Accounting can be defined as the process of collecting, recording, presenting & analyzing/interpreting financial information for the users of financial statement.
Accountant can also be describe as a person who has undergone a formal or professional training in the process of accounting & who belongs to at least one of the recognized professional accountancy bodies such as Institute of Chartered Accountants of Nigeria (ICAN), Association of Chartered Accountant (ACA), Institute of Chartered Accountant (ICA) etc.
Accounting systems take economic events and transactions that have occurred and process the data in those transactions into information that is helpful to managers and other users, such as sales representatives & production supervisors.
Accounting systems provide information such as financial statements (the income statement, balance sheet & statement of cash flows) and performance reports (such as the cost of operating a plant or providing a service). Managers use accounting information;
- To administer each of the activity or functional areas for which they are responsible and;
- To coordinate those activities or functions within the framework of the organization as a whole
Management Accounting, Financial Accounting & Cost Accounting
Management Accounting: Management accounting & financial accounting have different goals. Management Accounting measures, & reports financial & non-financial information that helps managers make decisions to fulfill the goals of an organization. Managers use management accounting information to choose, communicate and implement strategy. They also use management accounting information to coordinate product design, production & marketing decisions. Management accounting focuses on internal reporting.
Financial Accounting: Financial Accounting focuses on reporting to external parties. It measures and records business transactions and provides financial statements that are based on generally accepted accounting principles (GAAP). Managers are responsible for the financial statements issued to investors, government regulators & other parties outside the organization. Executive compensation is often directly affected by the numbers in these financial statements. It is not difficult to see that managers are interested in both management accounting & financial accounting.
Cost Accounting: Cost Accounting provides information for management accounting & financial accounting. Cost accounting measures and reports financial and non-financial information relating to the cost of acquiring or utilizing resources in an organization. Cost accounting includes those parts of both management accounting & financial accounting in which cost information is collected or analyzed.
Report such as balance sheets, income statements and statements of cash flow are common both in management & financial accounting. Most companies adhere to, or only mildly depart from, GAAP for their basic internal financial statements. Why? Because accrual accounting provides a uniform way to measure an organization's financial performance for internal & external purposes. However, management accounting is more wide-ranging than financial accounting's emphasis on financial statements. Management accounting embraces more extensively such topics as the development & implementation of strategies & policies, budgeting, special studies & forecasts, influence on employee behaviour, & non-financial as well as financial information
Accordingly, the accountant's roles in the organization can be analyses below:
- Preparation & presentations of timely accurate financial/accounting reports to management
- Identification of areas of inefficiency & wastages of resources in industries
- Treasury functions: Accountant also plays the role of treasury functions in such a way that they raise finance, cash management etc
- Setting up effective system of internal & accounting controls
- Preparation of feasibility reports: These reports assist management in assessing the viability/profitability or otherwise of proposed capital expenditure such as opening of a new factory or branch
- Investigation of the performance/operations of competing business organizations to assist management in policy formulation
- Investigation of frauds within the organization: Accountant plays the role of investigation of frauds within the organization
- Accountant assists the organization to avoid-rather than evade tax by using his knowledge of the tax laws
In conclusion, an accountant plays uncountable roles in organization to mention few.
