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Tag: career in chartered accounting

5 Effective Steps to Safeguard Financial Integrity

Posted on by Imarticus

The financial services sector is vast and covers various financial accounting. Hence, the core objective of anti-money laundering (AML) regimes is protecting the financial system’s integrity.

The AML plays a well-established role in protecting and facilitating functional financial systems.

In this AML regime, banks remained the initial focus for a long time as money transactions occurred mostly via banks. Apart from the banking services, the AML regime eventually went beyond to cover other financial and non-financial institutions.

This article presents five effective steps that will help in safeguarding financial integrity.

Read on to discover a few ways to secure your financial accounting system.

Financial Accounting Meaning

Financial accounting is a segment of accounting that deals with a variety of activities, such as recording, analysing, and reporting transactions.

These procedures are the outcome of company activities that occur over time. Financial statements such as the cash flow statement, balance sheet, and income statement are generated to provide an overview of these operations.

These statements record the performance of a company’s operations over a time period.

Financial accounting may be carried out under two methods— the accrual method, wherein recording is done for expenses of items that have not been paid yet, and the cash method, where recordings are done only for cash transactions.

5 Ways to Effectively Secure Financial Integrity

The steps below ensure the process of keeping financial integrity intact in financial accounting:

1. Authentication of transactions

This step entails confirming the identity of the person initiating the transaction. This security mode applies to digital payment customers, customers who visit the banks in person, customers who use credit/debit cards at either POS terminals or ATMs, and all customers who have access to banks’ data.

Initially, the authentication was simpler as it required only an ID with a password or a PIN. However, of late many banks have implemented two-factor authentication and multi-factor authentication. This authentication process reaffirms the person’s identity in better terms.

Another technique of authentication implemented by banks is biometric authentication. In this technique, the customer’s identity is verified through behavioural biometrics, i.e., their interaction with banking systems like IVR.

2. Maintaining audit trails

Passbooks always carry the history of banking transactions as a statement. In addition, banking systems support an audit trail whenever a customer interacts with the systems. This applies to both online and offline customers. Every time a customer interacts, the details of the interaction get recorded.

The data extracted from audit trails is backed up daily and archived at specific intervals without being completely dismissed.

3. Securing infrastructure

A secure infrastructure stores the database systems and servers with certain boundary establishments that secure the data. Any core banking system generally encodes production data. Important data such as customer name, bank account number, and address are mandatorily concealed if testing is required. Access to production systems, under any circumstances, is deprived.

Vendors dealing with infrastructure generally differ from the ones dealing with applications. Special equipment is usually given to bank employees that prohibits access to personal emails, USB ports, etc. They can only retrieve the banks’ network using public Wi-Fi over a VPN.

4. Securing processes

There have been several security implementations by the banks. These implementations include different modes of security for different categories of people. For instance, KYC (Know Your Customer) updates are for customers, NDA (Non-disclosure agreement) is for vendors and employees, etc.

DLP or Data Loss Prevention solutions enable banks to diminish insider threats. These solutions are also helpful in meeting the requirements of GDPR, a data protection regulation.

Implementations of processes are also performed at local and global regulations levels to ensure that the processes are aligned with the requirements.

5. Communicating regularly

Banks communicate with their customers regarding authentication procedures, system upgrades, generating account statements, etc. If any unforeseen activity occurs in the accounts, customers can set alerts to get notifications.

There are various modes of communication at customers’ disposal, and they are kept flexible for convenience. Hence, customers can opt for at least one of the modes to keep track of their accounts.

Conclusion

Safeguarding financial integrity is one of the core responsibilities of financial accounting. With the various implementations of security processes, it can be said that financial integrity is in safer hands.

The ways mentioned above are efficient in protecting financial integrity against data breaches.

If you are interested in chartered accountancy and aspire to become a CA, Imarticus Learning’s Association of Chartered Certified Accountants can be your best bet. The course includes all the domains, such as management, finance, accounting, taxation, etc., required to build a flourishing career. Head to the website immediately to learn more about the course.

 

Understanding Unique Accounting Requirements for Non-Profit Organisations

Posted on by Imarticus

Non-profit accounting is a subfield concerned with non-profit organisations’ financial administration. This field of accounting involves a distinct approach to financial management. It is designed to align with the unique requirements of non-profit organisations.

best association certified chartered accountant course

In this blog, we will cover non-profit accounting in detail. We will explore its distinctive demands and practices.

Readers will gain a comprehensive idea of how financial management operates within the context of organisations dedicated to making a positive impact on society.

Keep reading to expand your knowledge in this essential area of accounting.

Enrolling in an ACCA course can help prospective chartered accountants build a fulfilling career in non-profit accounting.  An ACCA certification will make you more employable in many industries worldwide.  

What Is a Non-Profit Organisation?

A trustee usually oversees a non-profit organisation. It operates without a profit motive. Its mainstay is often charitable entities, which sustain themselves through donations, though they may also generate revenue from avenues like membership charges, fundraisers, and grants. 

This distinct sector’s hallmark is its focus on social or humanitarian goals, channelling resources towards positive societal impacts rather than financial gains. This organisational model embodies a commitment to bettering communities and fostering change through various funding streams supplementing its philanthropic mission.

What Is Non-Profit Accounting?

Nonprofit accounting is a distinctive procedure through which nonprofit organisations strategise, document, and disclose their financial activities. In contrast to for-profit entities driven by profit generation, nonprofits emphasise the accountability facet of accounting. 

Their paramount concern lies in upholding transparency and responsibility. This entails adhering to a specialised framework of regulations and methodologies that ensure they remain answerable to their benefactors and supporters. Nonprofits, while still managing financial resources, emphasise demonstrating how funds are utilised to further their mission and bring about positive social impact. 

The foundation of nonprofit accounting is built upon financial viability and the ethical and moral obligation to showcase prudent financial stewardship, fostering trust within their community of stakeholders.

What sets non-profit accounting apart from for-profit accounting?

Accounting for non-profits differs from accounting for for-profits in various ways:

  • Net Worth vs. Equity: Non-profit organisations use “net worth” instead of “equity” on their balance sheets. This is because they don’t have equity stakeholders. For-profits have equity stakeholders who hold ownership shares, reflected in the equity section of the balance sheet.
  • Donor Limitations: Net worth is categorised as “with” or “without” donor restrictions. Donor-restricted assets are designated for specific programmes, while unrestricted assets can be used for any purpose. For-profits aim to generate profits for shareholders, shaping their financial strategies around maximising financial gains.
  • Programme-based Accounting: Non-profits often operate distinct programmes, each tracked individually to show income and expenses per programme. For-profits often employ consolidated accounting systems, focusing on overall financial performance rather than programme-level details.
  • Management and Administration Costs: These represent general overhead for non-profits. Minimising these costs is crucial, allocating more funds to services. In for-profits, overhead costs are managed, but the balance between cost efficiency and investment in growth opportunities differs due to profit-seeking goals.
  • Fundraising Costs: For non-profits, fundraising costs are allocated to funding categories tied to sales and marketing efforts, like grant proposals and solicitations. In the case of for-profits, marketing and sales costs are integral for generating revenue, primarily aiming to maximise profitability rather than funding allocation.
  • Financial Statements: Non-profits use unique statements. The income statement becomes the “statement of activities,” and the balance sheet transforms into the “statement of financial position.” Both produce cash flow statements. For-profits use traditional income statements and balance sheets, with cash flow statements as standard practice.
  • Budgets: Non-profits heavily rely on budgets due to limited income sources. Tight spending control necessitates consistent budgeting based on reasonable forecasts and promptly investigating cost deviations. While budgets are common for for-profits, they may focus more on achieving revenue and profit targets than strict spending control, as in non-profits.

Conclusion

Accounting for non-profit organisations can be a tricky game. However, with proper training and exposure, one can get lucrative opportunities as an accountant for non-profit organisations. The Association for Chartered Certified Accountants, UK certification can be helpful if you want to delve deeper into the audit and accounting industry. 

It is the world’s oldest CA programme offered by the ACCA body in the United Kingdom. The programme trains professionals in various fields, including forensic auditing, consulting, investment banking, taxation, management, and finance. 

Imarticus Learning offers a comprehensive ACCA course to crack the ACCA exam easily. It ensures you get practical exposure to the field through various internship opportunities. Head to the website to know more!