A Graduate’s Guide to Accountancy Jargon

Impress employers and colleagues alike with your familiarity of financial services terminology from A to Z.

The accountancy sector possesses, like all other industries, an exclusive pool of jargon and acronyms accessible only to those who have spent some time working in the field. Some terms may even be company-specific, which means that only staff are privy to their meaning, and outsiders and newbies are excluded.

For this reason, graduates are usually discouraged from using jargon during their interviews due to the risk of misusing them; applicants sometimes get ensnared by the false perception that they’ll sound more educated when they riddle their speech with corporate mumbo jumbo. Unfortunately, this only exposes them to the risk of sounding like someone who’s trying too hard.

But this doesn’t mean that you should completely shun all traces of job-speak during your interview! Instead, feel free to sprinkle your replies with some industry-specific terms so that you come across as educated and updated, but not trying to butter up to your interviewer.

Here’s a list of common accounting and financial management lingo that may help boost your level of confidence as you walk into the interview room:

A

ACCA

Association of Chartered Certified Accountants.

ATTS

Association of Taxation Technicians Singapore.

ATA

Accredited Tax Advisor. A professional certification awarded by the Singapore Institute of Accredited Tax Professionals (SIATP).

ATP

Accredited Tax Practitioner. Another professional certification awarded by the SIATP.

Accounting

Accountancy revolves around the process of determining, evaluating and conveying important economic findings to relevant parties so as to help them make informed decisions. It examines the interaction between various financial elements and produces a summary of an organisation’s commercial health.

The three main processes of accountancy are: • Determining information: The accounting procedure begins with the collecting and recording of data.

Economic transactions are documented in a set of “accounts” that operate on a system known as “double-entry book keeping” • Evaluating information: The accountant then assigns economic values to the data gathered, such as assessing available assets and calculating the company’s profit or loss as made over a specific period of time, usually referred to as a fiscal or financial year. • Conveying information: Information is useless if not disseminated. Once the relevant data has been properly evaluated and documented, the accounting information obtained will be broadcasted and circulated amongst users in a variety of ways, such as in management accounts and financial statements.

Acquisitions

A component of a business specialisation called mergers and acquisitions (M&A), acquisitions usually include the counselling of clients on the purchase and sales of other firms. It usually involves a wide variety of deals, like the buyouts of small-and medium-sized enterprises (SMEs) to multinational takeovers.

Angel investor

An individual who contributes capital to the start-up of a company in exchange for non-cash returns, such as ownership equity and convertible bonds.

Audit

Audit is the examination and validation of the accuracy of a business’ financial statements, done primarily for tax purposes. Its primary purpose is to confirm that the financial statements of the corporation are a true and fair reflection of its financial health.

Usually performed by external accountancy firms in order to guarantee impartiality, audits are categorised under assurance and advisory, and are typically performed at a client’s premises.

Audit manager

The person in charge of organising and managing audit teams, each ranging from two to 20 people per team. Audit managers ensure all audits are properly completed, and also build and maintain good relationships with clients on the side. They’re also responsible for guiding audit teams to meet their full potential.

Audit principal

The senior member or partner of an audit firm who gives the final confirmation during an audit process in order to certify the accuracy of the client’s financial statements.

B

Business recovery and insolvency Business recovery experts are usually brought in when a troubled venture can still be steered through difficulties towards a revival and/or improvements.

Insolvency experts, on the other hand, are only consulted when an enterprise is caught in a bad enough state that it has to wind up. It then falls upon the insolvency experts to help the proprietors through the liquidation process by selling off marketable assets in order to pay creditors.

Business services

A mixed package of accounting and auditing services generally offered to major establishments as they tend to need additional services for development. It may also entail advisory or consultancy services where financial recommendations are customised to suit the growth, goals and improvement of a company’s management systems. check the previous records and financial statements of the target company so as to ascertain its exact value, or to unearth underhanded business deals.

This usually entails professional reports by accountants and solicitors, and the whole process must be treated with the utmost confidentiality.

C

Capital gains tax

Tax that’s charged when a fixed asset is sold at a higher price than its acquisition price. While this specific form of tax isn’t applicable in Singapore, any gains a local company makes by selling off assets will still be taxed as incoming revenue.

CA Singapore

Chartered Accountant of Singapore. This qualification is managed by ISCA.

CIMA

The Chartered Institute of Management Accountants.

CIOT

The Chartered Institute of Taxation. While accreditation from this body isn’t mandatory for tax practitioners in Singapore, its CTA certification is still recognised locally, and may be useful for those who intend to work in tax outside of Singapore.

CIPFA

Chartered Institute of Public Finance and Accountancy. Although this organisation is based in the United Kingdom (U.K.), it cooperates with global accounting bodies to advance the field of public sector accountancy worldwide.

CPA Australia

An Australia-headquartered accounting body that offers the CPA qualification.

Completion work

The last step during an audit process where auditors carry out a final check to ensure that the audit is satisfactorily completed and sufficient audit evidence has been compiled for a sound audit opinion to be formed.

Computational work

The process of preparing and compiling sets of financial statements.

Corporate finance

The field of finance that companies turn to when they want to acquire other businesses. An accountancy firm – usually the purchaser’s auditors – will be appointed by the purchaser to evaluate the financial health of the target organisation prior to the actual acquisition. These auditors will also be responsible for communicating the takeover details and negotiating a decent purchase price with the target organisation.

Corporate recovery

Corporate recovery teams are usually roped in to assist ventures in financial difficulties and get them back on track. They’re usually engaged during the early stages of a s crisis as chances of recovery are typically higher at that point.

On the other hand, should a company be left with no option but to close up, the recovery team will assist with the selling of assets, the laying off of staff and the winding up of the enterprise in general.

Corporate tax

A levy that’s charged to a firm’s profits. Managed by the Inland Revenue Authority of Singapore (IRAS), different rates of tax are charged for different types of businesses, and for different levels of profit.

CTA

Chartered Tax Advisor. A CTA’s an expert in taxation matters who has obtained certification from the Chartered Institution of Taxation (CIOT), in Singapore, tax specialists are governed by SIAPT.

D

Debtors ledger

Used to document the details of an organisation’s debtors.

Disposals

When a business trades off its asset(s), or when a corporation liquidates part of its outfit.

Due diligence

The process of enquiries performed when a potential investor or buyer wants to invest in, or acquire, an enterprise. They

F

Financial accounting

Financial accounting is a catch-all term for the recording of economic transactions performed by an organisation, such as bookkeeping, and the subsequent preparation of financial statements from those accounts.

The financial information obtained is usually targeted towards other user groups like business owners, company shareholders, or IRAS, instead of executive management.

Fiscal year

Also referred to as a financial year, it consists of a period of 12 consecutive months which a business selects as its accounting period. Notably, it doesn’t necessarily have to follow the calendar year.

Fixed asset

Physical assets that are used in a company’s operations, usually lasting for more than a year.

Forensic accounting

A field of accountancy that caters to solving civil, criminal and insurance issues. Professionals in this field employ their knowledge of accountancy and IT alongside investigative skills to aid in the examination of evidence in regards to any allegations made in court.

Their clients are mostly lawyers and insurance establishments, although they may sometimes be approached by individuals seeking such services for personal disputes.

I

ICAEW

The Institute of Chartered Accountants in England & Wales.

Income tax

A percentage of levies charged on net personal and business revenue.

Inheritance tax

Tax charged on the properties that a person receives through inheritance or legal succession, usually determined by the current value of the possessions. Singapore used to refer to this as estate tax, but abolished it in 2008.

Insolvency

Highly related to a company’s liquidity, insolvency occurs when an institution or individual is unable to meet its debts and financial commitments when they’re due. Debts are paid through cash, so even if an enterprise’s total assets surpasses its liability, the organisation will still be considered insolvent if the assets cannot be converted into immediate cash to pay off its liabilities.

IRAS

Inland Revenue Authority of Singapore.

ISCA

Institute of Singapore Chartered Accountants.

Middle markets

Medium-tier establishments that are too big be considered an SME, but not big enough to be publicly-listed.

N

Not-for-profit

Organisations include clubs, societies and associations that are created for the purpose of assisting social growth and improvement. They usually champion social welfare and charity issues, and rarely gain profit.

Even if they do make revenue from the activities they run, any money made cannot be used for the personal benefit of the proprietor. Rather, the money should be channelled back to the body to be used for the benefit of society.

O

OMB

Owner-managed business.

M

Management accounting

Management accounting is about providing financial information to the executive management of a firm. Accountants are required to generate both regular and specially-requested reports to assist management as they monitor the company’s performance and plan future business pursuits.

Management consultancy

From an accountancy standpoint, management consultancy refers to the activity of engaging qualified accountants for their advice on other matters regarding the management of a company. This can range from financial strategy planning to HR issues, as well as matters relating to marketing and IT.

As these accountants are usually expected to possess quite a bit of business experience in order to give more in-depth advice to their customers, this is a role that only senior accountants with years of exposure to various businesses will be able to take on.

P

PAYE

Pay-As-You-Earn, an income tax payment system where an employee’s tax and other national insurance contributions are deducted from his or her wages before it’s paid out to the employee.

Private client services

A service that caters to high-net-worth individuals where the accountants engaged will manage the customers’ accounts and investments for them, as well as construct long-term financial planning that’s personalised to their needs and goals.

Public practice

Loosely termed “freelancing” accountants, such practices provide accountancy services to clients as independent professional consultants instead of as employees of a firm.

Public sector accountancy

The practice of accountancy in the government, local authorities and public corporations.

S

Seed investment

The initial funds used for the establishment of a company. It usually comes from the founder’s – or cofounder’s – personal assets, but can also be made by banks, venture capitalists, or angel investors.

SQP

Singapore Qualification Programme, a compulsory programme to take if one wants to practise as a chartered accountant in Singapore.

T

Taxation (Tax)

Tax work is usually divided into two major disciplines: • Tax compliance: This area of work entails filling in and submitting tax returns on clients’ behalf. Duties include compiling the necessary documents required for filings, ensuring compliance with tax agency requirements and informing clients if there are any tax changes which affect them • Tax advisory and planning: A consultancy-oriented area of work where tax professionals analyse an organisation’s financial accounts, and recommend changes as to how finances can be structured for minimum taxation within the boundaries of local legislation.

These two tax disciplines aren’t isolated from each other. In fact, if the best service is to be provided to clients, cooperation from both sides is necessary. Tax professionals working in tax compliance will sometimes need to refer to tax advisors for updated information during the course of their work, and vice versa.

Workload-wise, tax professionals tend to spend more time working in the office, and keep regular hours better than auditors do. There are also numerous sub-specialisations within the area, and each has their own specific set of jargon.

Tax liability

A person’s tax commitments, derived mainly from owned properties and earned income.