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The Full Guide of the Chartered Accountant

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Welink Accountants

Chartered Accountant Full Guide

 

Chartered accountants provide services within accounting firms or offer individual consultancy. Chartered accountants advise on tax, audit and financial tasks.

 

Summary:

 

  1. What is a Chartered Accountant?
  2. What does a Chartered Accountant do?
  3. Difference between an Accountant, a Certified Public Accountant (CPA) and a Chartered Accountant
  4. How to become a Chartered Accountant
  5. Steps to receiving certification as a Chartered Accountant
  6. Which qualifications are needed to become a Chartered Accountant?
  7. What are the main responsibilities of a Chartered Accountant?
  8. What are the skills required to succeed as a Chartered Accountant?
  9. What is the salary of a Chartered Accountant?
  10. Why are Chartered Accountants in demand?

 

1. What is a Chartered Accountant?

Chartered accountants are qualified members of the Institute of Chartered Accountants in England and Wales (ICAEW) or the Association of Chartered Certified Accountants (ACCA). These qualifications require at least four years of training, including completing a dissertation.

 

Many chartered accountants work in the industry, but they can also provide services within accounting firms or offer individual consultancy. They advise on tax, audit and other financial tasks for businesses and individuals alike.

 

 

What is a Professional Regulatory Body?

The Institute of Chartered Accountants in England and Wales (ICAEW) is an independent body that preserves the role and status of chartered accountancy as a master profession through preserving high standards of qualification. The ICAEW regulates the profession and is recognised as the national body for registered accountants. The ICAEW is sponsored by the British government as part of its membership of the G20 and seeks to improve the public's confidence in the quality and integrity of accountancy practice.

 

There are two types of qualifications to become a Chartered Accountant: Professional Qualifications (usually called 'Level 3 Qualifications') and Associate Qualifications (usually called 'Level 1 Qualifications'). A chartered accountant can take either a degree, diploma or postgraduate course to gain a Professional Qualification; alternatively, if the accountant does not have prior professional qualifications or experience, he can take an Associate Qualification.

 

Level 3 Qualifications are structured on an approved course programme. This is then assessed by the ICAEW to ensure that the candidate meets the required standards. A student must complete a dissertation for this qualification. 

 

This dissertation can be interdisciplinary or it may focus on areas of interest to the student, although there are differences of opinion as to whether this is desirable or not. Postgraduate students can carry out supervised work for credit (normally 10% of the dissertation).

 

Level 1 Qualifications are directed towards specific qualifications like Chartered Financial Analysts (CFAs) etc. These qualifications are set at a lower level as they do not need as much study as the professional qualifications. The Level 1 Qualifications are assessed on a course-by-course basis.

 

Chartered Accountants have a duty to their clients to provide 'Competent Professional Services' (CPS). This duty is relaxed in some situations, such as providing audit services to small companies or charities, or where a client asks for help on an ad-hoc basis. In these cases, the Chartered Accountants must provide 'Reasonable Professional Services' (RPS). RPS has been criticised for being lower than CPS, and therefore not useful because it may not assist clients.

 

2. What does a Chartered Accountant do?

Chartered Accountants are often employed by accountancy or financial firms, particularly if they are qualified for audit. Other chartered accountants may provide consultancy services to individuals or other businesses. Chartered accountants are also often employed by other businesses.

 

Chartered Accountants are authorised by the ICAEW to perform two types of audits: independent audits, which assure third parties about the information provided by the business, and statutory audits, required for certain legal purposes.

 

Independent audits are performed to give assurance to third parties about the information given by businesses. The auditor checks that the financial statements provided accurately represent the state of affairs of an entity and can be relied upon in decision-making processes such as investment decisions. The independence of the auditor is crucial to the successful performance of this role.

 

Statutory audits are performed to assure government agencies about financial statements. Statutory audits are required by law for companies with £50m or more of assets, and for a limited company (Limited Liability Partnerships or LLPs). For both types of entities, statutory auditors must be appointed by the ICAEW on their behalf.

 

Legal practitioners act as chartered accountants in certain circumstances. They carry out statutory audits on behalf of the ICAEW's members on an ad hoc basis and offer advice and assistance with work-related issues such as tax advice or insolvency advice.

 

 

Chartered accountants may also carry out the following:

- Financial analysis

- Business valuations

- Accounting and taxation advice

- Auditing and market advisory services

- Consulting and what-if scenario analysis

- Financial planning for individuals and companies

 

Chartered Accountants can work as directors, as employees of businesses, as partners in firms, as sole traders, etc. Some chartered accountants now also offer their services directly to customers through home working or mobile services. They may also provide outsourcing to other accountancy firms. Many chartered accountants provide tax advice and help to companies and individuals with their tax affairs (and sometimes VAT affairs).

 

Chartered Accountants are responsible for ensuring that their work complies with the law. The ICAEW has a Code of Professional Conduct that all chartered accountants must adhere to, and further Codes exist for specific areas, such as company directors or insolvency practitioners.

 

Chartered Accountants play an important role in society, particularly in the financial sector. They advise businesses about accounting and taxation laws and help businesses with any financial issues they may have. They also advise individuals to help them manage their finances, potentially saving them money in the long run.

 

Chartered accountants can help individuals and businesses make more informed decisions around tax and investment, such as saving for retirement. This helps to reduce the risk of people not saving enough for their future, which is regarded as bad for both individuals and society as a whole.

 

Individuals need to plan if they want to save enough for their retirement until old age, but people often fail to do this due to a lack of awareness and information. Chartered accountants can help individuals by providing information on how much they should be saving towards retirement – this is known as financial planning – and helping them to understand how their personal financial situation might impact these plans.

 

There is some criticism levelled at chartered accountants for not doing enough to help individuals and businesses. Some accountancy firms do not offer financial planning directly, and this may mean that people who need help do not receive it.

 

Chartered Accountants also advise businesses on how to manage their finances and financial issues they may have. The nature of the advice differs depending on the business, as different industries face different challenges regarding their finances. For example, chartered accountants advise businesses in the construction industry about tax returns and VAT payments; they also provide analysis of these payments to ensure that payments are correct and paid on time.

 

3. Difference between an Accountant, a Certified Public Accountant (CPA) and a Chartered Accountant

In the United Kingdom, an accountant's role is to advise clients on financial matters. Generally, this will be done in the form of a tax return or a tax audit. In contrast, CPAs are authorised to practice public accounting for not-for-profit associations and corporations.

 

CPAs can also perform financial audits on behalf of their client(s), but these are governed by a different set of laws and rules from accountancy work. For example, while accountants generally do not charge a fee rate for a financial audit, CPAs may charge a set fee to provide an audit.

 

A chartered accountant is a chartered member of the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants of Scotland, or the Association of Chartered Certified Accountants. These accountants are authorised to perform statutory audits on behalf of the ICAEW / ACA / ICAI respectively.



Both types are eligible for membership with both professional bodies, due to their common membership with CIMA.

 

Chartered Accountants in Australia are permitted to use the designatory letters "CA" or "ACA" under their membership with AICPA Australia, formerly CPA Australia. Since CPA Australia ceased to exist on 5 June 2010, this means that CA/ACA members may choose to join ACCA to obtain a UK qualification that matches the one they have obtained in Australia.

 

4. How to become a Chartered Accountant

To become a chartered accountant, one must first become an accountant. This means obtaining a degree in accountancy, completing the ACCA qualification and one year of relevant work experience.

 

 

However, to get on the ACCA Qualification trail, one must have three A-Levels or equivalent. Then they can take either an Intermediate or Advanced Apprenticeship in Professional Accountancy with KPMG or Ernst & Young (E&Y). 

Finally, they must complete the ACCA Qualification with their chosen employer (KPMG or E&Y). After two years of relevant work experience (not necessarily continuous), they are entitled to apply for Chartered Status.

 

The qualification can be taken through distance learning, which is available to individuals with the appropriate qualification. The cost of the full qualification is usually around £6,000.

 

Once a Chartered Accountant, the accountant can work in any industry or organization. However, many chartered accountants are employed by large companies in one specific field. Many are employed in tax consultancy, while others work as accountants for business owners or private companies.

 

5. Steps to receiving certification as a Chartered Accountant

 

  1. You must first be a certified accountant in the UK and by ACWA and BCS standards and meet all requirements stipulated by the Master.
  2. You must be a member of ACCA, ICAEW or ACA depending on where you wish to take their qualification. 
  3. You must then sit for one exam at each stage.
  4. After passing each stage, you will earn your Master's level qualification within either 3–4 years or taking the full 4-year route (ALC/ACA/ACCA).
  5. You must then complete the second stage of the qualification. This can take anywhere from 3–4 years.
  6. Once all of this is completed, you will be eligible to become a chartered accountant.



ACCA is an independent body set up in 1974 by the professional accountancy bodies in England and Wales. ACCA promotes public confidence in the profession of accountancy and aims to support the professionalism of its members (accounting professionals). It sets professional standards of practice, qualifications and ethical behaviour for its members through its rules, regulations, codes of conduct, and training requirements.

 

6. Which qualifications are needed to become a Chartered Accountant?

To become a Chartered Accountant, you must have completed four years of approved university study toward accounting, business studies or information technology at an approved university degree level or above, with at least an upper second-class honours degree or above.

 

You can also qualify for the Chartered Institute of Management Accountants.

Chartered Accountants are generally employed by accountants, auditors or accountancy firms. For some, this is a full-time occupation with the rest of their working life devoted to the career. Others may choose to work for one of these companies on an occasional basis, often as an external auditor or consultant on more specialised projects.

 

You will need to demonstrate that you have good interpersonal skills if you wish to become a Chartered Accountant by gaining experience in this line of work through gainful employment with other companies before training begins. Some positions in accountancy, auditing or consulting companies are advertised, although much of the recruitment at this level takes place by word-of-mouth.

 

Chartered Accountants or Chartered Accountants in training in the UK are required to undergo a minimum of 2 years of training with an authorised employer. Training is less if one already has professional accountancy experience before qualifying as a Chartered Accountant. 

 

After undergoing training with a qualified employer you will spend around 12 months doing your Final Assessment Test (FAT) which consists of two exams and the preparation of a detailed final project report. You would also undertake assignments based on real-life cases to give you experience working for an employer before you are awarded your qualification.

 

Training can be undertaken as part of a degree course or as a separate course, either on-the-job, through an employer's training department, self-directed learning or via distance learning. Most people practising as a Chartered Accountant do it as a full-time occupation.

 

The Chartered Institute of Management Accountants (CIMA), which is the largest professional accountancy body in the world and a member organisation of ACCA, requires new members to have at least another year's experience in their chosen profession before being eligible for Chartered Membership. This requirement is designed to ensure that candidates have some years' experience of working professionally so that they are fully qualified and competent to practice as a Chartered Accountant.

 

7. What are the main responsibilities of a Chartered Accountant?

 

  1. Preparation of financial statements (i.e. Annual Financial Statements/Accounts)
  2. The provision of information for tax purposes (i.e. preparation and filing of tax returns)
  3. Internal control procedures (i.e. internal controls designed to deter fraud and errors) in an organisation or business environment
  4. The preparation of financial reports (i.e. financial reports used to manage business resources)
  5. The audit of financial information (i.e. verifying the authenticity and reliability of the information presented in financial statements to ensure that there are no material misstatements)
  6. Preparation of statutory accounts for limited companies (i.e. ) statutory accounts are a set of accounts prescribed under the Companies Act 1985, which all limited companies must file with Companies House within nine months of their year-end)
  7. Engagement letters (i.e. document signed by both parties to an engagement setting out the terms, conditions and objectives of an audit or other type of work that is to be conducted on behalf of a client)
  8. Tax returns (i.e. document setting out the relevant details of the company's activities during the financial year (FY)), especially for peers within the industry who are on Companies House tax returns (i.e.)
  9. Preparation of legal documents (i.e. document that is prepared to support or comment on the information presented in financial statements)
  10. Preparation of business valuations (i.e. ) determination of market value for transactions, transfers and disposals)

 

 

8. What are the skills required to succeed as a Chartered Accountant?

1. Good working knowledge of accounting fundamentals & principles

This is an unavoidable aspect of the work of a chartered accountant; by implication, if we did not understand our work, we would not be able to do it well. To become a chartered accountant, one must learn about the underlying principles and theories of accountancy. These include:

 

Accounting and Auditing: 

Accounting is the process of recording, processing and presenting financial information to support management decision making. Accounting is fundamental to all businesses; therefore sound knowledge of accounting fundamentals and principles is essential for any business that wants to operate profitably.

 

Auditing: 

Auditing data consists of verifying financial statements (i.e. financial reports) against the original records to ensure that the statements are accurate. Auditors also provide opinions regarding internal controls designed to deter fraud and errors, and auditor's reports. Auditing is required under many accounting rules and regulations, such as IFRS Standards.

 

2. Ability to understand complex accounting problems

As a Chartered Accountant, you may be required to analyse large amounts of data, making sense of it all for your client. This requires insight into what is important in terms of understanding what you are attempting to convey through the data to your client. It also requires skills in assessing the data for accuracy and completeness before conveying its intended meaning to your client. This takes practice!

 

3. Understanding of the environment in which you work

Understand how your client’s business works. Accounting is a basic part of managing any type of business, so an understanding of the environment in which you are working is essential.

 

4. Ability to analyse complex accounting problems

Again, this skill is an indispensable attribute for being a better-than-average accountant. It allows one to work through complex accounting problems that may arise in the course of audit or other work that you are asked to do for one's client.

 

5. The ability to understand the law and regulations in your area of practice

This is a very important skill in ensuring that your work is compliant with relevant laws and regulations. Sound knowledge of accounting fundamentals and principles, coupled with an understanding of how your client's business works will enable you to understand how it may be affected by such laws and regulations. An example would be tax laws. This requires an understanding of taxation laws in general, not just tax laws specific to the type of business conducted by one’s clients.

 

6. Ability to work well with others

Having good interpersonal skills enable one to work well with colleagues and staff within and outside the organisation you are auditing or providing accounting services for. This contributes to a harmonious working environment, thereby increasing productivity.

 

7. Ability to work under pressure

The pressure of delivering accurate and high-quality accounting services to on-time deadlines is something that only the best accountants can do consistently well. Without this skill, you cannot succeed in the field of accounting.

 

8. Knowledge of new trends in your area of practice

Keeping up with trends in your area of practice will help ensure that you are competitive enough in the marketplace if you wish to pursue an accounting career. This includes keeping up to date with the latest accounting standards and rules.

 

9. Good oral and written communication skills

In becoming a chartered accountant, you will be communicating with a wide range of people from a variety of backgrounds, including your clients and other professional accountants. Thus good listening abilities and writing skills are essential for any chartered accountant.

 

10. Good interpersonal skills

This would include the ability to communicate clearly in English with all staff members, clients and other professionals in your field. These include (but are not limited to) your coworkers and colleagues as well as your potential competitors.

 

9. What is the salary of a Chartered Accountant?

 

Chartered Accountants' salaries depend on their area of practice and years of experience. The average salary of a Chartered Accountant in the UK is £40,000 - £60,000. Senior Chartered Accountants may earn £65,000 - £80,000 or more.

 

10. Why are Chartered Accountants in demand?

 

1. Growing demand

With the increasing complexities and costs of compliance and regulation, there is a growing demand for expert accountants and those with skills in business analysis to offer independent advice on those matters. This includes issues relating to corporate sustainability and corporate governance as well as the impact of the global financial crisis on accounting standards and financial reporting.

 

2. Additional work opportunities

Chartered Accountants who pass their professional exam with honours may be eligible to apply for membership of one of ACCA's 24 recognised international associations, enabling them to use the Chartered Accountant qualification around the globe. 

 

3. Opportunities in emerging economies

Chartered Accountants are in demand in the Middle East, Asia Pacific and Latin America. With many countries there facing rapid economic growth they are looking for internationally-trained professionals with capital markets experience and accounting skills.

 

4. Financial sector

Many of the large financial institutions, banks and financial services companies continue to expand globally but they also need accountants who possess a strong business understanding to manage their businesses effectively and deliver effective reporting to their stakeholders. Many Chartered Accountants seek specialist roles such as fraud investigation, fraud prevention & control, enterprise risk management, information technology audit, or management accounting.

 

 

Chartered Accountants are found in the following areas:

 

1. Retail, wholesale and logistics

Retail, wholesale and logistics Chartered Accountants are often employed by retailers to provide advice on stock control and consumer protection. They may also be involved in the purchasing of goods for resale or distribution. This can include sales figures, planning sales figures, sales promotions or opening new outlets. Selling additional services such as software services or consultancy services is also an area in which they may choose to work.

 

2. Banking & financial services

Chartered Accountants are employed by banks & financial institutions to provide specialised services relating to their business activities. Key areas are fraud prevention & control, fraud investigation, banking compliance with anti-money laundering rules and international banking regulatory audit where appropriate.

 

3. Technology companies

Chartered Accountants specialise in the audit of information technology systems. They may also advise companies on how to safeguard their computer systems from risk, control use of software packages and monitor costs closely. They would also be involved in the implementation of a new system and may be asked to audit those systems regularly.

 

4. Legal & Accountancy firms

Chartered Accountants are often employed by legal firms as financial controllers or senior business managers for larger clients, as well as advising clients on finance, tax and business strategy. In accountancy firms, they can work as internal auditors, external auditors or specialists in taxation law or international taxation issues. They may also be recruited as directors of companies, which would involve overseeing the day-to-day activities of those companies.

 

5. Government departments

In Government departments, they work as accounting officers providing financial reports to those in charge of providing those reports. In addition, they may also provide general management advice to ministers and Cabinet members as well as undertake special projects for government departments or take on special consultancies that relate to their professional expertise.

 

6. Public Relations & Marketing agencies

Chartered Accountants can seek employment with public relations and marketing agencies, where they work alongside senior staff at a client's company to devise a strategy for a specific campaign or manufacturing requirement relating to product launches or other corporate events.

 

7. Consulting & Business services

Chartered Accountants could work in accounting, finance and information systems departments for consulting firms to provide advice on problems clients face in their business operations. This often involves performing system reviews or re-engineering existing systems. They also may be involved in the financial analysis of client businesses.

 

8. Hospitals, Schools & Charities

Chartered Accountants are employed by hospitals, schools and charitable organisations to provide financial advice on projects or longer-term planning.

 

9. Government Ministries

Government ministries such as the Department of the Environment and the Department of Health may employ Chartered Accountants to perform their internal audits, as well as advising on how best to use resources and money allocated.

 

10. Federal & Local Government departments

Chartered Accountants specialise in providing financial and management information on government departments and agencies, including investigating frauds and breaches of data protection laws. They can also assist with designing systems for regulatory reporting by those institutions.

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