Accounting In The Real World Analysis
Accounting in the Real World
Rachel Benowitz
Northampton Community College
Abstract
This essay explores today’s accounting world and how to get there. When becoming an accountant education seems to be the key factor in preparing you for all the exams you will be taking to achieve your licensing along with personal experience on the job. After years of schooling, experience, and finally getting your license, you may enter the world of accounting and be a responsible accountant. You could work at a multitude of places but The Big 4 accounting firms are an accountant’s dream to work at. They are well known throughout the nation and serve many different clients with audits and many other types of work. Although you should …show more content…
take yourself as an accountant very seriously some do not and let mistakes slip through the cracks. This is when big scandals occur. People will simply overlook not stating enough revenue or income or overstating it just so it helps them. As an accountant you should be responsible and report any mistakes or imperfections when commencing an audit.
Accounting in the Real World To become an accountant is no simple task and if pursued should be taken seriously.
First, you must pass 150 semester credit from a post-secondary facility that is accepted by the state, a bachelor’s degree or higher, and a certain number of business and accounting courses during your education (Accounting CPA Requirements). After completing schooling, you must pass the CPA exam. This exam is centered on what the 150 credits you learned (Accounting CPA Requirements). Next, every applicant that is applying for their CPA license must complete an ethic exam or course to obtain the license (Accounting CPA Requirements). The next requirement is experience which is specific to each state’s board of accountancy (Accounting CPA Requirements). Lastly, you may apply for your CPA license. You must renew your license either annually or biannually and also maintain it by taking a certain number of continuing professional education (CPE) hours specified by your state (Accounting CPA …show more content…
Requirements). Accounting is necessary to all business all over the world. They perform essential audits and other services. In the United States there are four major accounting firms called the ‘Big 4’. These firms are Deloitte Touche Tohmatsu Limited, Pricewaterhouse Coopers, Ernst & Young, and Klynveld Peat Marwick Goerdeler (Big 4 Accounting Firms- Who Are They?) (Beattie). Before there was the Big 4 there was the Big 8. Through acquisitions and mergers the eight was down to six by the end of the late 1980s (Beattie). In 1998 the six went down to five and the five was about to turn to four with one of the biggest scandals in history (Beattie). In 2002, the Enron accounting scandal destroyed what was Arthur Anderson and left the bits and pieces to be bought by the reaming Big 4 (Beattie).
With accounting comes responsibility. Some accountants take pride in what they do and keep everything fair and honest while others scheme to take as much money as they can from others. In 2008, Bernie Madoff was arrested for scamming his own clients out of their money. Bernard L. Madoff Investment Securities LLC was an investment firm on Wall Street founded in 1960 with Bernard himself and about dozen other people (Henriques, 2008). Over the years he had promised his clients high returns with barely any fees involved (Henriques, 2008). What was really happening was that he was paying his clients their own money back with no profit but from other investors (The 10 Worst Accounting Scandals of All Time). In the 1980s, when his firm was number 1, so many people looked at this as an opportunity. They thought they would receive such great profit back but, they were only fools of Madoff’s big game plan. This was all just a Ponzi scheme and tricked each of his clients out of nearly 65 billion dollars and left most of them with nothing but wishful thinking of money they thought they had (Henriques, 2008). Madoff always talked about how he made his first earning as a lifeguard at city beaches working hard and encouraging other to put their hard earned money into his investment (Henriques, 2008). After he told his sons about the scheme he was running, they both alerted the authorities and arrested him the next day for one count of securities fraud (Henriques, 2008). Bernard Madoff received 150 years in prison with $170 billion dollar restitution. Another famous scandal is the Freddie Mac Scandal back in 2003. Freddie Mac and Fannie Mae were Government Sponsored Enterprises that bought mortgages from banks and turned them into low risk securities which then were offered to investors (Malkin, 2003). They encouraged people to have home-ownership when buying these mortgages so everyone could afford a home no matter if they had low or middle class income (Mclean, 2005). This is how the whole operation went. Fannie and Freddie would buy a mortgage from a bank which then freed up the bank’s capital so the ban could then make more loans to its customers (Mclean, 2005). This is how Government Sponsored Enterprises worked and how Fannie and Freddie got many advantages that even bigger bank names didn’t get (Mclean, 2005). What all started the Freddie Mac Scandal actually ended being the Enron scandal (Mclean, 2005). When the Enron scandal blew up Freddie Mac had the same accounting firm as they did, Arthur Anderson, and proceeded to fire them immediately; after getting a new accounting team and looking over all the books it was caught that Freddie Mac had understated its profits for years (Mclean, 2005). As this was intentional the SEC came in and conducted a huge investigation that rattled Freddie Mac and tore it to the ground (The 10 Worst Accounting Scandals of All Time). Eventually, fines of $125 million dollars in fines were given to them as well as firing of their COO, CEO, and CFO. (The 10 Worst Accounting Scandals of All Time).
Works Cited
Accounting CPA Requirements.
(n.d.). Retrieved from accountingcoach: http://www.accountingcoach.com/careers/cpa-requirements.html
Beattie, A. (n.d.). Financial History: The Rise Of Modern Accounting. Retrieved from investopedia: http://www.investopdeia.com/articles/tax/08/accounting-taxes.asp
Big 4 Accounting Firms- Who Are They? (n.d.). Retrieved from accountingverse: http://www.accountingverse.com/articles/big-4-accounting-firms.html
Henriques, D. B. (2008, December 11). Top Trader Accused of Defrauding Clients. Retrieved from The New York Times: http://www.nytimes.com/2008/12/12/business/12scheme.html?ref=bernardlmadoff&_r=0
Malkin, M. (2003, June 16). Freddie Mac 's Accounting Scandal. Retrieved from National Center for Policy Analysis: http://www.ncpa.org/sub/dpd/index.php?Article_ID=5028
Mclean, B. (2005, January 24). The Fall of Fannie Mae. Retrieved from CNN Money: http://money.cnn.com/magazines/fortune/fortune_archive/2005/01/24/8234040/
The 10 Worst Accounting Scandals of All Time. (n.d.). Retrieved from Accounting Degree:
http://www.accounting-degree.org/scandals/
Rachel Benowitz
Northampton Community College
Abstract
This essay explores today’s accounting world and how to get there. When becoming an accountant education seems to be the key factor in preparing you for all the exams you will be taking to achieve your licensing along with personal experience on the job. After years of schooling, experience, and finally getting your license, you may enter the world of accounting and be a responsible accountant. You could work at a multitude of places but The Big 4 accounting firms are an accountant’s dream to work at. They are well known throughout the nation and serve many different clients with audits and many other types of work. Although you should …show more content…
take yourself as an accountant very seriously some do not and let mistakes slip through the cracks. This is when big scandals occur. People will simply overlook not stating enough revenue or income or overstating it just so it helps them. As an accountant you should be responsible and report any mistakes or imperfections when commencing an audit.
Accounting in the Real World To become an accountant is no simple task and if pursued should be taken seriously.
First, you must pass 150 semester credit from a post-secondary facility that is accepted by the state, a bachelor’s degree or higher, and a certain number of business and accounting courses during your education (Accounting CPA Requirements). After completing schooling, you must pass the CPA exam. This exam is centered on what the 150 credits you learned (Accounting CPA Requirements). Next, every applicant that is applying for their CPA license must complete an ethic exam or course to obtain the license (Accounting CPA Requirements). The next requirement is experience which is specific to each state’s board of accountancy (Accounting CPA Requirements). Lastly, you may apply for your CPA license. You must renew your license either annually or biannually and also maintain it by taking a certain number of continuing professional education (CPE) hours specified by your state (Accounting CPA …show more content…
Requirements). Accounting is necessary to all business all over the world. They perform essential audits and other services. In the United States there are four major accounting firms called the ‘Big 4’. These firms are Deloitte Touche Tohmatsu Limited, Pricewaterhouse Coopers, Ernst & Young, and Klynveld Peat Marwick Goerdeler (Big 4 Accounting Firms- Who Are They?) (Beattie). Before there was the Big 4 there was the Big 8. Through acquisitions and mergers the eight was down to six by the end of the late 1980s (Beattie). In 1998 the six went down to five and the five was about to turn to four with one of the biggest scandals in history (Beattie). In 2002, the Enron accounting scandal destroyed what was Arthur Anderson and left the bits and pieces to be bought by the reaming Big 4 (Beattie).
With accounting comes responsibility. Some accountants take pride in what they do and keep everything fair and honest while others scheme to take as much money as they can from others. In 2008, Bernie Madoff was arrested for scamming his own clients out of their money. Bernard L. Madoff Investment Securities LLC was an investment firm on Wall Street founded in 1960 with Bernard himself and about dozen other people (Henriques, 2008). Over the years he had promised his clients high returns with barely any fees involved (Henriques, 2008). What was really happening was that he was paying his clients their own money back with no profit but from other investors (The 10 Worst Accounting Scandals of All Time). In the 1980s, when his firm was number 1, so many people looked at this as an opportunity. They thought they would receive such great profit back but, they were only fools of Madoff’s big game plan. This was all just a Ponzi scheme and tricked each of his clients out of nearly 65 billion dollars and left most of them with nothing but wishful thinking of money they thought they had (Henriques, 2008). Madoff always talked about how he made his first earning as a lifeguard at city beaches working hard and encouraging other to put their hard earned money into his investment (Henriques, 2008). After he told his sons about the scheme he was running, they both alerted the authorities and arrested him the next day for one count of securities fraud (Henriques, 2008). Bernard Madoff received 150 years in prison with $170 billion dollar restitution. Another famous scandal is the Freddie Mac Scandal back in 2003. Freddie Mac and Fannie Mae were Government Sponsored Enterprises that bought mortgages from banks and turned them into low risk securities which then were offered to investors (Malkin, 2003). They encouraged people to have home-ownership when buying these mortgages so everyone could afford a home no matter if they had low or middle class income (Mclean, 2005). This is how the whole operation went. Fannie and Freddie would buy a mortgage from a bank which then freed up the bank’s capital so the ban could then make more loans to its customers (Mclean, 2005). This is how Government Sponsored Enterprises worked and how Fannie and Freddie got many advantages that even bigger bank names didn’t get (Mclean, 2005). What all started the Freddie Mac Scandal actually ended being the Enron scandal (Mclean, 2005). When the Enron scandal blew up Freddie Mac had the same accounting firm as they did, Arthur Anderson, and proceeded to fire them immediately; after getting a new accounting team and looking over all the books it was caught that Freddie Mac had understated its profits for years (Mclean, 2005). As this was intentional the SEC came in and conducted a huge investigation that rattled Freddie Mac and tore it to the ground (The 10 Worst Accounting Scandals of All Time). Eventually, fines of $125 million dollars in fines were given to them as well as firing of their COO, CEO, and CFO. (The 10 Worst Accounting Scandals of All Time).
Works Cited
Accounting CPA Requirements.
(n.d.). Retrieved from accountingcoach: http://www.accountingcoach.com/careers/cpa-requirements.html
Beattie, A. (n.d.). Financial History: The Rise Of Modern Accounting. Retrieved from investopedia: http://www.investopdeia.com/articles/tax/08/accounting-taxes.asp
Big 4 Accounting Firms- Who Are They? (n.d.). Retrieved from accountingverse: http://www.accountingverse.com/articles/big-4-accounting-firms.html
Henriques, D. B. (2008, December 11). Top Trader Accused of Defrauding Clients. Retrieved from The New York Times: http://www.nytimes.com/2008/12/12/business/12scheme.html?ref=bernardlmadoff&_r=0
Malkin, M. (2003, June 16). Freddie Mac 's Accounting Scandal. Retrieved from National Center for Policy Analysis: http://www.ncpa.org/sub/dpd/index.php?Article_ID=5028
Mclean, B. (2005, January 24). The Fall of Fannie Mae. Retrieved from CNN Money: http://money.cnn.com/magazines/fortune/fortune_archive/2005/01/24/8234040/
The 10 Worst Accounting Scandals of All Time. (n.d.). Retrieved from Accounting Degree:
http://www.accounting-degree.org/scandals/