Role of an accountant

1. Role of an accountant.

Accountants are the persons who play a very important role in every industrial organization. We
can also say that without an accountant an organization cannot work effectively. Accountants are
the persons who practice the art of accounting. Accounting is a special branch of knowledge. In
accounting we record very useful data of business and there should be an expert to record the
important data. The person who records the data is called as an accountant. The accounting
system and the accountants, who maintain it, provide useful service to the society. Accountants
can broadly be classified into two categories:
1. Accountants in public practice.
2. Accountants in employment.



1. Accountants in Public Practice
Accountants in public practice offer their services for conducting financial audit, cost
audit, designing of accounting system and rendering other professional services for a fee. In
INDIA their two recongnised bodies where such accountants are members. (i) the institute of
cost and works accountants of India (ii) the Institute of Chartered Accountants of India.

2. Accountants in Employment
These are accountants who are employed in non-business entities or business entities.
Non-business entities are those organizations who work for the benefit of society not for profit
motive i.e., Educational institutes, Hospitals, Churches, Museums etc. business entities are those
who work for profit motive. These accountants provide information for tax returns, investment
decisions, performance evaluation, financial reporting, budgeting, etc.

Role of an accountant in industrial organisation

1. Maintenance of Books of Accounts. An accountant keeps a systematic records of
the transactions entered by a business firm in normal course of its operations. An
organisation cannot work effectively without recording all the transactions. Every
businessman wants to know about the profit or los of the particular year. Knowledge
about financial position is very important for every businessman for the future planning.
If a business is running in losses then businessman has to take some coactive actions to
come out from that situation that is possible only when you have all the record with you.
There are following some advantages of maintaining proper books of accounts.
(a) Planning for future: Maintenance of books of accounts is very important for
future planning. We can come to know about the business position with the help o
accounting books only. If a businessman is not aware about the profit or loss
derived from his business then there is no benefit of doing that business. So an
accountant can help us to give information about the success or failure of the
business.
(b) Decision-making in business: An accountant plays an important role in decision-
making process. Decision of every business is always based on the past records of

2. that business. Suppose we have to take decision regarding demand of next year
for that we have to study records of past sale figures we have to study the growth
of last few years and on that basis we can forecast demand of coming year. But if
there is no accountant to records the transactions then decision-making may be
difficult.
(c) Co-ordination: co-ordination is a very important function in the success of any
organization if there is no co-ordination among the different departments then
there will be problems. Proper record in books helps proper co-ordination among
production, purchase, finance, personnel and sales departments.
(d) Controlling: Controlling means evaluation of performance. Planning is the first
and controlling is the last function to perform for every organisation but these
both are the very important function to perform. In evaluation first standards are
set and then actual performance is compared with the standard. If there is any
deviation then corrective actions should be taken. So controlling is possible only
if there are proper records recorded by an accountant.
(e) Communication: Communication of business results with the concerned persons
is very essential for the organisation. Shareholders, Creditors, Prospective
investors, Management etc are always interested in detailed information from
company regarding profits because they have to plan for the future investment
planning. An accountant can communicate properly with interested people.
(f) Replacement of memory: A person cannot remember everything about his
business transactions due to human memory. An accountant can help to remember
all the business transactions by recording them in accounting books. We can use
that information after long time when the need arises. This considerably relieves
strain of one’s memory.
(g) Comparative study: A system of recording accounting transactions helps in
comparative study and evaluation of its performance. With the help of past
records we can compare performance of current year.
(h) Taxation purpose: Taxation authorities accept only properly maintained records
for income tax or sales tax purpose. An accountant can help for proper records.
(i) Evidence in court: properly maintained records can help in presenting good
evidence or proof in court as an when it is necessary.

2. Auditing of Accounts: An accountant can also play the function of auditor in the
organization. Auditing is concerned with inspecting of accounting data for determining
the accuracy and reliability of accounting statements and reports. Auditing may be of
following two types:
(i) Statutory Audit: Statutory audit is compulsory for an organization according to
companies act. According to the act organization has to get its accounts audited by a
qualified chartered accountant. The statutory auditor has to report whether the profit and
loss a/c and balance sheet a/c are showing true and fair position of the company.
(i) Internal Audit: Internal audit is applicable in large-scale organizations. In this audit
organization audit all the records for maintaining proper control. They have separate
internal audit department for this. Generally professionally qualified accountant heads
this department

3. 3. Taxation: An accountant has proper knowledge of his client’s accounts. Since he can
present his case in a proper manner in front of taxation authorities. He can also assist his
client in reduction of tax by making proper tax planning.

4. Financial Services: an accountant being having full knowledge of taxation, legal,
accounting matters, can properly advice regarding financial matters. He can suggest his client
regarding most suitable sources of finance, where to invest his hard earned money, selection of a
right and profitable project etc.
In the end it can be said an accountant is a caretaker or a well
wisher of the organization. He helps in accounting matters and also helps in decision making of
the company. We can say that he plays a very important role in the success of the
organization.He gives accurate and timely information. To fit in this role it is necessary that the
accountant develops effective communication abilities, a flexible accommodation and keep them
aware with the latest evolving technologies in the profession.