There are certain professions that are indispensable. An accountant is one such profession. Accountancy is a science and an art and takes experience and detailed study to master. An accountant also performs other functions that are very important to our society and the economy. Let us take a look at the functions of an accountant.
Functions of an Accountant
Accountants in the modern era perform a variety of functions. Their jobs are no longer limited to the preparation of financial accounts. Accountants also provide their clients, the government and society in general with many other important services.
Browse more Topics under Meaning And Scope Of Accounting
- Meaning of Accounting
- Objectives and Functions of Accounting
- Sub-fields of Accounting
- Limitations of Accounting
1] Maintaining Books of Accounts
This is the primary function of an accountant, i.e. to perform the functions of accounting. He will maintain a systematic record of all financial transactions of a firm. This allows the company to then prepare their financial statements from such records to ascertain the profit or loss for the year and gauge the financial position of the company from the balance sheet.
Maintenance of books of accounts is important for the management as well. It supports their decision-making process and assists them in future planning. And such systematic recording requires the skill, knowledge, and experience of an accountant.
2] Statutory Audit
The laws of our country require a few organizations to be compulsorily audited by an auditor. So limited companies, co-operative societies, companies or firms that have crossed a certain turnover limit, etc.
So a chartered accountant will minutely study and audit the financial records of the said firm. He will verify that to the best of his judgment the profit and loss statement gives a true and fair representation of the profit/loss earned. And that the Balance Sheet is a true and fair statement of the company’s financial position on the given date.
Learn more about the Limitations of Accounting here
3] Internal Audit
Some organizations also opt for internal auditing, which is also done by accountants. Internal auditors work with the management of the firm to review the accounts and the internal system of the firm at regular intervals of time.
Unlike the statutory audit, internal auditors work throughout the year. The act as safeguards and ensure that the internal systems will protect the firms from any misappropriation or fraud. They also act as a deterrent to anyone with dishonorable motives of fraud or thieving etc.
An internal auditor will, in fact, improve the efficiency of the accounting system and the overall management of the organization as well.
An accountant is also capable of handling taxation matters for a firm or an individual. He can file tax returns on behalf of his clients. A chartered accountant can also represent his clients in cases in Tribunals and Courts to settle tax liabilities on behalf of them.
Another important role of an accountant is that of a tax consultant. He has the knowledge and the information to advise his clients on how they can save on tax. So he will advise the clients in various ways they can reduce their tax burden through smart investments and changes to their financial system etc.
5] Cost Accounting
Accountants also carry out cost accounting, i.e. examine the costing structure of a firm. They record, report, summarize and analyze cost data of organizations. They then develop methods of controlling such costs.
6] Management Accountant
Management accountant does more than number crunching, he plays an overall advisory role in the management of an organization. They analyze the finances of a company and help the management with their functions of planning, decision-making, controlling, etc.
Accountants can also provide consultancy services in their areas of expertise. So if you want to reduce your fixed costs, or require working capital management or need to reform your credit terms, etc. an accountant can come to your rescue.
7] Financial Advice
Accountants have widespread knowledge and experience in many fields and industries. So they are very well equipped to provide their clients with financial advice about a variety of financial matters, like for example:
- Accountants can provide investment advice for their clients. They are proficient at reading and analyzing financial statements and so can advise whether a company is worth investing in or not
- They can also analyze the client’s needs and help them choose the insurance policies most suited to them. Accountants will help the client determine the amount of coverage they will require as well.
- If a company wants to expand they will require the services of an accountant to help them with the cost analysis, project report, etc. An accountant will also help the client check the feasibility of the expansion project and its long-term prospects.
- If an organization was being investigated (whether internally or by authorities) they hire accountants to help with the process.
Solved Question for You
Q: Name some other intermediary services that accountants provide.
Ans: Accountants provide many other services, some of which are
- They work with companies for registration of shares of new issues, or transfer of shares
- They play an important part in the process of company formation
- Accountants can also act as liquidators when the company is winding up
- Can act as arbitrators to settle financial disputes