Accountancy Jargon Buster
ACCA – The Association of Chartered Certified Accountants (ACCA) is a global professional body for professional accountants. The ACCA qualification is one way of becoming a recognised qualified accountant.
Audit – An official inspection of a business’s financial records to ensure the accounts accurately represent the businesses finances. External audits (conducted by an external party) are conducted by law for large corporations with large earnings by an external party. Many companies choose to conduct their own internal audits too to spot any problems and keep the accounts shipshape.
Audit opinion – After conducting the necessary collation and analysis of a company’s financial information, the auditor has to submit an ‘audit opinion’ to the company based on their findings. There are different terms for opinions according to what they find – for example if the auditor believes the accounts are a true and fair representation, they will issue an ‘unqualified audit opinion’.
AAT – The Association of Accounting Technicians (AAT) is a professional body for Accountants which offers professional qualifications for the industry.
Assurance – Assurance goes hand-in-hand with audit and refers to the confidence, or reassurance a company gets from knowing an audit has proven the books are in order and can enable them to take on particular projects or investments if they wish.
Bean Counters – Here’s a nickname for accountants you may hear floating around!
GAAP – GAAP stands for Generally Accepted Accounting Principles. It’s an acronym used throughout the industry to refer to the accepted rules within accounting practice set out by the law and industry regulators.
Push-down accounting – An acquired company (one that has been bought by another company) has to change its accounting policies to match those of the company that bought it. ‘Push-down accounting’ refers to all of the accounting processes for this.
IFRS – This tasty little acronym stands for ‘International Financial Reporting Standards’. The global nature of business means that an international standard in accounting procedures is necessary, as different jurisdictions have their own standards.
The bottom line – Nothing to do with VLP! Simply a company’s net income (total income minus all costs, taxes etc.) for a certain accounting period. The phrase refers to the figure shown in the bottom line on a company’s income statement.