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Chapter 1

Chapter 1. Introduction to Professional Research. Learning Objectives. Importance of research to professional accountants Definition and nature of professional accounting research US Securities & Exchange Commission ’ s view of research. Learning Objectives (cont.).

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Chapter 1

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  1. Chapter 1 Introduction to Professional Research

  2. Learning Objectives Importance of research to professional accountants Definition and nature of professional accounting research US Securities & Exchange Commission’s view of research

  3. Learning Objectives (cont.) • Role of research within a public accounting firm • Basic steps of the research process • Importance of critical thinking and effective communication • Importance of Research on CPA Exam

  4. Research importance Changes in law, new services, technologies, professional standards. Accounting, attestation, tax compliance, forensic accounting, fraud examinations, tax planning.

  5. Research Importance (contd.) Must have a clear definition of the problem, using professional databases to search for relevant authorities, reviewing authoritative literature, evaluating alternatives, drawing conclusions, and communicating results. Develop critical thinking skills

  6. What is Research? The act of conducting research is a systematic investigation of an issue or problem utilizing the researcher’s professional judgment. Accounting & Auditing Research The act of a systematic and logical approach and documenting evidence underlying a conclusion relating to an accounting or auditing issue or problem currently confronting the accountant or auditor.

  7. Accounting & Auditing Research • Theoretical research • Attempt to create new knowledge or add to a body of knowledge • Applied research • Investigates an issue of immediate practical importance • A priori – before the fact – should a client open a store at a certain location • A posteriori – after the fact – tax return

  8. Nature of Research Most important step is problem identification! Must be able to conduct effective and efficient research Effective – proper recording, classification, and disclosure, in compliance with authoritative pronouncements Efficient – meet deadlines and managerial costs

  9. Critical Thinking and Effective Communication Critical Thinking Must know how to think Be able to identify a problem, gather relevant facts, analyze the issue, synthesize and evaluate alternatives, and develop appropriate alternatives.

  10. Critical Thinking and Effective Communication (contd.) • Effective Communication • Coherence, conciseness, good use of standard English, and achievement of the purpose for the intended reader (memo if internal, report if external)

  11. Research on the CPA Exam Each part except for BEC currently has a research component consisting of a simulation. Must be able to research a database and to identify the exact citation/answer to a posed problem.

  12. The Research Process 1. Investigate and analyze a clearly definable issue or problem 2. Use an appropriate scientific approach 3. Gather and document adequate and representative evidence 4. Employ logical reasoning in drawing conclusions 5. Support the validity or reasonableness of the conclusions

  13. 1. Identify Relevant Facts Must define the problem!!!!!! Why and what At first, it is better to gather too many facts than too little as you are learning the research process. Exact source of the issue, justification for the issue, and scope

  14. 2. Collect the evidence Review relevant authoritative accounting or auditing literature and survey present practice. Be familiar with available resources You may have to develop your own resolution based on a series of facts, if a clear cut answer does not exist Must evaluate cost/benefits

  15. 3. Analyze the Results and Identify the Alternatives Support each alternative with authoritative literature or theoretical justification with concise documentation. Properly document alternatives from organized, collected information.

  16. 4. Develop Conclusion After analyzing alternatives, including economic consequences, develop conclusion. Often, only the final conclusion will be presented to the client (alternatives may be in the appendix)

  17. 5. Communicate the Results Often in the form of a research memo Statement of facts; clear, precise statement of the issue; brief straightforward conclusion; discussion of authoritative literature; explanation of how it applies to set of facts Avoid excess

  18. Research Navigation Guide FunctionalAreas Financial Accounting & Reporting SEC Issues Taxation Managerial Accounting Audit/ Attestation Governmental/ Not-for-profit Accounting Other Areas Topic (Issue) Assets Liabilities Equity Revenues Expense Sub-Topics Cost of Sales Compensation R & D Etc. Section Recognition Measurement Disclosure

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