inputting data incorrectly
The particular kinds of training that employees in each of these departments should have	Trainings; Identify relationship between the various financial statements Practicing some of the essential Excel skills to increase productivity How to budget for your business How to select best financial accounting software	Trainings; Profit management Assessing business opportunities using breakeven analysis Costing data for decision and control purposes Classification of costs	Trainings; Guide on how to calculate current and deferred tax starting from basic principles under IFRS A brief overview of the differences between IFRS and US GAAP The disclosures required under IFRS Understanding of the significance of current and deferred tax on the financial statement