What is an Accountant?
Definition: Accountants are defined as financial professionals who handle the series of accounts of private or public companies for ensuring the accuracy of financial statements for companies, organizations, or individuals.
Accountants are the professionals who perform accounting functions, auditing, financial statements and advise the management to improve the company’s financial system. Accountants can carry their duties by working with accounting firms or large companies or set up their practice. The duty of these professional accountants includes Data Management, Financial Analysis, Financial Reports, and Regulatory Compliances.
They may work with small, large companies, government, nonprofits, or set up their practice. A person who demonstrated his/ her competency in the professional associations’ certification exams like the CPA exam is certified with the professional term Accountant. They can use titles such as Chartered Accountant, Chartered Certified Accountant, or Certified Public Accountant.
The people who received these titles are given some responsibilities by statute. These responsibilities include the ability to certify an organization’s financial statements, and they can be held liable for any professional misconduct. However, suppose a person is not able to qualify for these certified exams. In that case, they can be hired by qualified accountants or set up their practice without any statutory privileges and obligations.
Types of Accountants
There are different types of accountants responsible for doing different accounting tasks by following accounting principles.
The very first type of accountant is a management accountant who is responsible for preparing financial information that companies use internally for handling financial tasks and financial reporting.
The second types of accountants are public accountants who work for accounting firms or are self-employed. They are responsible for performing audits and preparing financial documentation and tax forms for their clientele.
Another type of accountants government accountants who work with government agencies’ financial records. Such accountants are also responsible for auditing organizations, businesses, and individuals that are subject to any sort of government regulation and taxation.
History of Certified Public Accountants
American Association of Public Accountants was the very first professional association for accountants, and it was formed in the year 1887.
CPAs or certified public accountants were first licensed in the year 1896. All in all, the world of accounting saw immense growth at the time of the industrial revolution as businesses grew then with lots of complexities while at the same time, bondholders and shareholders who had invested money in the businesses wanted to be aware of the financial health of the associated companies.
Then came the time of the great depression after which the formation of the Securities and Exchange Commission (SEC) occurred which made it mandatory for the publicly traded companies to issue reports that had to be written by accredited accountants. This revolutionized the use of accountants in managing financial statements and now, the role of certified public accountants has become inevitable for channelizing a business or organization.
Duties of an Accountant
An Accountant performs multiple accounting duties, which depend on the company where they are working. These accounting duties include:
- Preparation and reviewing of financial statements to ensure that they are accurate
- Analysis of accounts
- Reviewing of financial documents and reports
- Conducting regular and annual audits
- Reviewing financial operations
- Advising the company for the betterment of the financial system. This may include advising on the areas that require cost savings and more efficiency
- Preparing and filing tax returns of individual or companies
- Preparing budgets and entering transactions and reconciling account balances
- Preparing accurate work papers, reconciliations, and schedules for audit purposes
- Sending invoices to accounts and enforcing payment terms with accounts
- Staying up to date on state and local tax laws
- Working with external auditors
- Recording payments and disbursements
For the above responsibilities, an accountant must perform them without any biasedness and show the company’s honest and accurate position.
However, the duties of the accountants can vary, and it is wholly based on the company with which they are working. Most of the time, the duties of accountants depend on the type of educational background and designation for which they are qualified.
There are various designations of an accountant, which include Certified Internal Auditor (CIA), Certified Management Accountant ( CMA), and Certified Public Accountant ( CPA). An accountant can have more than one designation.
Ethical Responsibility of an Accountant
Accountants must follow the ethical and standard rules that come under the region where they practice. These can be the guidelines by financial authorities, such as the International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP).
The IFRS is a set of rules that the International Accounting Standards Board issues. On the other hand, GAAP is a set of standards that an accountant has to follow while formulating financial statements for public companies.
Accountants are expected to perform their duties in an honest and trustworthy manner. They should avoid negligence in performing their duties. When it comes to the post of Certified Public Accounts ( CPA), an accountant significantly impacts his work on the entire company.
Qualifications For Being a Certified Public Accountant
There are no set of standard sets of requirements for individuals who wants to have a remarkable career in the accounting industry. But, Certified Public Accountant (CPA) is an exception to this. Most of the accountants possess a bachelor' degree.
An accountant must deal with different business areas such as bookkeeping, preparing financial statements, and legal considerations. Therefore, it is recommended that an accountant should possess a degree in accounting. In addition to this degree, an individual should complete some business and computer classes.
Knowing business and computers can help an individual have an excellent start for an accountant career. These classes will help an individual to develop his/her skills in the accounting area. On average, this degree requires four years to get completed.
On the knowledge part, for being a perfect accountant, an individual needs to have strong and communication skills. An individual must have the ability to be resourceful and strategic at the same time. An accountant must know about the company’s money that needs to be analyzed and managed daily. They have to ensure that the results of the financial statements are correctly analyzed and communicated to the top management. Every financial matter must be analyzed by an accountant accurately.
If at any point, a company gets any disappointing results in terms of its financial situation, then a company may ask the accountant to advise on improving the same. Therefore, the accountant’s duty is not only limited to “number analysis”, but an accountant is also expected to advise a company for improving the current situation. So, an accountant must possess complete knowledge about the company and financial system.
If you want to be an accountant, you need to have a bachelor’s degree. Plus, to make a successful career as an accountant, you should opt for higher degrees and certifications. Let us have a look at the available educational and certification options to be an accountant-
1. Education for Certified Public Accountants
You need to have A bachelor’s degree in accounting or any related field of study for making your career as an accountant. Having a master’s degree in accounting or taxation or doing MBA in the field associated with accounting will also help you get better jobs as an accountant.
2. Certification for an Accountant
As an accountant, if you want to file documents with the U.S. Securities and Exchange Commission, you have to become a certified public accountant (CPA). For this, you need to pass Uniform CPA Exam.
Important Skills of an Accountant
Different skills that an accountant should possess are-
1. Organized and attention to detail:
Tracking and analyzing finances demand the skills of the high level of organization for handling financial statements, financial transactions, financial reporting, etc. Management accountants should also pay strong heed to the detail in order to be able to keep all the details accurate as per accounting principles.
2. Business acumen
An accountant should be aware of all the key functions of a business for adeptly and accurately analyzing and managing financial data. With the help of business acumen, an accountant can work as a certified internal auditor following the generally accepted accounting principles.
3. Knowledge of Tools, Software, and MS Office
Accountants have to have a good knowledge of different accounting software and tools to automate and alleviate their accounting tasks. Knowledge of MS Excel and other spreadsheet software is also quite crucial for public accountants.
4. Analytical skills
Accountants are supposed to collect and analyze financial data for identifying patterns and potential issues in different accounts-related activities. In all such cases, their analytical skills are of utmost importance to help them perform their tasks with the needed effectiveness.
5. Communication skills
Accountants should also have good communication skills, as this will empower them to have the ability to listen carefully for adeptly collecting all the facts and figures important for performing accounting tasks. Communication skills will let an accountant connect with businesses, clients, stakeholders, managers, etc in the most favorable manner. Accountants should have the ability to articulate the results of their accounting work to present them without any misconception or miscommunication.
6. Mathematical skills
When it comes to being a successful accountant, it is important to understand that only basic mathematical skills are crucial for being a good accountant. Basic math skills to have the ability to analyze, interpret and compare data and figures are need to become an accountant.
Liabilities of An Accountant
Under two different laws, Accountants can be held liable. These laws are Common law and Statutory Law.
Common-Law liabilities include
- Frauds
- Negligence, and
- Breach of contract
Statutory-Law Liabilities includes
- Any state or Federal Securities law.
In case of any misstatement or fraud by an accountant, he may be held liable for paying uninsured losses to the creditors and investors.
Scope of Career as Accountant
There is a good scope of career in the accounting industry. However, there is tough competition in this field. But, still, the demand for Accountants is growing. It is expected that the demand for Accountants will grow by 10% between 2016 and 2026. This projection is made by The Bureau of Labor Statistics (BLS).
There is a good demand for Accountants in every country, be it India or the US. As far as the salary is concerned, the same is dependent on various factors. These factors include the qualification, post, education, company for which an accountant is working, the state, and the country where the accountant works. But in every city or country, an accountant can get a handsome amount of salary. So, if anyone is interested in having a career in the accounting industry, then the scope is high.
Accountant Salary
Salaries for accountant job profiles vary depending upon your qualifications and employers. So, an accountant working with any large firm would get higher salaries, while independent accountants’ income varies with their clientele.
The Median Annual Salary of an accountant is $69,350 ($33.34/hour) while the top 10% Annual Salary of accountants is $122,220 ($58.75/hour) and the bottom 10% Annual Salary of public accountants is $43,020 ($20.68/hour).
Job Growth Outlook of Certified Public Accountants
U.S. Bureau of Labor Statistics suggests that the job growth for accountants is going to be at 10 percent for the decade ending in 2026 while on the other hand, job growth for all the other occupations is around 7 percent.
Job prospects in the field of accounts management are associated with the health of the economy, but the importance of accountants will always be there with more and more companies going to be public and tax codes being difficult to understand by the common people.
Wrap Up!
On the concluding note, it is clear that an accountant is responsible for ensuring the accuracy of financial statements for a company, corporation, individual, or organization.
An accountant is responsible for making sure that laws and procedures are generally accepted and well followed, plus taxes are also correct and paid at the right time. As an accountant, you would be responsible for preparing financial documentation and explaining their findings to businesses or individuals.
How important do you consider the role of an accountant in managing the financial health of a business?
