A key component of corporate accounting, as opposed to keeping personal accounts, is the use of the double entry bookkeeping system, whereby every transaction that takes place will leave a record in two or more accounts.
In the UK, corporate company accounts have to be filed at Companies House, whereas there is no such requirement for smaller organisations such as sole traders and partnerships. Definitions of what is deemed to be a small, medium or large company for accounting purposes depend on the turnover, balance sheet total and the number of employees the company has.
In both the USA and the UK, accounting standards for preparing financial statements are only set in common law. Although corporate accounting practices vary from country to country, the International Financial Reporting Standards (IFRS) have now been adopted across the European Union as well as in countries such as Australia, South Africa and Russia. In the United States, meanwhile, accountants are bound by the Generally Accepted Accounting Principles (GAAP).
Deliberate failure to adhere to the spirit of corporate accounting regulations is often referred to as ‘creative accounting’. There have been numerous instances of scandals in recent years where major corporations have deliberately misrepresented the state of their finances. The collapse of the energy company Enron in 2001 was a particularly high-profile of this.