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{{short description|Measurement, processing and communication of financial information about economic entities}}
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'''Accounting''', also known as '''accountancy''', is the process of recording and processing information about [[economic entity|economic entities]], such as [[business]]es and [[corporation]]s.<ref name="NP 2013">{{cite book |last1=Needles |first1=Belverd E. |title=Principles of Financial Accounting |last2=Powers |first2=Marian |publisher=Cengage Learning |year=2013 |edition=12 |series=Financial Accounting Series}}</ref><ref>{{Cite report |date=November 1940 |title=Accounting Research Bulletins No. 7 Reports of Committee on Terminology |url=http://clio.lib.olemiss.edu/cdm/ref/collection/deloitte/id/9342 |publisher=Committee on Accounting Procedure, American Institute of Accountants |access-date=31 December 2013 |archive-date=7 January 2014 |archive-url=https://web.archive.org/web/20140107100208/http://clio.lib.olemiss.edu/cdm/ref/collection/deloitte/id/9342 |url-status=dead }}</ref> Accounting measures the results of an organization's economic activities and conveys this information to a variety of stakeholders, including [[investor]]s, [[creditor]]s, [[management]], and [[Regulatory agency|regulators]].<ref name = "UW Dept">{{cite web |url=http://www.foster.washington.edu/academic/departments/accounting/Pages/accounting.aspx |title=Department of Accounting |year=2013 |website=Foster School of Business |access-date=31 December 2013 |archive-date=19 March 2015 |archive-url=https://web.archive.org/web/20150319223850/http://www.foster.washington.edu/academic/departments/accounting/Pages/accounting.aspx |url-status=live }}</ref> Practitioners of accounting are known as [[accountant]]s. The terms "accounting" and "[[financial reporting]]" are often used interchangeably.<ref name="Ias">{{cite journal |title=The introduction of International Accounting Standards in Europe: Implications for international convergence |date=2005 |url=https://www.tandfonline.com/doi/abs/10.1080/0963818042000338013 |publisher=Taylor & Francis Online |doi=10.1080/0963818042000338013 |access-date=3 April 2023 |archive-date=3 April 2023 |archive-url=https://web.archive.org/web/20230403191956/https://www.tandfonline.com/doi/abs/10.1080/0963818042000338013 |url-status=live |last1=Schipper |first1=Katherine |journal=European Accounting Review |volume=14 |pages=101–126 |s2cid=153931720 |url-access=subscription }}</ref>

Accounting can be divided into several fields including [[financial accounting]], [[management accounting]], [[tax accounting]] and [[cost accounting]].<ref name = "WC 1981" /> [[Financial accounting]] focuses on the reporting of an organization's financial information, including the preparation of [[financial statement]]s, to the external users of the information, such as investors, regulators and [[suppliers]].<ref name = "HDF 2006"/> [[Management accounting]] focuses on the measurement, analysis and reporting of information for internal use by management to enhance business operations.<ref name = "NP 2013"/><ref name = "HDF 2006" /> The recording of financial transactions, so that summaries of the financials may be presented in financial reports, is known as [[bookkeeping]], of which [[double-entry bookkeeping]] is the most common system.<ref name="L 2009">{{cite book |last=Lung |first=Henry |url=http://ndl.ethernet.edu.et/bitstream/123456789/27157/1/141.Henry%20Lunt.pdf |title=Fundamentals of Financial Accounting |publisher=Elsevier |year=2009}}</ref> [[Accounting information system]]s are designed to support accounting functions and related activities.

Accounting has existed in various forms and levels of sophistication throughout human history. The double-entry accounting system in use today was developed in medieval Europe, particularly in [[Venice]], and is usually attributed to the Italian mathematician and Franciscan friar [[Luca Pacioli]].<ref name=jkdiwan>{{cite book|last=DIWAN|first=Jaswith|title=ACCOUNTING CONCEPTS & THEORIES|publisher=MORRE|location=LONDON|id=id# 94452|pages=001–002}}</ref>  Today, accounting is facilitated by [[:Category:Accounting organizations|accounting organizations]] such as standard-setters, [[accounting networks and associations|accounting firms]] and [[professional accounting body|professional bodies]]. Financial statements are usually audited by accounting firms,<ref name = "Parliament Auditors 1"/> and are prepared in accordance with [[accounting standard|generally accepted accounting principles]] (GAAP).<ref name = "HDF 2006"/> GAAP is set by various standard-setting organizations such as the [[Financial Accounting Standards Board]] (FASB) in the United States<ref name = "NP 2013" /> and the Financial Reporting Council in the [[United Kingdom]]. As of 2012, "all major economies" have plans to [[Convergence (accounting)|converge]] towards or adopt the [[International Financial Reporting Standards]] (IFRS).<ref name=globalcon>{{Cite web|publisher=[[IFRS Foundation]] and [[International Accounting Standards Board]] |website=ifrs.org |url=http://www.ifrs.org/Use+around+the+world/Use+around+the+world.htm?WBCMODE=PresentationUnpublished |title=The move towards global standards |year=2011 |archive-url=https://web.archive.org/web/20111225111828/http://www.ifrs.org/Use+around+the+world/Use+around+the+world.htm?WBCMODE=PresentationUnpublished |archive-date=25 December 2011 |url-status=dead |access-date=27 April 2012}}</ref><ref>{{cite web |title=The importance of high quality accounting standards |url=https://www.proquest.com/openview/113ef6fb20852f7024ae491923c7e84c/1?pq-origsite=gscholar&cbl=3330 |access-date=3 April 2023 |archive-date=3 April 2023 |archive-url=https://web.archive.org/web/20230403192502/https://www.proquest.com/openview/113ef6fb20852f7024ae491923c7e84c/1?pq-origsite=gscholar&cbl=3330 |id={{ProQuest|<!-- Add ProQuest data here -->}}|url-status=live }}</ref>

==History==
{{main article|History of accounting}}
[[File:Pacioli.jpg|thumb|right|upright=1.2|''[[Portrait of Luca Pacioli]]'', painted by [[Jacopo de' Barbari]], 1495 ([[Museo di Capodimonte]])]]
Accounting is thousands of years old and can be traced to [[Ancient history|ancient]] [[civilization]]s.<ref name = "R 1992">Robson, Keith. 1992. "Accounting Numbers as 'inscription': Action at a Distance and the Development of Accounting." ''Accounting, Organizations and Society'' 17 (7): 685–708.</ref><ref name="NYSSCPA 2003">{{Citation | url =http://www.nysscpa.org/trustedprof/archive/1103/tp24.htm | title =A History of 'Accountancy' | publisher =New York State Society of CPAs | date =November 2003 | access-date =28 December 2013 | archive-date =1 January 2015 | archive-url =https://web.archive.org/web/20150101061851/http://www.nysscpa.org/trustedprof/archive/1103/tp24.htm | url-status =live }}</ref><ref name="UniSA 2013">{{Citation | url =http://www.library.unisa.edu.au/about/exhibitions/historyacc.aspx | title =The History of Accounting | publisher =University of South Australia | date =30 April 2013 | access-date =28 December 2013 | archive-url =https://web.archive.org/web/20131228180919/http://www.library.unisa.edu.au/about/exhibitions/historyacc.aspx | archive-date =28 December 2013 | url-status =dead }}</ref> One early development of accounting dates back to ancient [[Mesopotamia]] and is closely related to developments in [[writing]], [[counting]] and [[money]];<ref name = "R 1992" /> there is also evidence of early forms of [[bookkeeping]] in ancient [[Iran]],<ref name = "G 1980">{{cite book|last=کشاورزی|first=کیخسرو|title=تاریخ ایران از زمان باستان تا امروز (Translated from Russian by Grantovsky, E.A.) | year=1980 | pages=39–40 | language=fa}}</ref><ref name = "OD 2008">Oldroyd, David & Dobie, Alisdair: ''Themes in the history of bookkeeping'', The Routledge Companion to Accounting History, London, 2008, {{ISBN|978-0-415-41094-6}}, Chapter 5, p. 96</ref> and early [[auditing]] systems by the ancient [[Egyptians]] and [[Babylonians]].<ref name = "NYSSCPA 2003" /> By the time of Emperor [[Augustus]], the [[Ancient Roman Government|Roman government]] had access to detailed financial information.<ref name="O 1995">{{Cite journal|last=Oldroyd |first=David |title=The role of accounting in public expenditure and monetary policy in the first century AD Roman Empire |journal=The Accounting Historians Journal |volume=22 |issue=2 |date=December 1995 |pages=117–129 |publisher=Academy of Accounting Historians |doi=10.2308/0148-4184.22.2.117 |jstor=40698165}}</ref>

Many concepts found in present accounting seem to have been initiated in the medieval Middle East. For example, Jewish communities used [[double-entry bookkeeping]] in the early-medieval period<ref>Parker, L. M., "Medieval Traders as International Change Agents: A Comparison with Twentieth Century International Accounting Firms", The Accounting Historians Journal, 16(2) (1989): 107–118.</ref><ref>''Medieval Traders as International Change Agents: a Comment'', Michael Scorgie, The Accounting Historians Journal, Vol. 21, No. 1 (June 1994), pp. 137–143</ref> and Muslim societies, at least since the 10th century also used many modern accounting concepts.<ref>{{cite journal |last1=Hamid |first1=Shaari |last2=Craig |first2=Russell |last3=Clarke |first3=Frank |title=Bookkeeping and accounting control systems in a tenth-century Muslim administrative office |journal=Accounting, Business & Financial History |date=January 1995 |volume=5 |issue=3 |pages=321–333 |doi=10.1080/09585209500000049 }}</ref>

The spread of the use of [[Hindu–Arabic numeral system|Arabic numerals]], instead of the [[Roman numerals|Roman numbers]] historically used in Europe, increased efficiency of accounting procedures among Mediterranean merchants,<ref>{{cite journal |last1=Danna |first1=Rafael |title=The spread of Hindu-Arabic numerals in the tradition of European practical mathematics: A socio-economic perspective, thirteenth-sixteenth centuries |journal=Conference: The Economic History Society |date=5–7 April 2019}}</ref> who further refined accounting in [[medieval Europe]].<ref name="logica.ugent.be">{{cite web |last=Heeffer |first=Albrecht |title=On the curious historical coincidence of algebra and double-entry bookkeeping |work= Foundations of the Formal Sciences |publisher=[[Ghent University]] |date=November 2009 | page=11 |url=http://logica.ugent.be/albrecht/thesis/FOTFS2008-Heeffer.pdf |archive-url=https://ghostarchive.org/archive/20221009/http://logica.ugent.be/albrecht/thesis/FOTFS2008-Heeffer.pdf |archive-date=2022-10-09 |url-status=live }}</ref> With the development of [[Joint-stock company|joint-stock companies]], accounting split into [[financial accounting]] and [[management accounting]].

The first published work on a [[double-entry bookkeeping system]] was the ''[[Summa de arithmetica]]'', published in [[Italy]] in 1494 by [[Luca Pacioli]] (the "Father of Accounting").<ref>{{Cite web|url=https://www.huffingtonpost.com/steve-mariotti/so-who-invented-double-en_b_3588941.html|title=So, Who Invented Double Entry Bookkeeping? Luca Pacioli or Benedikt Kotruljević?|last=Mariotti|first=Steve|date=12 July 2013|website=Huffington Post|language=en-US|access-date=3 August 2018|archive-date=10 September 2017|archive-url=https://web.archive.org/web/20170910062611/http://www.huffingtonpost.com/steve-mariotti/so-who-invented-double-en_b_3588941.html|url-status=live}}</ref><ref name = "LW 1994">{{Cite journal|last1=Lauwers |first1=Luc |last2=Willekens |first2=Marleen |title=Five Hundred Years of Bookkeeping: A Portrait of Luca Pacioli |journal=Tijdschrift voor Economie en Management |year=1994 |volume=XXXIX |issue=3 |page=302 |format=PDF download |publisher=[[KU Leuven]] |url=https://lirias.kuleuven.be/bitstream/123456789/119065/1/TEM1994-3_289-304p.pdf |archive-url=https://web.archive.org/web/20110820033441/https://lirias.kuleuven.be/bitstream/123456789/119065/1/TEM1994-3_289-304p.pdf |archive-date=20 August 2011 |url-status=live}}</ref> Accounting began to transition into an organized profession in the 19th century,<ref name="ICAEW 2013">{{Citation | url =https://www.icaew.com/en/library/subject-gateways/accounting-history/resources/timeline | title =Timeline of the History of the Accountancy Profession | publisher =Institute of Chartered Accountants in England and Wales | year =2013 | access-date =28 December 2013 | archive-date =11 October 2014 | archive-url =https://web.archive.org/web/20141011141621/http://www.icaew.com/en/library/subject-gateways/accounting-history/resources/timeline | url-status =live }}</ref><ref>{{citation |url=http://www.ruf.rice.edu/~sazeff/PDF/Horizons,%20Part%20I%20(print).pdf |title=How the U.S. Accounting Profession Got Where It Is Today: Part I |author=Stephen A. Zeff |journal=Accounting Horizons |pages=189–205 |volume=17 |issue=3 |date=2003 |doi=10.2308/acch.2003.17.3.189 |access-date=16 May 2020 |archive-date=21 July 2022 |archive-url=https://web.archive.org/web/20220721003409/http://www.ruf.rice.edu/~sazeff/PDF/Horizons,%20Part%20I%20(print).pdf |url-status=live }}</ref> with local [[professional bodies]] in England merging to form the [[Institute of Chartered Accountants in England and Wales]] in 1880.<ref name="Perks16">{{cite book |author=Perks, R.W. |year=1993 |title=Accounting and Society |publisher=Chapman & Hall |location=London |isbn= 978-0-412-47330-2 |page=16 }}</ref>

==Etymology==
[[File:Hauptbuch Hochstetter vor 1828.jpg|thumb|left|upright|Early 19th-century [[ledger]]]]
Both the words "accounting" and "accountancy" were in use in [[United Kingdom|Great Britain]] by the mid-1800s and are derived from the words ''accompting'' and ''accountantship'' used in the 18th century.<ref name = "LN 2009">Labardin, Pierre, and Marc Nikitin. 2009. "Accounting and the Words to Tell It: An Historical Perspective." ''Accounting, Business & Financial History'' 19 (2): 149–166.</ref> In [[Middle English]] (used roughly between the 12th and the late 15th century), the verb "to account" had the form ''accounten'', which was derived from the Old French word ''aconter'',<ref name = "B 1984">Baladouni, Vahé. 1984. "Etymological Observations on Some Accounting Terms." ''The Accounting Historians Journal'' 11 (2): 101–109.</ref> which is in turn related to the [[Vulgar Latin]] word ''computare'', meaning "to reckon". The base of ''computare'' is ''putare'', which "variously meant to prune, to purify, to correct an account, hence, to count or calculate, as well as to think".<ref name = "B 1984"/>

The word "[[accountant]]" is derived from the French word {{lang|fr|compter}}, which is also derived from the Italian and [[Latin]] word {{lang|la|computare}}. The word was formerly written in English as "accomptant", but in process of time the word, which was always pronounced by dropping the "p", became gradually changed both in [[pronunciation]] and in [[orthography]] to its present form.<ref>Pixley, Francis William: Accountancy—constructive and recording accountancy (Sir Isaac Pitman & Sons, Ltd, London, 1900), p. 4</ref>

=== Terminology ===
'''Accounting''' has variously been defined as the keeping or preparation of the financial records of transactions of the firm, the analysis, verification and reporting of such records and "the [[Generally accepted accounting principles|principles]] and procedures of accounting"; it also refers to the [[Job (role)|job]] of being an [[accountant]].<ref name = "Cambridge Business Accounting">{{cite web |url=http://dictionary.cambridge.org/dictionary/business-english/accounting |title=accounting noun – definition in the Business English Dictionary |year=2013 |website=Cambridge Dictionaries Online |publisher=Cambridge University Press |access-date=30 December 2013 |archive-date=2 July 2015 |archive-url=https://web.archive.org/web/20150702062650/http://dictionary.cambridge.org/dictionary/business-english/accounting |url-status=live }}</ref><ref name = "Cambridge British Accounting">{{cite web |url=http://dictionary.cambridge.org/dictionary/british/accounting?q=accounting |title=accounting noun – definition in the British English Dictionary & Thesaurus |year=2013 |website=Cambridge Dictionaries Online |publisher=Cambridge University Press |access-date=30 December 2013 |archive-date=2 November 2014 |archive-url=https://web.archive.org/web/20141102082918/http://dictionary.cambridge.org/dictionary/british/accounting?q=accounting |url-status=live }}</ref><ref name = "MW 2013 accounting">{{cite web |url=http://www.merriam-webster.com/dictionary/accounting |title=accounting |year=2013 |website=Merriam-Webster |publisher=Merriam-Webster, Incorporated |access-date=30 December 2013 |archive-date=23 July 2022 |archive-url=https://web.archive.org/web/20220723235833/https://www.merriam-webster.com/dictionary/accounting |url-status=live }}</ref>

'''Accountancy''' refers to the [[Job (role)|occupation]] or [[profession]] of an accountant,<ref name = "MW 2013 accountancy">{{cite web |url=http://www.merriam-webster.com/dictionary/accountancy |title=accountancy |year=2013 |website=Merriam-Webster |publisher=Merriam-Webster, Incorporated |access-date=30 December 2013 |archive-date=29 July 2022 |archive-url=https://web.archive.org/web/20220729092830/https://www.merriam-webster.com/dictionary/accountancy |url-status=live }}</ref><ref name = "Cambridge Business Accountancy">{{cite web |url=http://dictionary.cambridge.org/dictionary/business-english/accountancy?q=accountancy |title=accountancy noun – definition in the Business English Dictionary |year=2013 |website=Cambridge Dictionaries Online |publisher=Cambridge University Press |access-date=30 December 2013 |archive-date=19 October 2014 |archive-url=https://web.archive.org/web/20141019020532/http://dictionary.cambridge.org/dictionary/business-english/accountancy?q=accountancy |url-status=live }}</ref><ref name = "Cambridge British Accountancy">{{cite web |url=http://dictionary.cambridge.org/dictionary/british/accountancy?q=accountancy |title=accountancy noun – definition in the British English Dictionary & Thesaurus |year=2013 |website=Cambridge Dictionaries Online |publisher=Cambridge University Press |access-date=30 December 2013 |archive-date=19 October 2014 |archive-url=https://web.archive.org/web/20141019014728/http://dictionary.cambridge.org/dictionary/british/accountancy?q=accountancy |url-status=live }}</ref> particularly in [[British English]].<ref name = "Cambridge Business Accounting" /><ref name = "Cambridge British Accounting" />

== Topics ==
Accounting has several subfields or subject areas, including [[financial accounting]], [[management accounting]], [[auditing]], [[taxation]] and [[accounting information system]]s.<ref name = "WC 1981">Weber, Richard P., and W. C. Stevenson. 1981. "Evaluations of Accounting Journal and Department Quality." The Accounting Review 56 (3): 596–612.</ref>

===Financial accounting===
{{main article|Financial accounting}}
Financial accounting focuses on the reporting of an organization's financial information to external users of the information, such as investors, potential investors and creditors. It calculates and records business transactions and prepares [[financial statement]]s for the external users in accordance with [[generally accepted accounting principles]] (GAAP).<ref name = "HDF 2006">{{Citation
 | last1 = Horngren
 | first1 = Charles T.
 | author-link1= Charles Thomas Horngren
 | last2 = Datar
 | first2 = Srikant M.
 | author-link2= Srikant Datar
 | last3 = Foster
 | first3 = George
 | title = Cost Accounting: A Managerial Emphasis
 | place = New Jersey
 | publisher = Pearson Prentice Hall
 | year = 2006
 | edition = 12th
}}</ref> GAAP, in turn, arises from the wide agreement between [[accounting research|accounting theory]] and practice, and changes over time to meet the needs of decision-makers.<ref name = "NP 2013" />

Financial accounting produces past-oriented reports—for example financial statements are often published six to ten months after the end of the accounting period—on an [[Annual report|annual]] or quarterly basis, generally about the organization as a whole.<ref name = "HDF 2006" />

===Management accounting===
{{main article|Management accounting}}
Management accounting focuses on the measurement, analysis and reporting of information that can help managers in making decisions to fulfill the goals of an organization. In management accounting, internal measures and reports are based on [[cost–benefit analysis]], and are not required to follow the generally accepted accounting principle (GAAP).<ref name = "HDF 2006" /> In 2014 CIMA created the [https://www.cgma.org/resources/reports/globalmanagementaccountingprinciples.html Global Management Accounting Principles (GMAPs)]. The result of research from across 20 countries in five continents, the principles aim to guide best practice in the discipline.<ref name=FT>{{cite news|last=King|first=I.|title=New set of accounting principles can help drive sustainable success|newspaper=Financial Times|date=23 October 2014|url=https://www.ft.com/content/0b595a98-59fa-11e4-8771-00144feab7de|publisher=ft.com|access-date=28 January 2015}}</ref>

Management accounting produces past-oriented reports with time spans that vary widely, but it also encompasses future-oriented reports such as [[budgets]]. Management accounting reports often include financial and non financial information, and may, for example, focus on specific products and departments.<ref name = "HDF 2006" />

===Intercompany accounting===
{{main article|Intercompany accounting}}
Intercompany accounting focuses on the measurement, analysis and reporting of information between separate entities that are related, such as a parent company and its subsidiary companies.  Intercompany accounting concerns record keeping of transactions between companies that have common ownership such as a parent company and a partially or wholly owned subsidiary. Intercompany transactions are also recorded in accounting when business is transacted between companies with a common parent company (subsidiaries).<ref>{{Cite web |title=What is Intercompany Accounting? {{!}} F&A Glossary {{!}} BlackLine |url=https://www.blackline.com/resources/glossaries/intercompany-accounting/ |access-date=2024-08-16 |website=www.blackline.com}}</ref><ref>{{Cite web |last=Beaver |first=Scott |date=2024-04-03 |title=What Is Intercompany Accounting? Best Practices and Management |url=https://www.netsuite.com/portal/resource/articles/accounting/intercompany-accounting.shtml |website=www.netsuite.com}}</ref>

===Auditing===
{{main article|Financial audit|Internal audit}}
Auditing is the verification of assertions made by others regarding a payoff,<ref name = "B 1979">Baiman, Stanley. 1979. "Discussion of Auditing: Incentives and Truthful Reporting." Journal of Accounting Research 17: 25–29.</ref> and in the context of accounting it is the "[[wiktionary:unbiased|unbiased]] examination and evaluation of the financial statements of an organization".<ref name = "I 2013">{{cite web |url=http://www.investopedia.com/terms/a/audit.asp |title=Audit Definition |year=2013 |website=Investopedia |publisher=Investopedia US |access-date=30 December 2013 |archive-date=26 July 2022 |archive-url=https://web.archive.org/web/20220726065345/https://www.investopedia.com/terms/a/audit.asp |url-status=live }}</ref> Audit is a professional service that is systematic and conventional.<ref>{{cite journal|last1=Tredinnick|first1=Luke|title=Artificial intelligence and professional roles|journal=Business Information Review|date=March 2017|volume=34|issue=1|pages=37–41|doi=10.1177/0266382117692621|s2cid=157743821|url=http://repository.londonmet.ac.uk/3812/3/OOTB-AI.pdf |archive-url=https://ghostarchive.org/archive/20221009/http://repository.londonmet.ac.uk/3812/3/OOTB-AI.pdf |archive-date=2022-10-09 |url-status=live}}</ref>

An audit of financial statements aims to express or disclaim an independent opinion on the financial statements. The auditor expresses an independent opinion on the fairness with which the financial statements presents the financial position, results of operations, and cash flows of an entity, in accordance with the generally accepted accounting principles  (GAAP) and "in all material respects". An auditor is also required to identify circumstances in which the generally accepted accounting principles (GAAP) have not been consistently observed.<ref name = "SAS 1 Responsibilities">{{cite web |url=http://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-00110.pdf |title=Responsibilities and Functions of the Independent Auditor |date=November 1972 |website=AICPA |access-date=30 December 2013 |archive-date=23 April 2021 |archive-url=https://web.archive.org/web/20210423141039/https://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-00110.pdf |url-status=dead }}</ref>

===Information systems===
{{main article|Accounting information system}}
An accounting information system is a part of an organization's [[information system]] used for processing accounting data.<ref name=OpenLearn>{{cite web|title=1.2 Accounting information systems|url=http://labspace.open.ac.uk/mod/resource/view.php?id=365833|work=Introduction to the context of accounting|publisher=OpenLearn|access-date=3 February 2014}}</ref>
Many corporations use artificial intelligence-based information systems. The banking and finance industry uses AI in fraud detection. The retail industry uses AI for customer services. AI is also used in the cybersecurity industry. It involves computer hardware and software systems using statistics and modeling.<ref>{{cite journal|last1=Pathak|first1=Jagdish|last2=Lind|first2=Mary R.|title=Audit Risk, Complex Technology, and Auditing Processes|journal=EDPACS|date=November 2003|volume=31|issue=5|pages=1–9|doi=10.1201/1079/43853.31.5.20031101/78844.1|s2cid=61767095}}</ref>

Many accounting practices have been simplified with the help of [[accounting software|accounting computer-based software]]. An [[enterprise resource planning]] (ERP) system is commonly used for a large organisation and it provides a comprehensive, centralized, integrated source of information that companies can use to manage all major business processes, from purchasing to manufacturing to human resources. These systems can be cloud based and available on demand via application or browser, or available as software installed on specific computers or local servers, often referred to as on-premise.{{Citation needed|date=October 2025}}

===Tax accounting===
{{main article|Tax accounting}}
Tax accounting in the United States concentrates on the preparation, analysis and presentation of tax payments and tax returns. The U.S. tax  system requires the use of specialised accounting principles for tax purposes which can differ from the [[generally accepted accounting principles]] (GAAP) for financial reporting.<ref name="autogenerated2010">{{ Citation | last1 = Droms| first1= William G.| last2= Wright| first2= Jay O.| title= Finance and Accounting for nonfinancial Managers: All the Basics you need to Know| publisher= Basic Books| year= 2010| edition= 6th}}</ref> U.S. tax law covers three basic forms of business ownership: [[partnership]], [[corporation]], and [[disregarded entity]].<ref>{{Cite web |title=26 CFR § 301.7701-2 - Business entities; definitions. |url=https://www.law.cornell.edu/cfr/text/26/301.7701-2 |access-date=2025-11-05 |website=LII / Legal Information Institute |language=en}}</ref> [[Corporate tax in the United States|Corporate]] and [[Income tax in the United States|personal]] income are taxed at different rates, both varying according to income levels and including varying marginal rates (taxed on each additional dollar of income) and average rates (set as a percentage of overall income).<ref name="autogenerated2010"/>

===Forensic accounting===
{{Unreferenced section|date=June 2023}}
{{main article|Forensic accounting}}

Forensic accounting is a specialty practice area of accounting that describes engagements that result from actual or anticipated disputes or [[litigation]].<ref>{{Cite web |title=What is a Forensic Accountant? {{!}} Forensic CPA Society |url=https://www.fcpas.org/about-us/what-is-a-forensic-accountant/ |access-date=2023-08-02 |language=en-US}}</ref> "[[Forensic science|Forensic]]" means "suitable for use in a court of law", and it is to that standard and potential outcome that forensic accountants generally have to work.

=== Political campaign accounting ===
{{main article|Political campaign accounting}}
Political campaign accounting deals with the development and implementation of financial systems and the accounting of financial transactions in compliance with laws governing political campaign operations. This branch of accounting was first formally introduced in the March 1976 issue of ''The Journal of Accountancy''.<ref>{{cite journal |id={{ProQuest|198258865}} |last1=Wagman |first1=Barry E. |title=Political campaign accounting—New opportunities for the CPA |journal=Journal of Accountancy |volume=141 |issue=3 |date=March 1976 |page=36 }}</ref>

== Organizations ==
{{Category see also|Accounting organizations}}

=== Professional bodies ===
{{main article|Professional accounting body}}
[[Professional accounting bodies]] include the [[American Institute of Certified Public Accountants]] (AICPA) and the other 179 members of the [[International Federation of Accountants]] (IFAC),<ref name="ifac">{{cite web|url=http://www.ifac.org/about-ifac/membership/members|title=IFAC Members|publisher=ifac.org|access-date=25 March 2016|archive-date=10 March 2016|archive-url=https://web.archive.org/web/20160310092205/http://www.ifac.org/about-ifac/membership/members|url-status=dead}}</ref> including [[Institute of Chartered Accountants of Scotland]] (ICAS), [[Institute of Chartered Accountants of Pakistan|Institute of Chartered Accountants of Pakistan (ICAP)]], [[CPA Australia]], [[Institute of Chartered Accountants of India]], [[Association of Chartered Certified Accountants]] (ACCA) and [[Institute of Chartered Accountants in England and Wales]] (ICAEW). Some countries have a single professional accounting body and, in some other countries, professional bodies for subfields of the accounting professions also exist, for example the [[Chartered Institute of Management Accountants]] (CIMA) in the UK and [[Institute of Management Accountants|Institute of management accountants]] in the United States.<ref name="Prince">{{cite web |url=http://www.accountingforsustainability.org/international_network/accounting-bodies-network |title=Accounting Bodies Network |website=The Prince's Accounting for Sustainability Project |access-date=3 January 2014 |archive-url=https://web.archive.org/web/20140103155739/http://www.accountingforsustainability.org/international_network/accounting-bodies-network |archive-date=3 January 2014 |url-status=dead |df=dmy-all }}</ref> Many of these professional bodies offer education and training including qualification and administration for various accounting designations, such as certified public accountant ([[AICPA]]) and [[chartered accountant]].<ref name = "AICPA CPA">{{cite web |url=http://www.aicpa.org/BecomeACPA/GettingStarted/Pages/default.aspx |title=Getting Started |year=2014 |website=AICPA |access-date=3 January 2014 |archive-date=7 January 2014 |archive-url=https://web.archive.org/web/20140107234214/http://www.aicpa.org/BECOMEACPA/GETTINGSTARTED/Pages/default.aspx |url-status=live }}</ref><ref name = "ICAEW ACA">{{cite web |url=http://www.icaew.com/en/qualifications-and-programmes/aca |title=The ACA Qualification |year=2014 |website=ICAEW |access-date=3 January 2014 |archive-date=4 January 2014 |archive-url=https://web.archive.org/web/20140104034737/http://www.icaew.com/en/qualifications-and-programmes/aca |url-status=live }}</ref>

=== Firms ===
{{main article|Accounting networks and associations}}

Depending on its size, a company may be legally required to have their [[financial statement]]s [[auditing|audited]] by a qualified auditor, and audits are usually carried out by [[Accounting networks and associations|accounting firms]].<ref name = "Parliament Auditors 1">{{cite web |url=https://publications.parliament.uk/pa/ld201011/ldselect/ldeconaf/119/11904.htm |title=Auditors: Market concentration and their role, Chapter 1: Introduction |year=2011 |website=UK Parliament |publisher=House of Lords |access-date=1 January 2014 |archive-date=29 July 2022 |archive-url=https://web.archive.org/web/20220729092827/https://publications.parliament.uk/pa/ld201011/ldselect/ldeconaf/119/11904.htm |url-status=live }}</ref>

Accounting firms grew in the United States and Europe in the late nineteenth and early twentieth century, and through several mergers there were large international accounting firms by the mid-twentieth century. Further large mergers in the late twentieth century led to the dominance of the auditing market by the "Big Five" accounting firms: [[Arthur Andersen]], [[Deloitte]], [[Ernst & Young]], [[KPMG]] and [[PricewaterhouseCoopers]].<ref name = "Parliament Auditors 2">{{cite web |url=https://publications.parliament.uk/pa/ld201011/ldselect/ldeconaf/119/11905.htm |title=Auditors: Market concentration and their role, CHAPTER 2: Concentration in the audit market |year=2011 |website=UK Parliament |publisher=House of Lords |access-date=1 January 2014 |archive-date=28 March 2022 |archive-url=https://web.archive.org/web/20220328230040/https://publications.parliament.uk/pa/ld201011/ldselect/ldeconaf/119/11905.htm |url-status=live }}</ref> The [[Arthur Andersen#Demise|demise of Arthur Andersen]] following the [[Enron scandal]] reduced the Big Five to the [[Big Four accounting firms|Big Four]].<ref name = "FT Big Four">{{cite web |url=http://lexicon.ft.com/Term?term=big-four |title=Definition of big four |year=2014 |website=Financial Times Lexicon |publisher=The Financial Times Ltd |access-date=1 January 2014 |archive-date=2 January 2014 |archive-url=https://web.archive.org/web/20140102195935/http://lexicon.ft.com/Term?term=big-four |url-status=dead }}</ref>

=== Standard-setters ===
{{See also|Accounting standards|Convergence of accounting standards}}
[[Generally accepted accounting principles]] (GAAP) are accounting standards issued by national regulatory bodies. In addition, the [[International Accounting Standards Board]] (IASB) issues the [[International Financial Reporting Standards]] (IFRS) implemented by 147 countries.<ref name = "NP 2013" /> Standards for international audit and assurance, ethics, education, and public sector accounting are all set by independent standard settings boards supported by IFAC. The International Auditing and Assurance Standards Board sets international standards for auditing, assurance, and quality control; the [[International Ethics Standards Board for Accountants]] (IESBA)<ref name="ifac2">{{cite web|url=http://www.ifac.org/ethics|title=IESBA &#124; Ethics &#124; Accounting &#124; IFAC|publisher=ifac.org|access-date=25 March 2016|archive-date=26 May 2016|archive-url=https://web.archive.org/web/20160526235439/http://www.ifac.org/ethics|url-status=dead}}</ref> sets the internationally appropriate principles-based ''Code of Ethics for Professional Accountants''; the [[International Accounting Education Standards Board]] (IAESB) sets professional accounting education standards;<ref name="ifac3">{{cite web|url=http://www.ifac.org/education|title=IAESB &#124; International Accounting Education Standards Board &#124; IFAC|publisher=ifac.org|access-date=25 March 2016|archive-date=16 May 2016|archive-url=https://web.archive.org/web/20160516184718/http://www.ifac.org/education|url-status=dead}}</ref> and [[International Public Sector Accounting Standards]] Board (IPSASB) sets accrual-based international public sector accounting standards.<ref name="ifac4">{{cite web|url=http://www.ifac.org/public-sector|title=IPSASB &#124; International Public Sector Accounting Standards Board &#124; IFAC|publisher=ifac.org|access-date=25 March 2016|archive-date=27 May 2016|archive-url=https://web.archive.org/web/20160527045153/http://www.ifac.org/public-sector|url-status=dead}}</ref><ref name="Ias"/>

Organizations in individual countries may issue accounting standards unique to the countries. For example, in Australia, the Australian Accounting Standards Board manages the issuance of the accounting standards in line with IFRS. In the [[United States]] the [[Financial Accounting Standards Board]] (FASB) issues the Statements of Financial Accounting Standards, which form the basis of [[US GAAP]],<ref name = "NP 2013" /> and in the [[United Kingdom]] the [[Financial Reporting Council]] (FRC) sets accounting standards.<ref name="ICAEW Standards">{{Citation | url =http://www.icaew.com/en/library/subject-gateways/accounting-standards/knowledge-guide-to-uk-accounting-standards | title =Knowledge guide to UK Accounting Standards | publisher =ICAEW | year =2014 | access-date =1 January 2014 | archive-date =18 November 2018 | archive-url =https://web.archive.org/web/20181118172337/https://www.icaew.com/en/library/subject-gateways/accounting-standards/knowledge-guide-to-uk-accounting-standards | url-status =live }}</ref> However, as of 2012 "all major economies" have plans to [[Convergence (accounting)|converge]] towards or adopt the IFRS.<ref name=globalcon />

== Education, training and qualifications ==

=== Degrees ===
A [[bachelor's degree]] or a [[master's degree]] in accounting or a related field is required for most accountant and [[auditor]] [[Job (role)|job positions]], and some employers prefer applicants with advanced qualifications.<ref name = "BLS 2012">{{cite web |url=http://www.bls.gov/ooh/Business-and-Financial/Accountants-and-auditors.htm#tab-4 |title=How to Become an Accountant or Auditor |year=2012 |website=U.S. Bureau of Labor Statistics |publisher=United States Department of Labor |access-date=31 December 2013 |archive-date=9 July 2022 |archive-url=https://web.archive.org/web/20220709084813/https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm#tab-4 |url-status=live }}</ref> A degree in accounting may also be required for, or may be used to fulfill the requirements for, membership to professional accounting bodies. For example, the education during an accounting degree can be used to fulfill the [[AICPA|American Institute of CPA's]] (AICPA) 150 semester hour requirement,<ref name = "AICPA 150">{{cite web |url=http://www.aicpa.org/becomeacpa/licensure/requirements/pages/default.aspx |title=150 Hour Requirement for Obtaining CPA Certification |year=2013 |website=AICPA |access-date=31 December 2013 |archive-date=29 July 2022 |archive-url=https://web.archive.org/web/20220729094716/https://www.aicpa.org/becomeacpa/licensure/requirements/pages/default.aspx |url-status=live }}</ref> and associate membership with the [[Certified Public Accountants Association]] of the UK is available after gaining a degree in finance or accounting.<ref name="ACPA Criteria">{{cite web|url=http://www.acpa.org.uk/criteria-for-entry.aspx |title=Criteria for entry |year=2013 |website=CPA UK |access-date=31 December 2013 |url-status=dead |archive-url=https://web.archive.org/web/20130819184954/http://acpa.org.uk/criteria-for-entry.aspx |archive-date=19 August 2013 }}</ref>

A [[Doctor of Philosophy|doctorate]] is required in order to pursue a career in accounting [[academia]], for example, to work as a university [[professor]] in accounting.<ref name = "AICPA Academia">{{cite web |url=http://www.aicpa.org/interestareas/youngcpanetwork/resources/career/pages/acareerineducation.aspx |title=Want a Career in Education? Here's What You Need to Know |year=2013 |website=AICPA |access-date=31 December 2013 |archive-url=https://web.archive.org/web/20140101002919/http://www.aicpa.org/interestareas/youngcpanetwork/resources/career/pages/acareerineducation.aspx |archive-date=1 January 2014 |url-status=dead }}</ref><ref name = "BYU Prep">{{cite web |url=http://www.byuaccounting.net/mediawiki/index.php?title=Main_Page |title=PhD Prep Track |year=2013 |website=BYU Accounting |access-date=31 December 2013 |archive-date=5 May 2019 |archive-url=https://web.archive.org/web/20190505181108/http://www.byuaccounting.net/mediawiki/index.php?title=Main_Page |url-status=live }}</ref> The [[Doctor of Philosophy]] (PhD) and the [[Doctor of Business Administration]] (DBA) are the most popular degrees. The PhD is the most common degree for those wishing to pursue a career in academia, while DBA programs generally focus on equipping [[business executives]] for business or public careers requiring research skills and qualifications.<ref name = "AICPA Academia" />

=== Professional qualifications ===
{{Main|Chartered accountant|Certified Public Accountant}}
{{See also|Professional certification #Accountancy, auditing and finance}}
Professional accounting qualifications include the [[chartered accountant]] designations and other qualifications including certificates and diplomas.<ref name="ACCA Qualifications">{{cite web |url=http://www.accaglobal.com/gb/en/qualifications/glance.html |title=Accountancy Qualifications at a Glance |year=2014 |website=ACCA |access-date=4 January 2014 |archive-date=6 January 2014 |archive-url=https://web.archive.org/web/20140106005500/http://www.accaglobal.com/gb/en/qualifications/glance.html |url-status=live }}</ref> 
In Scotland, chartered accountants of [[Institute of Chartered Accountants of Scotland|ICAS]] undergo [[Continuous professional development|Continuous Professional Development]] and abide by the ICAS code of ethics.<ref>{{Cite web|url=https://www.icas.com/ethics/icas-code-of-ethics|title=ICAS code of ethics|last=Kyle|first=McHatton|website=www.icas.com|language=en|access-date=18 October 2018|archive-date=18 October 2018|archive-url=https://web.archive.org/web/20181018201603/https://www.icas.com/ethics/icas-code-of-ethics|url-status=live}}</ref> In England and Wales, chartered accountants of the [[Institute of Chartered Accountants in England and Wales|ICAEW]] undergo annual training, and are bound by the ICAEW's [[code of ethics]] and subject to its disciplinary procedures.<ref name="ICAEW Chartered">{{cite web|url=http://www.icaew.com/en/qualifications-and-programmes/better-qualified/ |title=ACA – The qualification of ICAEW Chartered Accountants |year=2014 |website=ICAEW |access-date=4 January 2014 |url-status=dead |archive-url=https://web.archive.org/web/20131011082948/http://www.icaew.com/en/qualifications-and-programmes/better-qualified/ |archive-date=11 October 2013 }}</ref>

In the [[United States]], the requirements for joining the [[American Institute of Certified Public Accountants|AICPA]] as a [[Certified Public Accountant]] are set by the Board of Accountancy of each [[U.S. state|state]], and members agree to abide by the AICPA's [[Code of conduct|Code of Professional Conduct]] and Bylaws.

The ACCA is the largest global accountancy body with over 320,000 members, and the organisation provides an 'IFRS stream' and a 'UK stream'. Students must pass a total of 14 exams, which are arranged across three levels.<ref>{{Cite news|url=https://www.careersinaudit.com/article/european-accounting-qualifications-explained/|title=European Accounting Qualifications Explained {{!}} CareersinAudit.com|work=CareersinAudit.com|access-date=13 December 2017|language=en-GB|archive-date=7 October 2018|archive-url=https://web.archive.org/web/20181007223203/https://www.careersinaudit.com/article/european-accounting-qualifications-explained/|url-status=live}}</ref>

== Research ==
{{Main article|Accounting research}}
Accounting research is [[research]] in the effects of economic events on the process of accounting, the effects of reported information on economic events, and the roles of accounting in organizations and society.<ref name="ACCA 2010">{{Citation|url=http://www.accaglobal.com/content/dam/acca/global/PDF-technical/human-capital/rr-120-002.pdf |title=The Relevance and Utility of Leading Accounting Research |publisher=The Association of Chartered Certified Accountants |year=2010 |access-date=27 December 2013 |url-status=dead |archive-url=https://web.archive.org/web/20131227111624/http://www.accaglobal.com/content/dam/acca/global/PDF-technical/human-capital/rr-120-002.pdf |archive-date=27 December 2013 }}</ref><ref name="Burchell et al 1980">{{cite journal |last1=Burchell |first1=S. |last2=Clubb |first2=C. |last3=Hopwood |first3=A. |last4=Hughes |first4=J. |last5=Nahapiet |first5=J. |title=The roles of accounting in organizations and society |journal=Accounting, Organizations and Society |date=1980 |volume=5 |issue=1 |pages=5–27|doi=10.1016/0361-3682(80)90017-3 }}</ref> It encompasses a broad range of research areas including [[financial accounting]], [[management accounting]], [[auditing]] and [[taxation]].<ref name = "OOS 2010">Oler, Derek K., Mitchell J. Oler, and Christopher J. Skousen. 2010. "Characterizing Accounting Research." ''Accounting Horizons'' 24 (4): 635–670.</ref>

Accounting research is carried out both by academic researchers and practicing accountants. [[Methodology|Methodologies]] in academic accounting research include archival research, which examines "objective data collected from [[Information repository|repositories]]"; experimental research, which examines data "the researcher gathered by [[Controlled experiments|administering treatments to subjects]]"; analytical research, which is "based on the act of [[Scientific modelling|formally modeling]] [[Theory|theories]] or substantiating ideas in mathematical terms"; [[Antipositivism|interpretive]] research, which emphasizes the role of language, interpretation and understanding in accounting practice, "highlighting the symbolic structures and taken-for-granted themes which pattern the world in distinct ways"; [[critical theory|critical]] research, which emphasizes the role of power and conflict in accounting practice; [[Case study|case studies]]; [[computer simulation]]; and [[field research]].<ref name="CSWW 2010">Coyne, Joshua G., Scott L. Summers, Brady Williams, and David a. Wood. 2010. "Accounting Program Research Rankings by Topical Area and Methodology." ''Issues in Accounting Education'' 25 (4) (November): 631–654.</ref><ref name="Chua 1986">{{cite journal |last1=Chua |first1=Wai Fong |title=Radical developments in accounting thought |journal=The Accounting Review |date=1986 |volume=61 |issue=4 |pages=601–632}}</ref>

Empirical studies document that leading [[List of accounting journals|accounting journals]] publish in total fewer research articles than comparable journals in economics and other business disciplines,<ref name="JAE 2002">{{cite journal |last1=Buchheit |first1=S. |last2=Collins |first2=D. |last3=Reitenga |first3=A. |title=A cross-discipline comparison of top-tier academic journal publication rates: 1997–1999 |journal=Journal of Accounting Education |year=2002 |volume=20 |issue=2 |pages=123–130|doi=10.1016/S0748-5751(02)00003-9 }}</ref> and consequently, accounting scholars<ref>{{cite journal |last1=Merigó |first1=José M. |last2=Yang |first2=Jian-Bo |title=Accounting Research: A Bibliometric Analysis: Accounting Research: A Bibliometric Analysis |journal=Australian Accounting Review |date=March 2017 |volume=27 |issue=1 |pages=71–100 |doi=10.1111/auar.12109 |url=https://pure.manchester.ac.uk/ws/files/47006681/Nerigo_Yang_AAR_CTA.docx |access-date=3 December 2022 |archive-date=30 December 2022 |archive-url=https://web.archive.org/web/20221230103214/https://pure.manchester.ac.uk/ws/files/47006681/Nerigo_Yang_AAR_CTA.docx |url-status=live }}</ref> are relatively less successful in [[academic publishing]] than their [[business school]] peers.<ref name="CAR 2004">{{cite journal |last1=Swanson |first1=Edward |title=Publishing in the majors: A comparison of accounting, finance, management, and marketing |journal=Contemporary Accounting Research |year=2004 |volume=21 |pages=223–255|doi=10.1506/RCKM-13FM-GK0E-3W50 }}</ref> Due to different publication rates between accounting and other business disciplines, a recent study based on academic author rankings concludes that the competitive value of a single publication in a top-ranked journal is highest in accounting and lowest in marketing.<ref name="JBR 2018">{{cite journal |last1=Korkeamäki |first1=Timo |last2=Sihvonen |first2=Jukka |last3=Vähämaa |first3=Sami |title= Evaluating publications across business disciplines |journal=Journal of Business Research |year=2018 |volume=84 |pages=220–232 |doi=10.1016/j.jbusres.2017.11.024 |doi-access=free }}</ref>

==Scandals==
{{Main article|Accounting scandals}}
{{See also|Accounting ethics}}
The year 2001 witnessed a series of financial information frauds involving [[Enron]], auditing firm [[Arthur Andersen]], the telecommunications company [[WorldCom]], [[Qwest]] and [[Jarden|Sunbeam]], among other well-known corporations. These problems highlighted the need to review the effectiveness of [[Standard accounting practice|accounting standards]], auditing regulations and [[corporate governance]] principles. In some cases, management manipulated the figures shown in financial reports to indicate a better economic performance. In others, tax and regulatory incentives encouraged over-leveraging of companies and decisions to bear extraordinary and unjustified risk.<ref name="mba.ufm.edu.gt">Astrid Ayala and Giancarlo Ibárgüen Snr.: "A Market Proposal for Auditing the Financial Statements of Public Companies" (Journal of Management of Value, [[Universidad Francisco Marroquín]], March 2006) p. 41, [https://web.archive.org/web/20110721084545/http://www.mba.ufm.edu.gt/journalofmanagement/content/ENG_MarketProposal.pdf UFM.edu.gt]</ref>

The [[Enron scandal]] deeply influenced the development of new [[regulations]] to improve the reliability of financial reporting, and increased public awareness about the importance of having accounting standards that show the financial reality of companies and the objectivity and independence of auditing firms.<ref name="mba.ufm.edu.gt"/>

In addition to being the largest [[bankruptcy]] reorganization in American history, the Enron scandal undoubtedly is the biggest audit failure<ref>Bratton, William W. "Enron and the Dark Side of Shareholder Value" ([[Tulane Law Review]], New Orleans, May 2002) p. 61</ref> causing the dissolution of [[Arthur Andersen]], which at the time was one of the five largest accounting firms in the world. After a series of revelations involving irregular accounting procedures conducted throughout the 1990s, Enron filed for [[Chapter 11]] bankruptcy protection in December 2001.<ref>{{cite news | title = Enron files for bankruptcy | work = BBC News | date = 3 December 2001 | url = http://news.bbc.co.uk/1/hi/business/1688550.stm | access-date = 15 March 2008 | archive-date = 24 March 2022 | archive-url = https://web.archive.org/web/20220324223251/http://news.bbc.co.uk/1/hi/business/1688550.stm | url-status = live }}</ref>

One consequence of these events was the passage of the [[Sarbanes–Oxley Act]] in the [[United States]] in 2002, as a result of the first admissions of fraudulent behavior made by Enron. The act significantly raises criminal penalties for [[securities fraud]], for destroying, altering or fabricating records in federal investigations or any scheme or attempt to defraud shareholders.<ref>Aiyesha Dey, and Thomas Z. Lys: "Trends in Earnings Management and Informativeness of Earnings Announcements in the Pre- and Post-Sarbanes Oxley Periods ([[Kellogg School of Management]], Evanston, Illinois, February, 2005) p. 5</ref>

== Fraud and error ==
Accounting [[fraud]] is an intentional misstatement or omission in the accounting records by management or employees which involves the use of deception. It is a criminal act and a breach of civil tort. It may involve collusion with third parties.<ref name="IAASB-ISA240">{{Citation | title =2018 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements | publisher =The International Auditing and Assurance Standards Board | date =December 2018 }}</ref>

An accounting error is an unintentional misstatement or omission in the accounting records, for example misinterpretation of facts, mistakes in processing data, or oversights leading to incorrect estimates.<ref name="IAASB-ISA240"/> Acts leading to accounting errors are not criminal but may breach civil law, for example, the tort of [[negligence]].

The primary responsibility for the prevention and detection of fraud and errors rests with the entity's management.<ref name="IAASB-ISA240"/>

==See also==
* [[Accounting information system]]
* [[Accounting records]]
* [[Outline of accounting]]

==References==
{{Reflist|30em}}

==External links==
* {{Library resources about |onlinebooks=no |label=accounting }}
* [https://www.informs.org/About-INFORMS/History-and-Traditions/OR-Application-Areas/Accounting Operations Research in Accounting] {{Webarchive|url=https://web.archive.org/web/20160915005851/https://www.informs.org/About-INFORMS/History-and-Traditions/OR-Application-Areas/Accounting |date=15 September 2016 }} on the Institute for Operations Research and the Management Sciences website

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