Chapter 1 Introduction to Professional Research. Learning Objectives Importance of research to professional accountants Importance of research to professional.

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Presentation transcript:

Chapter 1 Introduction to Professional Research

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

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

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

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. 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 Develop critical thinking skills

What is Research? The act of conducting research is a systematic investigation of an issue or problem utilizing the researcher’s professional judgment. 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. 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.

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

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

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

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

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

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

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

2. Collect the evidence Review relevant authoritative accounting or auditing literature and survey present practice. Review relevant authoritative accounting or auditing literature and survey present practice. Be familiar with available resources 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 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 Must evaluate cost/benefits

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

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

5. Communicate the Results Often in the form of a research memo 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 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 Avoid excess

Research Navigation Guide Functional Areas 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