What is the role of an accountant? The role of an accountant is generally described as someone who handles the financial records of the business and prepares the financial statements for them. There are different types of accountants though, and this essay looks at what roles these are in particular, looking at how they are similar and how they differ from each other. This essay will look at the role of the accountant in smaller businesses, like family businesses, and the wider business environment, showing how it affects and affected major issues of today’s business world, for example the credit crunch.Order now
The difference between the roles of a present accountant will also be explored briefly, comparing to older roles of an accountant towards the end of the essay. All the various roles will be brought together towards the conclusion. The role of the accountant is one that belongs to the business environment. There are two main types of accounting – management accounting (internal) and financial accounting (external). A management accountant role deals with recording and analysing financial records for the companies for which they work.
These records are then taken into account with business decisions. These decisions relate to the manufacturing and to the selling of the companies’ goods and services. According to Wood and Sangster, management accountants are likely to maintain a budget system that helps managers plan and control activities. The budgets are prepared frequently, for example monthly (2008, p655). These budgets can also help motivate workers and meet objectives of the business. Financial accounting is all the other roles that management accountants don’t do.
These are for external users and have to provide annual statements, unlike management accounting. One example of financial accounting is Government accountants. These accountants work in the public sector and their role is to maintain and examine the records of government agencies. Accountants who are employed by the government guarantee that their revenues and expenditures are made in accordance with laws and regulations. Another example of financial accounting is public accountants. This is the most common accountant and they have many roles including auditing and tax.
Public accountants only have roles in the public sector. They make sure that pubic organisations are managed effectively and efficiently and to make the best use of public money. Public accountants tend to add value to their role when they are employed be someone, in order to make their own in a sense profit. Not all financial accountant roles are set on making profit. Some accountants are employed by charities for example to help organise their budget and cash flow, so they maintain a good level of cash coming into the charity so that it doesn’t make a loss and fall as a charity.
This is also the same for accountants employed by clubs, for example football clubs. Depending on whether an accountant is certified or not can effect what the role of an accountant can do. A public accountant is different to a certified public accountant because they have earned a license that shows that they have achieved a high level of experience, skill and training. This may mean that a certified public accountant has more chance of a larger role and more accounts to do because they have proven that they have had more training.
Different users need accountants to help them. Owners of the business and shareholders are the most important users. Accountants would be requested by them to maybe to show the financial statements in an understanding and reliable way which can be shown to current and future shareholders. Accountants can also show the banks and creditors how a business is doing and the relevant information that they request easily. This can be useful for the business if they want to take out a loan for example.
Managers also rely a lot on what accountants do because they need to look at the state of the financial records so they know how to manage their business. The managers can easily compare the annually statements to influence what their next decisions are. Suppliers also need the aid of accountants to help know what business’ financial positions are, for example if a business is going to exist next year and whether or not to invest in a long term contract with them. Tax authorities need accountants too to help calculate the amount of tax businesses owe to them.
Financial advisers rely on accountants to show them the accountants of businesses that will be decent to invest in their shares. Accounting has always been around to record business transactions for many years. Bookkeeping was made to standardise the procedure of accounting and gave people a method to account. The role of an accountant years ago was just to record invoices and receipts that were used to calculate business’ profit simply. This then changed when businesses employed another person to take care of the accounts, due to business’ sizes expanding.
Now there is an Institute of Chartered Accountants that leads the accounting profession with the many different roles an accountant can take. The role of the accountant has also changed due to technology advances throughout the years. Computers now can have special software packages that can summarize transactions, and save time and manual work for accountants. This means that accountants now need to be skilled enough to work with the changing technology advances and be able to specialise in the programmes – not just the knowledge of bookkeeping.
On the other hand, there is of course the disadvantage of fraud still, which is easier with the increase of technology. Having computers help accountants has led to a new area of accounting called forensic accounting. Their role is to investigate and analyse financial evidence, and develop computer applications to help with the analysis of the evidence. Forensic accountants can even assist in legal actions as a witness. The role of an accountant can be related to issues today such as the credit crunch.
The ‘Big 4 accountants’ (Pricewaterhouse Coopers, KPMG, Deloitte and Ernst & Young) had to provide an independent assessment of the unknown (then) debt banks had held were worth. This showed that the role of an accountant is important to the worldwide economy because the accountants had to assess the global financial situation and try to come up with a way the economy could get through the recession. The role of the accountants chosen for this was on a much bigger scale than a normal role because it was dealing with multiple banks and a number of financial records at once.
Due, also, to the credit crunch was the demand for accountants to help rebuild the economy. This meant that the opportunities for accountants increase so the role of an accountant can become quite vague, as there were many roles an accountant could take to help. One main objective to rebuilding the economy was to increase the confidence level of consumers so for example an accountant could help individuals manage their budgets if they were unemployed – there are endless tasks an accountant could take.
This essay showed that the profession of an accountant is reasonably diverse, there are so many roles one could take and many positions inside those roles to suit everyone. The role has changed slightly because of advances in technology but taking that into consideration, it has made the role better and more efficient, with more time for an accountant to make sure that the books are correct. The role of the accountant isn’t just to book keep though, it’s shown that it takes care of the businesses however large or small they are (or the economy for that matter).
Without an accountant a business would not exist – that is the basic and first role of an accountant – to make sure that the exact opposite happens. Wood, F. , Sangster, A. (2008) Business Accounting 1, Essex: Pearson Education Limited. Bureau of Labour Statistics (2008-2009). Occupational Outlook Handbook. Retrieved October 15 2009, from http://www. bls. gov/oco/ocos001. htm Zysan, A. (n. d. ). Forensic Accounting Demystified. Retrieved Thursday October 15, 2009, from http://www. forensicaccounting. com/