An accountant is a finance professional who records business transactions, issues financial statements and reports a firm’s performance. They scrutinize the inflow and outflow of cash. In addition, they ensure that transactions are legal and compliant with tax regulations. They must be adept with ethical standards such as International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP).
A financial accountant identifies potential tax write-offs and opportunities for maximizing profits. They start as entry-level accountants and gradually become managers and partners. A finance professional involved in filing documents with the U.S. Securities and Exchange Commission (SEC) has to be a certified public accountant (CPA). Most accountants strive to get licensed as a Certified Public Accountant (CPA) as it is considered the pinnacle in the field.
Table of contents
- Accountants utilize their accounting, finance, law, and business knowledge to formulate accurate financial statements. They analyze the financial health of an individual or a company.
- Their responsibilities include recording financial transactions, forming financial statements, analyzing financial performance, auditing, and reporting.
- The superior skills that an accounting professional should possess include communication skills, analytical ability, critical thinking, computer knowledge, mathematical skills, business understanding, and keeping up with corporate laws and taxation.
How does an Accountant Work?
An accountant is a professional in the field of accounting who scrutinizes the inflow and outflow of cash and assists in the auditing process during yearly filing. Moreover, they also have an in-depth understanding of tax regulations and legal compliances as they ensure their company is abiding by those laws and regulations to avoid any scrutiny from regulatory authorities.
A certified management accountant scrutinizes a company’srevenuesRevenuesRevenue is the amount of money that a business can earn in its normal course of business by selling its goods and services. In the case of the federal government, it refers to the total amount of income generated from taxes, which remains unfiltered from any deductions. and expensesExpensesAn expense is a cost incurred in completing any transaction by an organization, leading to either revenue generation creation of the asset, change in liability, or raising capital. to ensure that all the transactions are compliant with regulations. As such, they are required to handle numerous responsibilities. Multinational companiesMultinational CompaniesA multinational company (MNC) is defined as a business entity that operates in its country of origin and also has a branch abroad. The headquarter usually remains in one country, controlling and coordinating all the international branches. have a dedicated accounting department comprising many professionals. But a small firm may operate with only one accounting professional directly reporting to the regional head.
Usually, these professionals work from offices, but some companies offer the flexibility to work from home. In some cases, they might even travel frequently to meet clients. These professionals work 40 hours a week; some profiles require longer schedules. During tax filing deadlines or budgetingBudgetingBudgeting is a method used by businesses to make precise projections of revenues and expenditure for a future specific period of time while taking into account various internal and external factors prevailing at that time., the workload is higher.
Historically speaking, accounting roles witnessed significant growth during the time of the industrial revolution. Businesses were becoming complex; stakeholdersStakeholdersA stakeholder in business refers to anyone, including a person, group, organization, government, or any other entity with a direct or indirect interest in its operations, actions, and outcomes. questioned the returns from their investment. Further, after the 1929 Great Depression1929 Great DepressionThe Great Depression refers to the long-standing financial crisis in the history of the modern world. It began in the United States on October 29, 1929, with the Wall Street Crash and lasted till 1939., the Securities and Exchange Commission (SEC) was formed in the U.S. Consequently, all publicly-traded companies were required to employ qualified accounting professionals to publish financial reportsFinancial ReportsFinancial reporting is a systematic process of recording and representing a company’s financial data. The reports reflect a firm’s financial health and performance in a given period. Management, investors, shareholders, financiers, government, and regulatory agencies rely on financial reports for decision-making.. This regulatory change further increased the need for professionals. As a result, accounting personnel have become a ubiquitous part of the business.
How to Become?
While most jurisdictions accept an accountant degree, there can be specific requirements for different levels of working as an accountant. If an accountant wants to file accounts with the Securities and Exchange Commission (SEC), they must be a Certified Public Accountant (CPA). Let us understand how one can become an accountant through the discussion below.
#1 – Qualification
Aspirants require a degree course in accounting. However, many companies prefer accounting graduates, and thus, aspirants can pursue three-year studies that offer a bachelor’s degree in accounting. Alternatively, aspirants can also choose an associate degree course. Upon completion, they can pursue a two years advanced program—a master’s degree in finance, business administration, commerce, or accounting.
Top destinations for accounting include the University of Texas, Austin; Brigham Young University, Provo; and the University of Illinois, Champaign.
#2 – Certifications
Aspirants can get certified as Certified Public AccountantsCertified Public AccountantsA Certified Public Accountant (CPA) is a US state board-issued license to practice the accounting profession (CPA), Chartered Financial AnalystChartered Financial AnalystCFA exam is a three-part exam to check your fundamentals of wealth planning, investment tools, portfolio management, and valuing assets. Candidates with a background in finance, accounting, economics, or business generally pursue this, and its exam dates and notifications can be followed on its official website. (CFA), Certified Financial PlannerCertified Financial PlannerCFP is a certification that helps people to plan their finances well. In the USA, the average age of the population is 36.8 years. Thus, the need to reach their retirement age with a good net worth is a priority. (CFP), Chartered Certified AccountantChartered Certified AccountantACCA is an accounting qualification recognized globally that provides a solid foundation to students and professionals for careers in accounting, tax consulting, auditing, business valuation, treasury management. Its exam dates, timetables, and important notifications are readily available on its official website. (ACCA), Certified Management AccountantCertified Management AccountantChartered Management Accountant (CMA) is an important credential to accountants and financial professionals by the Institute of Management Accountants (IMA) to validate their capabilities in management accounting. Its exam dates and notifications are readily available on the IMA website. (CMA), or Chartered Financial Consultant (ChFC). Certifications improve the potential career options available to an aspirant.
#3 – Skills
Accounting professionals require a refined understanding of corporate laws, taxation, and business practices. To succeed in this profession, individuals must be competent mathematically and possesses analytical abilities. They must also be comfortable with computers and software like Freshbooks, Quickbooks, and Xero.
A financial accountant plays multiple roles within an organization from documentation to analysis and tax regulations. Let us understand their functions, roles, and responsibilities through the explanation below.
- Recording the company’s financial transactions;
- Preparing 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. —income statementIncome StatementThe income statement is one of the company's financial reports that summarizes all of the company's revenues and expenses over time in order to determine the company's profit or loss and measure its business activity over time based on user requirements., cash flow statementCash Flow StatementA Statement of Cash Flow is an accounting document that tracks the incoming and outgoing cash and cash equivalents from a business., and balance sheetBalance SheetA balance sheet is one of the financial statements of a company that presents the shareholders' equity, liabilities, and assets of the company at a specific point in time. It is based on the accounting equation that states that the sum of the total liabilities and the owner's capital equals the total assets of the company..
- Auditing and reporting the financial health of the entity.
- Updating the book of accountsBook Of AccountsThe best accounting books are - Accounting made simple: accounting explained in 100 pages or less, A brief history of economic genius paperback, Accounting all-in-one for dummies, Accounting handbook (Barron’s accounting handbook), The tax and legal playbook: game-changing solutions to your small..
- Assisting auditorsAuditorsAn 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..
- Keeping track of expenses.
- Comparing budgeted expenditure and actual spendings.
- Supervising the entry of financial data into the ERP systems.
- Recommending secure software to clients.
- Risk analysisRisk AnalysisRisk analysis refers to the process of identifying, measuring, and mitigating the uncertainties involved in a project, investment, or business. There are two types of risk analysis - quantitative and qualitative risk analysis..
- Implying fair accounting practices and procedures.
- Adhering with the taxation laws and government regulations.
- Suggesting ways for cost reduction and maximizing profits.
- Filing tax returns.
Aspiring certified management accountants find opportunities both in the public sector and the private sectorPrivate SectorThe private sector is a section of the national economy that the government does not own. The business conducted under this sector is carried out by companies or entrepreneurs who focus on profit maximization and customer satisfaction.. In-house industry professionals take care of accounting and auditing for a company. Public accountants manage accounts for various clients. Accounting professionals working for the government could be employed at local, state, or federal levels. They keep an account of public funds, i.e., the government revenues and expenditures.
With experience, accounting professionals graduate to finance manager, financial controllerFinancial ControllerThe financial controller is one of the senior-level executives of the company who is responsible for managing all the finance and the accounting, preparation and publishing of the financial statements such as the balance sheets, cash flow statement and the income statements timely, auditing compliance, and coordinate in the preparation of the economic forecast of the company., chief financial officer, chartered accountant, or finance director roles. Moreover, as a nation’s economyEconomyAn economy comprises individuals, commercial entities, and the government involved in the production, distribution, exchange, and consumption of products and services in a society. grows, it accelerates employment opportunities in the accounting sector. In the next ten years, i.e., from 2020 to 2030, the U.S. expects phenomenal employment growth of 7% for accounting and audit professionals—135,000 new jobs.
The demand for work in this domain is virtually never-ending as there is a requirement across levels of the economy in both private and public sectors right from entry-level jobs to top managerial positions.
Despite the fact that the salary for a financial accountant can vary depending on their qualifications, experience, and the nature of their work, let us take a look at the average salary through the official data acquired.
As of 2021, accounting professionals average $60,057 a year. This data was computed by averaging the salaries of 26,210 anonymous professionals. Their annual salaries ranged from $41000 to $88000.
Moreover, an entry-level professional earns $45,192 every year. A junior accounting professional makes $49,206 a year. The average base pay of accounting professionals at Google is $1,24,003 a year. Similarly, companies like PwC and Deloitte average $68,311 every year.
Frequently Asked Questions (FAQs)
They should possess multiple skills such as accounting and finance, analytical and mathematical skills, communication skills, computer proficiency, business know-how, time management, and a clear understanding of corporate laws and taxation.
Accounting is a discipline that demands extensive knowledge of accounts, finance, business, and law. Therefore, it is all about excelling in the various skills and abilities required for becoming an accountant. Moreover, with continuous practice, one might develop a keen interest in the profession, making it easier.
These professionals have expertise in finance and accounts. They serve individuals, business entities, and government organizations. Their roles include the recording, classifying, and summarizing of financial transactions. The primary objective is to report financial performance accurately. The five trending career options include auditor, financial accountant, tax accountant, financial analyst, and management accountant.
This has been a guide to what is an Accountants. Here we explain the salary, responsibilities, how to become one, job prospects, roles, and duties in detail. You may also have a look at these articles below to learn more about finance –