What do accountants do?
Accountants are vital to the running of all businesses. They analyse and provide trustworthy information about financial records. This could involve them in financial reporting, taxation, auditing, forensic accounting, corporate finance, business recovery and insolvency, or accounting systems and processes.
Depending on what area of accountancy you choose to specialise in, typical tasks could include:
- Continuous management of financial systems and budgets.
- Undertaking financial audits: an independent check of a company’s financial position.
- Liaising with clients to provide financial information and advice.
What does it mean to be ‘chartered’?
Whether you’re an accountant, engineer or surveyor, being ‘chartered’ means you’re a qualified professional in a particular field, and a member of a professional body with a royal charter, such as ICAEW – find out more about joining the institute and its benefits.
Types of accountancy
There are two main types of accountancy – financial and management accountancy.
Management accountants provide financial information internally within an organisation, for example, for the use of management to aid in decision making. As a management accountant, you might get involved in performing budget analysis, financial planning and forecasting. The emphasis of management accountancy is on forward planning and the achievement of financial goals.
Financial accountants provide information for the use of people external to a company, such as shareholders, investors and creditors. Financial accountants focus more on the summarising of a company’s current position, reporting on a company’s profitability, liquidity, solvency and stability. Unlike management accounting, financial accounting is required by law.
Many graduates entering the accountancy profession will do so via financial accountancy, working in public practice. The work you do in public practice can vary depending on what area you specialise in. You could work within:
- Audit, assurance and advisory
- Business recovery and insolvency
- Corporate finance and risk management
- Forensic accounting
Areas of work in public practice:
Audit, assurance and advisory
Simply put, assurance means getting an independent expert to look at something and give their views on its accuracy or quality.Audit is generally the core activity within the assurance and advisory work undertaken by accountancy firms. An audit is an independent check of whether an organisation’s financial statements are a true and fair reflection of its financial condition. Audits are normally conducted at a client’s premises by a team of auditors who work with senior management and staff at all levels.
Typical activities that auditors carry out include risk analysis, getting to know the client’s business, building relationships with the client and checking items that appear in the financial statements. As a result of audit work suggestions can be made about how the business could improve its controls and business processes.
Advisory services provide assistance to companies faced with opportunities for growth such as a merger or acquisition, or critical challenges such as fraud, litigation or reorganisation. Many large accountancy firms offer advisory services to
clients, as companies nowadays strive to improve business performance, effectively manage through crises and gain the greatest amount of value from transactions.
Business recovery and insolvency
From time to time a business may encounter problems; for example it may find itself short of capital or it may need to re-organise its operations in order to improve cash flow.
In some cases a business recovery expert may be able to step in and help steer the business through its difficulties and back towards a successful future, whereas in other situations an insolvency expert may have to guide the business through the insolvency or winding-up process, selling off the business’s assets and paying creditors. Both areas of work involve high levels of diplomacy and robustness and a good level of legal and commercial understanding.
Corporate finance and risk management
Accountants who work in this field are involved in mergers and the acquisition of companies: they assess the financial health of a target company in order to calculate the value of the company for a potential merger or takeover.
Risk management is the identification, analysis and economic control of risks that threaten the assets or earning capacity of a business. Investors and business managers use risk assessments to determine whether to undertake a particular venture, what rate of return they require to make a profit, and how to minimise an activity’s potential losses.
Forensic accounting is the detection and prevention of fraud. It involves the use of accounting, IT and investigation skills to search for evidence of criminal conduct on behalf of lawyers and insurance companies. Forensic accounting is varied, and often involves legal disputes, requiring in-depth research, analysis and even being an expert witness in court. No two cases are the same.
The type of clients varies from large listed corporations and offshore trusts to small partnerships, while on the criminal side, cases can include white-collar crimes and other general offences, such as drug dealing, where a visit to a defendant in prison is not uncommon. Large firms often have specialised departments in litigation support composed of qualified accountants.
A mixed skillset is needed: in addition to the research and analytical attributes, the ability to communicate effectively both in writing and in the courtroom is essential. As networking and marketing is where the work comes from, forensic accountants need to develop a wide range of referrers.
Tax accountants work in tax compliance, which involves completing and submitting tax returns for both individuals and companies. They are also involved in tax advisory and planning, which involves analysing and recommending changes in how individuals and companies structure their finances so as to minimise their tax payments within the framework of legislation. This does give rise to ethical questions, making ethics an important issue for tax accountants. For further information on becoming a Chartered Tax Adviser take a look at our Tax careers area.