An individual who closely monitors the inflows and outflows of the company's money
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An accountant plays a very crucial role in an organization, regardless of whether it is a multinational company or a small, domestic one. The inflow and outflow of the company’s money are closely monitored by the accountant, who also makes sure that all financial transactions are legal, correct, and that they went through the proper channels. They work closely with bookkeepers to ensure that the company’s financial statements are in order.
It is common to find people who are neither an accountant nor an auditor to be able to differentiate between the two. Indeed, the two professions share a lot of similarities, but they both also come with several differences. Let us discuss some of these points in the following paragraphs.
In most cases, an accountant is a regular employee of a company or one who’s been hired by a company and pursues long-term employment. On the other hand, an auditor may have been hired by a company from a service provider on a short-term or project basis in order to validate or substantiate the work done by the accountant. An auditor ideally shouldn’t have any connections with the company, to avoid biases.
In relation to the previous point, the auditor doesn’t need a permanent space in the office building of the company who hired him, as he will need to move from department to department. The opposite goes for the accountant who keeps his own office, with other accountants on the team.
It is the accountant’s responsibility to check the company’s finances on a daily basis and create financial reports at the end of the year in order to report to the management the actual financial situation of the company and determine its strong and weak points. The auditor, on the other hand, is tasked to make sure that these figures are reasonably accurate.
Hiring a company auditor is required for public companies or private companies with third-party interests (i.e., debt obligations) requiring them to undergo an audit. It is optional for private companies. Their work is set against auditing standards while that of accountants is regulated by international accounting standards.
Accountant vs Bookkeeper
Again, the two terms are often confused but their differences are clear-cut.
A bookkeeper holds the key to a successful business because he or she does the following tasks:
Makes a record of every financial transaction entered into by a company every single day. It is his job to process receipts, invoices, as well as payments, and make sure that everything is listed down.
Makes a record of all accounts receivable and accounts payable or, in simpler words, the money that goes into paying creditors and the money that comes in from debtors. For example, a customer who owes the company a specific amount each month for six months can be put under accounts receivable.
Processes the payroll. It is the job of the bookkeeper to maintain the payroll and make sure that each employee receives the exact amount that is due to them.
Keeps track of the company’s money, including all the expenses it makes, as well as its earnings, on a daily basis. The data is very important because, when compiled into reports, they describe the fiscal health of the company, and errors can lead to poor reporting and bad decisions.
Responsibilities of an Accountant
The responsibilities of an accountant are numerous, and some of them may overlap with those of the bookkeeper. In a nutshell, the accountant understands and interprets a company’s financial health through the combination of his knowledge of numbers and accounting principles.
Accountants look at the company’s losses and profits and present the figures in a detailed way to allow the management to know about how the organization is doing.
They deal and cooperate with auditors in making audits of the company by providing them with the necessary figures and information.
Accountants review budgets, especially towards the end of the financial year, and make sure that the expenditures will not deplete the organization’s coffers. They make sure that the company’s spending is under control.
They manage the safekeeping and inputting of the company’s financial data into its systems. Any slight change from the original can jeopardize the entire company’s financial status.
They recommend and apply the use of efficient and secure accounting software that will support the gathering and safekeeping of financial data and the creation of financial reports.
A bookkeeper typically occupies a position below the company’s accountant and reports to the accountant.
How to Become an Accountant
There is a difference between being an accountant and a Certified Public Accountant. Though both require a bachelor’s degree in Accountancy, an accountant has not yet taken the state licensure or certification for accountants but may still perform accounting tasks such as preparing financial statements and tax returns.
On the other hand, the Certified Public Accountant has been licensed by the state, passed the CPA examination, and completed a required number of hours of apprenticeship under a CPA.
Depending on the country, people who want to become accountants need to put in additional hours on financial accounting, auditing, financial reporting, and taxes. Certain companies also require their accountants to obtain a Master’s Degree in Accounting.
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