What is Accountant Responsibility?
Accounting Responsibility means that an accountant work should understand and follow his/her duties of documenting accounting information so as to ensure that public trust and interest of all the related stakeholders are preserved. The accountant of the company is generally given important responsibilities which include collecting and recording the various financial information of the company, scrutinizing and summarizing the information collected by him and then presenting them in form of the financial statement to the users of the financial information for their decision making.
Components of the Accountant’s Responsibility
#1 – Accounting
In accounting, if there is any journal posted or invoice 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.
Many times the job involves estimation while making provision for 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, at a time 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., 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. 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. 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. 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., 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. 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 employs a mix of accounting, auditing, and investigative acumen by recording accounting documents, preparing reports, and performing financial analysis for use in legal proceedings. Thus, it provides an accounting analysis from a litigation perspective., etc. These reports are used by people to apply for loans, mortgage, credit card, cash credit, and other financial needs. While certifying these documents, the accountant must look at original papers, the last few years reports, other affecting factors, and then only he/she should sign the reports.
#4 – Digital Environment
The digital world today poses a new challenge at accountant tasks, and it is their duty to be equipped with the skillset needed to work through a computerized environment. The system development and system audit demand and accountant not only have the accounting skill set but also to 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 the start to a 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. can see how it impacts the Profit & Loss and Balance Sheet. The digital world today is an ever-changing scape, and the emerging cyber crimes and thefts pose a new set of challenges on 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 skillset of accounting and digitization, but they also have a moral responsibility towards society, regulatory authorities, 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.
They should never indulge in any malpractice, file any false report, submit any unreasonable project report, or involve in any systematic financial fraud. As an accountant, many a time they have to use their judgment, and it should be free from any bias must never be influenced by any higher authority or any person. The accountant must always work ethically and with the highest degree of professionalism and must never let down the accounting profession by using any unethical or illegal means while performing their duties.
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- Financial statements represent the true and fair view of the financial status of the entity
- Audit facilitation becomes easy
- Tax filing and other statutory compliance becomes easier
- Improves public faith and investors trust which is good for business
- Improves 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. in the long run
- Improved relationship with banks makes it easy for financing activitiesFinancing 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.
- If the bookkeepingBookkeepingBookkeeping is the day to day recording of financial transactions such as purchases, sales, receipts, and payments, and it is the first step in the accounting process. It can be prepared in two ways: single-entry and double-entry; however, the double-entry approach is more widely used and recognized in most countries. and records are not kept systematically, the audit process becomes difficult, and auditors may qualify the audit report
- One bad misconduct or scam can take the even a legend organization down badly 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.
- Loss of Goodwill and business
Points to Note
In today’s globalization and increasing compliance requirement, the responsibility, and duties of an accountant changes with each amendment. It is his/her duty to keep themselves updated with all the recent changes, new updates and prepare themselves accordingly. With the introduction of IFRS globally, there is going to 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. and also the way accounting is done in many countries. Now a global accountant has to keep pace with all these changes and ensure that implementation is smooth, and the organization is IFRS ready.
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. With so much respect and money come 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.
This has been a guide to what is Accountant Responsibility? Here we discuss the top 5 responsibilities of an accountant, including accounting, auditing, CPA, digital and moral responsibility, along with advantages and disadvantages. You can learn more about accounting from the following articles –