The role of accounting in an organisation

                        

A proficient accountant will not make a successful company

But behind a successful company is many proficient accountants

This article will help readers better understand the role and function of accounting.

 Accounting purpose and scope in the complex operating environment

  Accounting can be defined as the process of recording financial transactions pertaining to a business. The accounting summarizing analyzing and reporting this transaction to oversight agencies, regulators, and tax collection entities. The financial statements used in accounting are a concise summary of financial transactions over an accounting period, summarizing a company’s operations, financial position, and cash flow (Fernando,2021).

The scope of accounting will affect the following three groups of people: internal users, external users, and government. And each object will have a different report type. For external users, users will use GAAP (General Accepted Accounting Principles) (Fernando,2021) which is a financial statement for external people such as suppliers, banks, customers, investors, potential investors. GAAP will give them an overview of the financial picture of a business and also provide details about the increase and decrease of each cash flow so that people know that the business or company is in good condition. how to behave. Similar to external users, the government also uses another main type of report which is IRC (Internal Revenue Code) (Kagan,2021). As for internal users, they can use both GAAP and IRC. 

The main branches of accounting and job skillsets and competencies

The main branches of accounting: According to McAdam & Co, there are three primary forms of accounting, despite the fact that there are eight branches in total. Tax accounting, financial accounting, and management accounting are the three main categories (Segal, 2021).

3.1 Financial accounting

Financial accounting is an accounting tool that may involve the process of copying, aggregating, and reporting a multitude of transactions arising from business activities over a period of time. It is the original determinant of accounting rules. Transactions are aggregated during the preparation of financial statements, including balance sheets, income statements, and cash storage statements, which record a company's results of operations for a single fiscal period (Cambridge, 2021).

Technical jobs and competencies of financial accountants:

Analytical skills

Eager to learn

Excellent communication skills

Have a desire to experiment and improve the way an organization work

3.2. Management accounting

Management accounting is the practice of identifying, measuring, analyzing, interpreting, and communicating finances to managers in pursuit of organizational goals. It differs from financial accounting because the accounting manager's target project is supported by internal users of the company making informed business decisions (Cambridge,2021).

Job skills and competencies of management accountants:

Good decision-making skills

High computing power and business acumen Presentation of financial information

3.3. Tax accounting

Tax accounting refers to the rules used to create tax assets and liabilities in the accounting records of a business or individual. Tax accounting is derived from the Internal Revenue Code (IRC), rather than one of the accounting frameworks, such as GAAP or IFRS. Tax accounting can result in the generation of a taxable income figure that is different from that reported on an organization's income statement (Cambridge, 2021).

Job skills and competencies of tax accountants:

Collection and processing of tax-related information

Analyze information and advise managers

Do tax report

A critical evaluation of the accounting function in informing decision making and meeting stakeholder and societal needs and expectations

As mentioned above, the main task of accounting is to provide necessary information to users so that we cannot underestimate the function of accountants in providing data to make decisions and meet their needs and expectations. It can be said that the influence of providing accounting information affects all actors in the economy

Functions of accounting for external users: external users of accounting information are usually creditors, investors, customers (Siddiqui,2021)

Creditors: allow them to determine the creditworthiness of the business.

Investors: are concerned with the inherent risks of investing and profit. Because it is important to evaluate the feasibility of investing in the company

Customers: to assess the financial situation of the business, especially when they stick with it for a long time, because it allows maintaining a stable source of business.

 

Functions of accounting for the government (Siddiqui,2021)

Legal authority: ensures that it conforms to rules and regulations and that it protects the interests of those involved who rely on such information.

 

Functions of accounting with internal users: the users of internal accounting information are usually management, employees, and owners (Siddiqui,2021).

Management: greatly helps the leadership in the planning, control, and decision-making process, helping the manager to perform his job better.

Employees: use accounting information to understand the financial health, sales, and profitability of the business to determine their level of job security, potential future compensation, benefits retirement, and job opportunities.

Owners: analyze the viability and profitability of their investments, it also leads them to determine any future course of action.

Accounting systems and the role of technology in modern-day accounting

An accounting system is a set of accounting processes with integrated controls and procedures. The accounting system typically covers the main scope of an organization's functions, including the purchase of goods and services, the sale of goods and services, the payment of employees, and financing activities, such as debt collection, selling shares, and paying interest to lenders. Specific components of an accounting system include accounts payable, invoices and accounts receivable, fixed assets, inventory, and payroll. Depending on the volume of transactions being processed, there may be dedicated accountants assigned to each previous module (Bragg and Bragg,2021).

 

In today's accounting, the sector plays an essential role. E-Accounting, often known as internet accounting, is a relatively new invention in the accounting sector. All of your transactions will be recorded in an internet server or data system, similar to a website, blog, or web blog. However, login id and passcode will be used to open or create profiles. E-Accounting is still in its infancy, but by 2010, it will almost certainly be commercialized. E-Accounting has been adopted by a vast number of businesses. Both the accountant and the employer are pleased with E-Accounting because it is inexpensive and free of data redundancy or failures.

Accounting information accuracy and dependability: Using financial statements like the Excel program in financial reporting has been proved to effectively eliminate data inaccuracies, lower expenses, and increase efficiency.

Timeliness in data and communication provision: The capacity to compute, accelerate, access, exchange and transfer data across computer networks has aided in the rapid and reliable treatment of economic accounting...

Issues of ethics, regulation, and compliance and the extent to which they are constraints or threats to the organization

In the current period, an accountant must always follow established ethical standards to avoid mistakes in the profession. The typical example of the Enron company that shocked the world in the early 2000s has become a lesson in general for businesses and accountants in particular. Andersen contracted as a consultant to Enron, then acted as an auditor to certify Enron's financial statements. A type of activity both kicking the ball and blowing the whistle. Through the use of MTM and SPV, people in high positions of Enron and the auditing firm Andersen have earned themselves billions of dollars. And when the incident was exposed, the company's stock price continued to fall, more than 5,000 employees were forced to quit their jobs, lost their pensions, more than 20,000 creditors owed $67 billion. And those are the consequences of a business, investors and related people have to suffer. From that, we can see that for an accountant, only having professional experience is not enough, they need professional ethics (Segal,2021).

 

And to become an accountant, a real auditor besides the professional training and forging they need to have.

• Integrity in professional ethics: This principle compels all professional accountants to be truthful and honest in all of their professional relationships.

• Objectivity-related professional ethics principles: All professional accountants must adhere to the principle of objectivity, which prohibits them from allowing bias, conflicts of interest, or undue influence from others to impact their professional or business decisions. It's all about business.

• Confidentiality ethical principles: Do not disclose confidential information obtained through professional and business relationships outside the company or employer organization without appropriate and specific authority, unless there is a legal or professional obligation profession or right of disclosure

References

Bragg, S. and Bragg, S., 2021. Accounting system definition — AccountingTools. [online] AccountingTools. Available at: <https://www.accountingtools.com/articles/2017/5/7/accounting-system> [Accessed 16 October 2021].

Dictionary.cambridge.org. 2021. financial accounting. [online] Available at: <https://dictionary.cambridge.org/en/dictionary/english/financial-accounting> [Accessed 26 October 2021].

Dictionary.cambridge.org. 2021. management accounting. [online] Available at: <https://dictionary.cambridge.org/en/dictionary/english/management-accounting> [Accessed 26 October 2021].

Dictionary.cambridge.org. 2021. tax accounting. [online] Available at: <https://dictionary.cambridge.org/en/dictionary/english/tax-accounting> [Accessed 26 October 2021].

Fernando, J., 2021. Accounting Definition. [online] Investopedia. Available at: <https://www.investopedia.com/terms/a/accounting.asp> [Accessed 14 October 2021].

Fernando, J., 2021. Generally Accepted Accounting Principles (GAAP). [online] Investopedia. Available at: <https://www.investopedia.com/terms/g/gaap.asp> [Accessed 11 October 2021].

Kagan, J., 2021. Internal Revenue Code (IRC). [online] Investopedia. Available at: <https://www.investopedia.com/terms/i/internal-revenue-code.asp> [Accessed 13 October 2021].

Segal, T., 2021. Enron Scandal: The Fall of a Wall Street Darling. [online] Investopedia. Available at: <https://www.investopedia.com/updates/enron-scandal-summary/> [Accessed 15 October 2021].

Segal, T., 2021. How Branch Accounting Works. [online] Investopedia. Available at: <https://www.investopedia.com/terms/b/branch-accounting.asp> [Accessed 21 October 2021].

Siddiqui, F., 2021. The users of accounting information and their needs. [online] Linkedin.com. Available at: <https://www.linkedin.com/pulse/users-accounting-information-needs-fareed> [Accessed 14 October 2021].