586

figures to show 3)______________ on borrowed money, the cost of new equipment purchased, 4)______________. At the end of the financial year, 5)_____________ before and after taxes, and the amount of profit that 6)______________. All this shows that a satisfactory accounting system 7)______________; and without it management 8)____________, and would not be able to make intelligent decisions affecting its profit-making activities.

5. Read the definitions of the following words and complete the sentences using one of them.

Accountancy (noun) is the theory of keeping financial records.

Accounting (noun / adjective) refers to the activity of keeping financial records. Account (noun) is a record of money received and spent.

Accountant (noun) is a person who keeps and works with financial records.

1) Can you check that the figures have been entered correctly in the bank

_____________?

2)He’s at university studying ______________.

3)The management of the company have not decided on their ______________ policies.

4)A bookkeeper writes details of financial transactions in the ______________.

5)Most people in the profession read ______________ magazines and journals in order to stay informed.

6)She’s been working as an _____________ with this firm for several years now.

7)The directors of the company approve the _______________ at the end of the ___________ year.

8)The chief _____________ has completed the draft _____________ for this year.

9)Each branch maintains its own full _______________ system.

10)_______________ is really not an exact science.

11)A business manager needs some ________________ knowledge in order to understand what he reads in the company _____________.

6.Scan the text and number the statements after the text so that they are in the same order as the ideas in the text.

Accounting is also concerned with reporting on the effects of past decisions. But one should consider whether this is done for its own sake or whether it is done in order to provide information which it is hoped will prove helpful in current and future decisions. We contend that knowledge of the past is relevant only if it can be used to help in making appropriate decisions but we cannot redo the past. Thus, the measurement of the past results is a subsidiary role, but because of the historical development of accounting and, perhaps, because of the limitations of the present state of the art, «backward looking» accounting sometimes appears to be an end in itself and not as a

means that will help in achieving a more fundamental objective.

«Foundation in Accounting», R. Lewis and I. Gillespie

	Statement	Order
a)	Financial information about the past is only useful if it helps future decisions.
b)	The history of accountancy has made it appear to concentrate on the past.
c)	Accounting can indicate the results of past actions.	1
d)	Showing the financial results of past actions can be an aid to decision-making.
e)	Showing the financial results of past actions can be just to record what happened.
f)	Describing the past is a less important role of accountancy.
g)	We can affect the future but we cannot change the past.

7. Complete the scheme with the words below. Give your comments on the Accounting Information System.

There are four sequential stages of an accounting information system. The first two stages are concerned with preparation, whereas the last two stages are concerned with using the information collected.

Inform ation	In form ation	In form ation	In form ation
____________	___________	___________	____________

(analysis identification recording reporting)

8.Decide whether the statements below are true (T) or false (F). Comment your answers.

1)Companies are told which accounting policies to use. ____

2)Companies can change their accounting policies whenever they like, as long as they disclose this in their Annual Report. _____

3)Companies could produce several profit figures, depending on how they depreciated their assets, valued their inventory, etc. ____

4)There is only one correct interpretation of a company's financial position, and company accounts must show this. _____

5)In a lot of countries, companies do not record the current value of their assets. ____

6)In countries with high inflation, companies value their assets at their current replacement cost.

_____

9.Translate the following extract from Russian into English.

Что такое бухгалтерский учет?

Почему множество предпринимателей попадает в беду? Причин много, но важнейшая состоит в том, что они недооценивают в своей работе бухгалтерский учет и бухгалтера.

Если на предприятии учет поставлен хорошо, а бухгалтер обладает необходимой информацией, то у менеджера всегда будет полноценная и достаточная информация для принятия действенных управленческих решений.

Зная, как меняется объем и состав имущества предприятия, каковы его обязательства, возрастают ли они или наоборот уменьшаются, администратор всегда будет иметь представление о том, работает ли его предприятие с прибылью или в убыток, сможет ли оно вовремя погасить долги, надо ли думать о банкротстве или для этого нет никаких оснований.

Все это делает бухгалтерский учет необходимым инструментом управления. Управление — это умение принимать решения, а их нельзя принимать без знания об участниках хозяйственных процессов. Эти знания называются информацией. Такая бухгалтерская информация охватывает всю экономическую жизнь, и ее регулирование попадает под действие специального законодательства, которое дает следующее определение: «Бухгалтерский учет представляет собой упорядоченную систему сбора, регистрации и обобщения информации в денежном выражении об имуществе, обязательствах организаций и их движении путем сплошного, непрерывного и документального учета всех хозяйственных операций».

SUPPLEMENTARY READING PRACTICE

1. Read the following text and:

(a) fill each gap with a suitable word from the box;

accountants	back	number	members
principles	profession	role	throughout
organized	creation	organizations	functions

Accountancy Profession

The organization of the accountancy profession dates 1)____________ to January 1853 when eight accountants in Edinburgh, Scotland met for the purpose of seeking recognition of their 2)______________ as a separate and distinct profession. The discussion of their professional situation resulted in the 3)__________ of the Institute of Chartered Accountants of Scotland. Since that time numerous professional accountancy organizations have been established 4)_____________ the world. The process is going on. In 1977 the International Federation of Accountants (IFAC) was established. Its initial membership was 63 organizations representing 49 countries, but within a decade, the 5)_______________ grew to 105 organizations from 79 countries. The establishment of the IFAC recognized the need for international coordination of the objectives of professional accountancy organizations and means of achieving those objectives. Accountancy is an international profession. Under the conditions of global interdependence of countries through trade, finance, and crossborder investments, the 6)______________ of the IFAC is becoming more important. The size and principles of accountancy 7)________________

vary. Some organizations comprise accountants working in commerce, industry, and government organizations, as well as in public practice (auditing), others consist solely of members in public practice.

The main 8)_________________ of the accountancy profession may be summarized as follows:

–to protect the public by ensuring the observance by its members of the highest 9)______________ of professional and ethical conduct;

–to promote and increase the knowledge, skills, and proficiency of members of the organization and students;

–to preserve the professional independence of 10)________________ in whatever capacities they may be serving;

–to maintain the legitimate rights of its 11)______________. IFAC was 12)_________________ in recognition of the growing changes towards internationalization of the world economy, business and trade.

Words you may need:

Institute of Chartered Accountants of Scotland — Институт Присяжных Бухгалтеров Шотлан-

дии

observance (n) — соблюдение conduct (n) — поведение proficiency (n) — (зд.) опыт to preserve (v) — сохранять

(b)sum up the text in 5–7 sentences and present your summary;

(c)name the most important events in the development of the accountancy profession in the world.

2. Read the text and give its key idea. Discuss the following question:

Why has accounting become too interesting?

In recent years, accounting has become front-page news both in the USA and Europe and has become a major talking point among those connected with the world of business. Unfortunately, the attention that accounting has attracted has been for all the wrong reasons. We have seen that investors rely on financial reports to help to keep an eye on both their investment and the managers. However, what if the managers provide misleading financial reports to investors? Recent revelations suggest that the managers of some large companies have been doing just this.

Two of the most notorious cases have been those of Enron, an energy-trading business based in Texas, which was accused of entering into complicated financial arrangements in order to obscure losses and to inflate profits, and WorldCom, a major long-distance telephone operator in the US, which was accused of reclassifying $3.9 billion of expenses so as to falsely inflate the profit figure that the business reported to its owners (shareholders) and to others. In the wake of these scandals, there was much closer scrutiny by investment analysts and investors of the financial reports that businesses produce. This has led to further businesses, in both the US and Europe, being accused of using dubious accounting practices to bolster profits.

Various reasons have been put forward to explain this spate of scandals. Some may have been caused by the pressures on managers to meet unrealistic expectations of investors for continually rising profits, others by the greed of unscrupulous executives whose pay is linked to financial performance. However, they may all reflect a particular economic environment.

The US authorities have made it plain that they view the actions of unscrupulous executives with some hostility. In July 2005, Bernie Ebbers, the former chief executive of WorldCom was sentenced to 25 years in prison for his part in the fraud.

Whatever the causes, the result of these accounting scandals has been to undermine the credibility of financial statements and to introduce much stricter regulations concerning the quality of financial information.

There are some comments suggesting that when all appears to be going well with a business, people can be quite gullible and over-trusting.

The thoughts of Warren Buffett

Warren Buffett is one of the world's shrewdest and most successful investors. He believes that the accounting scandals mentioned above were perpetrated during the ‘new economy boom’ of the late 1990s when confidence was high and exaggerated predictions were being made concerning the future. He states that during that period:

You had an erosion of accounting standards. You had an erosion, to some extent, of executive behaviour. But during a period when everybody ‘believe’, people who are inclined to take advantage of other people can get away with a lot.

He believes that the worst is now over and that the ‘dirty laundry’ created during this heady period is being washed away and that the washing machine is now in the ’rinse cycle’. However, he points out that: “It's only in the rinse cycle that you find out how dirty the laundry has been.”

Source: The Times, Business Section, 26 September 2002

3. Read the text and say what it is about. Think about the title of the text and be ready to describe professional responsibilities of the Accountant.

Twenty years ago Accountants were seen as respectable but boring people who did something complex with figures.

Today, things have changed. With the beginning of the world economic revolution, the development of market relations between countries with different economies, financial expertise has

become necessary. New styles of management are now running both new and traditional types of business and more than ever before, enterprises require the guidance of a professional highlyqualified Accountant.

Nowadays, the Accountant’s job is not only to do books and to make a balance sheet but also to solve real financial problems, create effective business solutions.

The knowledge in financial management and financial analysis together with an analytical mind enables the Accountant to make up a business plan and to find sources for funding a company’s early development. As organizations grow, an understanding of business law is essential. In ongoing business management Accountants are required to minimize tax liabilities and review major policy decisions. When businesses begin to go off track it is the Accountant who is called in. His skills and abilities for practical problem solving are at premium. The Accountant can redirect valuable assets to more profitable areas, identify and isolate unprofitable operations, limit the financial impact of collapsed company and ensure that suppliers and associated organizations suffer as little as possible.

The bottom line of any successful business is profit. Therefore, an understanding of the individual factors, which make a company profitable, or unprofitable, is essential. The Accountant can help to run a company towards greater profitability.

As recognized specialists in business development, business law and business management, auditing and taxation, Accountants are highly-marketable people.

Many Accountants move into the fields of industry, government and commerce. Some of them choose banking and financial services, other oil and transport companies or manufacturing industries. Some choose management consultancy, others start their own companies.

4. Read the text and say what the Chart of Accounts in Russia is and what it provides. Open the brackets putting the verbs in the correct form.

In the West each company (to have) a certain freedom in the design of its own set of accounts so as to reflect the nature of its business and the needs of its management in directing that business. In Russia this process (to regulate) centrally, there (to be) a tradition of using a uniform Chart of Accounts.

The first uniform Chart of Accounts (to appear) in Russia in the 1920s. It (to intend) for industries only and was revised periodically. In 1961 the first national uniform Chart of Accounts (to create) and put into operation. With only insignificant changes, this chart (to use) in accounting practice until 1992. In 1992 the transition to a new chart (to make). The current Chart of Accounts (to consist) of about 100 accounts and 60 subaccounts grouped into 10 main sections. All accounts included in this uniform chart (to call) «synthetic» (main or summary) accounts. On the basis of this chart, each enterprise also may create a set of «analytic» (supporting) accounts if needed to supplement the synthetic accounts. The Chart of Accounts can be considered the most important element of the accounting system in Russia because it (to determine) the accounting practice and other elements of the system.

The Chart (to provide) for the following: an interrelated classification, grouping, and generalization of information about business activities of enterprises, a unified methodological basis for the organization of accounting in the whole national economy, an effective system of control of indicators for business activities, comparability of accounting procedures used and information generated in the accounting systems of different enterprises, etc.

Words you may need:

set of accounts — перечень счетов synthetic account — синтетический счет analytic account — аналитический счет

interrelated classification — взаимосвязанная классификация grouping — группировка

indicator (n) — показатель

5. Make a free translation of the following text into English and:

(a)write down key statements (7–10 sentences);

(b) give a presentation on International Accounting Standards.

Значение международных стандартов финансовой отчётности в формировании системы бухгалтерского учета

Международные стандарты финансовой отчетности (МСФО) разрабатываются независимой международной организацией — Советом по международным стандартам финансовой отчетности (International Accounting Standards Board), который расположен в Лондоне.

Совет по международным стандартам финансовой отчетности — независимая организация, члены которой утверждаются Комитетом по назначению. Члены Комитета, в свою очередь, номинируются на должность в процессе широкого обсуждения Международной федерацией бухгалтеров (МФБ) с компаниями и академическими кругами. МФБ насчитывает 156 бухгалтерских ассоциаций, в которые входят 2 млн. членов, в том числе из России. Деятельность Совета по международным стандартам поддерживается и финансируется на добровольных началах аудиторскими фирмами, ассоциациями и коммерческими организациями.

Совет проводит консультации по всем своим проектам. Аудиторские фирмы, компании, академические круги и любой желающий могут представить письмо-комментарий в поддержку или с критикой будущего стандарта. При недостаточной поддержке нового стандарта со стороны будущих пользователей и после анализа конструктивной критики новый стандарт может претерпеть значительные изменения или вообще не быть принят. Для одобрения решения о принятии, корректировке или аннулировании стандарта МСФО необходимы голоса восьми членов Совета из четырнадцати.

Наиболее известными национальными стандартами являются Общепринятые принципы бухгалтерского учета США (US GAAP).

Считается, что МСФО являются наиболее разработанными бухгалтерскими стандартами в мире. В большинстве стран отчетность по МСФО должны составлять все крупные предприятия.

В отличие от МСФО национальные стандарты многих стран, как правило, представляют собой свод подробных правил, детально описывающих порядок учета хозяйственных операций и исключений из этих правил. Однако следует отметить, что российские стандарты становятся все более близкими к МСФО, а действующие в настоящее время Принципы Бухгалтерского Учета почти полностью соответствуютмеждународнымстандартам,хотянекоторыеразличиясохраняются до сих пор.

6. Scan the text and single out the main facts. Present them in a short review.

For many years the accounting system in Russia was criticized by Western academicians for its failure to adhere to Western accounting principles. Such criticism is no longer valid. Since the early 1990s, accounting in the Russian Federation has changed significantly.

The year 1991 was crucial in accounting development in Russia due to the following three events:

1)publication of the new Chart of Accounts;

2)production of a new set of financial statements similar to those used in Western account-

ing;

3)beginning of preparations for radical change in accounting and auditing regulation.

In 1992, Regulation on Accounting and Reporting in the Russian Federation was approved by decree of the Government of Russia. The document diminished the control function of accounting and declared the following equal objectives of accounting:

a)maintenance of control over the availability, movement, and use of material, manpower and monetary resources according to approved norms and estimates;

b)provision of full and reliable information about the performance and financial results of an enterprise, which is indispensable for operational management as well as for investors, suppliers, customers and creditors, tax, financial, and bank authorities, and others interested in the financial and business activity of the enterprise.

It would not be an exaggeration to say that an essentially new Russian accounting system has come into being with the introduction of the new Chart of Accounts, which includes greater cohesion to international accounting norms.

The essential elements of accounting methodology are as follows:

•Documents form the legal foundation for recording transactions according to the approved rules of bookkeeping. No entry should be made unless the bookkeeper has the primary document.

•Taking inventory is the sole means of controlling the physical safety of assets and their valuation. It is the main method of supervising persons who are financially responsible for assets. The safeguarding of assets is always entrusted to a financially responsible person.

•The uniform Chart of Accounts, which provides the nomenclature of accounts and correspondence among them, must be used by all types of enterprises.

•Double entry is a traditional accounting concept that is accepted in Russia as it is in all developed countries.

•Internal reporting includes the general ledger, summary (principal) account registers, primary documents, inventory data, etc. External reporting includes the Balance Sheet, Statement of Financial Results and Their Uses, and supplementary forms that are uniform and obligatory for all types of enterprises. Non-profit organizations and banks have their own uniform charts of accounts and financial reporting forms. Reporting is carried out according to the statutory regulation and presented within strictly prescribed time limits.

•Information generated by the accounting system must be timely, reliable, full, accurate, and objective.

•Historical cost accounting is the only method of internal and external reporting permitted.

Words you may need:

valid (adj) — имеющий силу, юридически действительный indispensable (adj) — необходимый, незаменимый cohesion (n) — связь

primary document — первичный документ taking inventory — инвентаризация

sole (adj) — единственный

financially responsible person — материально-ответственное лицо nomenclature (n) — номенклатура (перечень наименований)

correspondence (n) — корреспонденция (счетов) internal reporting — внутренняя отчетность external reporting — внешняя отчетность general ledger — главная бухгалтерская книга summary account register — сводный журнал

Statement of Financial Results and Their Uses — Отчет о финансовых результатах и их использовании

financial reporting form — бланк финансовой отчетности

historical cost accounting — учет на основе стоимости приобретения

7.Read the information and analyse the scheme below.

Accounting and User Needs

For accounting information to be useful, the accountant must be clear for whom the information is being prepared and for what purpose the information will be used. There are likely to be various groups of people (known as «user groups») with an interest in a particular organization, in the sense of needing to make decisions about it. The most important of these groups are shown in the following scheme.

	Собственники	Клиенты	Конкуренты
		_______________
	______________		______________

Кредиторы	Управляющие
______________	_______________
	BUSINESS
	ORGANISATION
Поставщики	Органы власти
_______________	______________

	Работники	Инвестиционные	Представители
			общественности
	______________	аналитики
			__________________
		_________________
		____________

(a)Give English names to the user groups;

(b)Suggest what sort of decision each group of accounting information users is likely

to make. Characterize each group.

are interested in information about the stability and profitability of 1) ________________ their employers. They also need information which enables them to assess the ability of the enterprise to provide remuneration, retirement benefits and

			employment opportunities.
			need financial information relating to the enterprise to assess how ef-
			fectively the managers are running it and to make judgements about likely
2)	________________		levels of risk and return in the future. They are also involved with decisions
			on the employment of senior managers. Here past performance of the busi-
			ness is assessed.
			need	financial information about		an enterprise	in order
3)	_________________		to assess its ability to meet its obligations, to pay interest and to repay
			the amount borrowed.
			need information that enables them to determine whether
			amounts owed to them will be paid when due. They are likely to be
4)	_________________		interested in an enterprise over a shorter period than lenders unless
			they are dependent upon the continuation of the enterprise as a
			major customer.
			have an interest in information about the continuance of an
5)	________________		enterprise, especially when they have a long-term involvement with, or
			are dependent on, the enterprise.
			need	information in	order to	regulate the	activities
			of enterprises, to assess whether they comply with agreed pricing
6)	________________		policies, whether financial support is needed, and how much tax
			they should pay. They also require information in order to determine
			taxation policies and as the basis for national income and statistics.
			are affected by enterprises in a variety of ways. For example, en-
			terprises may make a substantial contribution to the local economy in
			many ways including the number of people they employ and their
7)	________________		patronage of local suppliers. Financial statements may assist the pub-
			lic	by	providing	information
			about the trends and recent developments in the prosperity of the en-
			terprise and the range of its activities.
			need financial information relating to an enterprise to assess the likely
8)	________________		risks and returns associated with the enterprise in order to determine its in-
			vestment potential and to advise clients accordingly.
			need financial information relating to an enterprise to assess the
9)	________________		threat to sales and profits posed by those businesses and to provide a
			benchmark against which the competitor's performance can be measured.
			need financial information relating to an enterprise to help
10) _______________			make decisions and plans for the business and to exercise control
			so that the plans come to fruition.

(c)Rank the user groups according to the priority that you think should be given to their needs. Explain your reasons.

(d)Identify the main users of accounting information for a university. Do these users differ very much from the users of accounting information for a railway company?