Accountant Responsibility Top 5 Responsibilities Of An Accountant

What is Accountant Responsibility?

Components of the Accountant’s Responsibility

#1 – Accounting

In accounting, if there is any journal posted or invoiced booked in the system, it should be reviewed by the accountant and ensure that the invoice is not booked earlier or from an unknown Supplier. While closing the books for the month, accrual should be made for invoices due but not received, and prepaid should be released.

The job often involves estimation while providing any expense or revenue item; here, the accountant must be clear in taking the basis for estimation and should be a bit conservative in approach. Also, when unsure of an item, whether to capitalize or expenseCapitalize Or ExpenseCapitalization recognizes the cost incurred as an expenditure that is capital in nature or as a business asset, whereas expensing refers to booking cost as an expense in the business’s income statement, deducted from the total revenue while calculating the profits.read more, one should follow accounting standards and other guiding notes to arrive at a rationale.

#2 – Auditing

The audit is the one thing at which the public, banks, investors, and other related parties trust that the financial statementsFinancial StatementsFinancial statements are written reports prepared by a company’s management to present the company’s financial affairs over a given period (quarter, six monthly or yearly). These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all levels.read more are presenting a true and fair view. It is saying the auditor is a watchdog and not a bloodhound with so many recent accounting scandalsAccounting ScandalsAccounting Scandals refer to situations which demonstrate intentional falsification or misrepresentation of financial documents. Some of the most famous ones are by Enron, Freddie Mac, HealthSouth, & American Insurance Group etc. read more like Tyco, Enron, WorldCom, etc.

The SOXSOXThe Sarbanes-Oxley Act (Sox) of 2002 was enacted by the US Federal Law for increased corporate governance, strengthening the financial and capital markets at its core and boost the confidence of general users of financial reporting information and protect investors from scandals like that of Enron, WorldCom, and Tyco.read more was formed, and auditors were asked to go deep into the books. As an account, while working as an auditorWorking As An AuditorAn auditor is a professional appointed by an enterprise for an independent analysis of their accounting records and financial statements. An auditor issues a report about the accuracy and reliability of financial statements based on the country’s local operating laws.read more, one should never skip any step of the audit process. They must follow all the steps, take reasonable samples, question any ambiguities, ask the higher management for consent in writing where required, and do all the reasonable checks to ensure that books look good. They should release the audit reportAudit ReportAn audit report is a document prepared by an external auditor at the end of the auditing process that consolidates all of his findings and observations about a company’s financial statements.read more only after being satisfied with the validity and accuracy of numbers in financial statements.

#3 – Certified Public Accountant

Accountants working as CPA do so many tasks like return filing, valuation, project reporting, forensic accountingForensic AccountingForensic accounting is the investigation of fraud and misrepresentation.read more, etc. People use these reports to apply for loans, mortgages, credit cards, cash credit, and other financial needs. While certifying these documents, the accountant must look at the original papers, the last few years’ reports, and other affecting factors, and then only they should sign the reports.

#4 – Digital Environment

Today’s digital world poses a new challenge for accountant tasks, and it is their duty to be equipped with the skills needed to work through a computerized environment. The system development and system audit demand that accountants have the accounting skill set and possess a certain degree of technical knowledge about how accounting is done in the digital world.

The accountant must learn how to use test data in the computer and follow it from the start point where an accountantAn AccountantAn accountant is a finance professional responsible for recording business transactions on behalf of a firm, reporting the firm’s performance and issuing financial statements. Thus, an accountant plays an important role whether it is a small domestic entity or a large multinational company.read more can see how it impacts the Profit & Loss and Balance Sheet. Today’s digital world is an ever-changing scape, and the emerging cyber crimes and thefts pose a new set of challenges for accountants and need them to be prepared and responsible for challenges thrown at them.

#5 – Moral Responsibility

An accountant is not only responsible for being equipped with the skills of accounting and digitization, but they also have a moral responsibility towards society, regulatory authorities, the country, and all the related stakeholders. Accountants are also called the watchman of economy and treasure, and it is a huge compliment that comes with a high level of obligation and moral responsibility.

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Advantages

Financial statements represent the true and fair view of the entity’s financial status Audit facilitation becomes easyTax filing and other statutory compliance becomes easierImproves public faith and investors trust which is good for businessImproves GoodwillGoodwillIn accounting, goodwill is an intangible asset that is generated when one company purchases another company for a price that is greater than the sum of the company’s net identifiable assets at the time of acquisition. It is determined by subtracting the fair value of the company’s net identifiable assets from the total purchase price.read more in the long runImproved relationship with banks makes it easy to financing activitiesFinance ActivitiesThe various transactions that involve the movement of funds between the company and its investors, owners, or creditors in order to achieve long-term growth are referred to as financing activities. Such activities can be analyzed in the financial section of the company’s cash flow statement.read more

Disadvantages

If the bookkeepingBookkeepingBookkeeping is the day-to-day documentation of a company’s financial transactions. These transactions include purchases, sales, receipts, and payments.read more and records are not kept systematically, the audit process becomes difficult, and auditors may qualify the audit report.One bad misconduct or scam can badly take a legendary organization down towards bankruptcy.If the accountant is not following processes in place, it also points out loopholes in internal controlsInternal ControlsInternal control in accounting refers to the process by which a company implements various rules, policies, or procedures to ensure the accuracy of accounting and finance information, safeguard the various assets of the business, promote accountability in the business, and prevent the occurrence of frauds in the company.read moreLoss of Goodwill and business

Points to Note

In today’s globalization and increasing compliance requirements, an accountant’s responsibility and duties change with each amendment. They must keep themselves updated with all the recent changes and new updates and prepare themselves accordingly. With the introduction of IFRS globally, there will be a massive change in the accounting systemsAccounting SystemsAccounting systems are used by organizations to record financial information such as income, expenses, and other accounting activities. They serve as a key tool for monitoring and tracking the company’s performance and ensuring the smooth operation of the firm.read more and the way accounting is done in many countries. A global accountant must keep pace with all these changes and ensure that implementation is smooth and the organization is IFRS ready.

Conclusion

Accounting is a fine and noble profession, and it has been in place for quite some time now. Accountants are regarded as one of the finest, and they are one of the highest-paid professionals. However, with so much respect and money comes the responsibility of moral obligation and ethical requirement to keep things simple and straight and not let down any related party who has trusted accountant work.

What is Accountant Responsibility?#

Components of the Accountant’s Responsibility#

#1 – Accounting#

#2 – Auditing#

#3 – Certified Public Accountant#

#4 – Digital Environment#

#5 – Moral Responsibility#

Advantages#

Disadvantages#

Points to Note#

Conclusion#

Recommended Articles#