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Nowadays, majority of the large companies have at least few accountants to help manage and handle the company's account. There are a lot of people out there questioning the need of having an accountant in the company, and the importance of an accountant. What is an accountant? The word concept implies that as an accountant is the one that keeps, audits and inspects the financial records of individual or business concerns and prepares financial and tax report for the company ("accountant", n.d.). Back to the earliest days, there were no computers to help them to insert the information into the ledgers and prepare financial statement. As we all can see, technology is improving day after another, and up to date, computers are being used throughout the globe in storing and also keying in information into databases and also to keep track of company's accounts. Companies still need accountants to help manage the company's account, as accountants play vital roles and they help complete tasks required for a company to stay in shape, by help keeping the financial information in track. Accounting is very important to all companies as well as to the individuals.
There are few types of accountant that needed by the company which are Financial Accountant, Management Accountant, System Accountant, Project Accountant and Accountants as internal auditors. But the two main accountants that is a must to a company are financial accountant and management accountant. The difference is managerial accountants is primarily "concerned with the provision of information to managers within the organisation" (Davies & Boczko, 2005, p.17) such as cost of the product, planning and control, and decision making, and limited themselves from providing information to the external reporting. While, Davies and Boczko (2005, p.16) defines that financial accountant is "responsible in general for the reporting of financial information to the owners of a business, and preparing specially for the external reporting of financial information, statutorily required, for the shareholders".
As a financial accountant, they should record all the financial transactions such as company's profit, wages, and other expenditure that the company had spent for that particular period of time and to prepare a balance sheet that shows the financial position at the end of each period. According to Rickwood and Thomas (1992, p.2), "the things that included in the account are the amount of cash and money at the bank; other assets that the business owns; debtors and creditors; amount of capital that the owner has been invested into the business and money that has been borrowed by the business".
Besides that, the qualified accountant might be able to help in giving advice to the company, regarding taxation issues. Even though accountants are not professionally equipped with the knowledge regarding taxation issues, however, more or less, they will be able to help in avoiding paying unnecessary taxes (Abbas, n.d., para.4). Therefore, accountants have to record all the income and expenses and keep the receipts so that it might be able to support in tax deductions (Tax Tips for the self-employed, n.d., para.2).
Apart from that, accountants also help businesses prepare accounts that are needed by the bank. There are some businesses that need loans from the bank in order to keep their business running. The banker will consider the loan application if the accountant provides them the company's account that has been required by the banker (Abbas, n.d., para. 7). Aside from banks, "accountants also need to make some relationships with the fund managers and also insurance companies" (Gray & Bebbington, 2001, p.9) which they also needs to have some relevant information about the company before approving any of the contract.
According to Abbas (n.d., para.9), accountants are also able to help the company with budgeting and cash flow forecasting as well as managing the finances. The accountant will investigate the occurred cost. The cash flow statements will get affected if there are changes in current assets and liabilities. Rickwood and Thomas (1992, p.326), explained that "profit is a symbol or measure the business performance and it is an ultimate success and survival of an enterprise depends on its ability to generate and use the cash in the most efficient manner".
Besides that, financial accountant also have the responsible to provide information in the company's annual reports which will show the company's performance figures (Gray & Bebbington, 2001, p.9). The annual reports will be including the financial statements and the auditors' report, for their shareholders on every end of each year. They are important as they helps shareholders understand how their investment is doing and they are also a good starting point for the people who are considering buying shares in a company (Understand annual reports, n.d.).
After financial accountants have collected all the relevant statement, they will send the reports to managerial accountant. This action enables them to plan and control their business activities for the present and the future which will affect the operation of the company (Rickwood & Thomas, 1992, p.2). There are few things that the managerial accountant can do, such as profitability of the business; level of activity and productivity; efficiency of credit and stock control procedures; the solvency and liquidity position; and the effect of any loans on the business's profitability and financial stability (Rickwood & Thomas, 1992, p.2).
The main role of a management accountant is that they have to "provide management with data designed to assist in the formulation of a plan covering all the business functions" (Murphy, 1963, p.8). The business plan included the firm's product markets and competitors' cost and cost structures, capital items and revenue projections which will affect the making judgements on the effectiveness decisions (Weetman, 2003, p.461).Success of effectiveness of the certain plan will have to depends on the information that provided by the accounts to the manager. Some of the companies make their decision by following their traditional types of management information they have such as regulatory compliance date etc (Gray & Bebbington, 2001, p.46).
According to Gray and Bebbington (2001, p.9), management accountant will also advise the company about the investment appraisal to have a very real tendency to narrow the range of issues considered and encourage short-term, less risky options. The environmental issues still is a matter that will be affecting the costs and benefits for the future generation purposes. This is an important role because it will help the company in reducing cost in their environment which is impact together with an estimation of the likely costs or benefits to the organisation. "Many organisation have reaped with such benefits from the so-called 'win-win situations'"(Walley & Whitehead, 1994).
Apart from that, Weetman (2003, p.462-463), has explained that there is "a cycle of profit planning and control which is one of the management accountant role by starting with the management of existing performance". From the existing performance the cycle moves to the examining the future environment which the accountant might need to use the techniques of economic analysis. The management accountant then will need to provide information on targets that they wish to achieved. The next cycle is by formulating a strategy which the accountant is expected to provide more detailed budgets which translate the strategy to the next cycle which is operating plans. Management accountant must be ready to measure the results once the plans are implemented and compare it with the outcome expected when the operating plans were set (Weetman, 2003, p.463).
Other than that, Barbera(1996) made a research and found out that management accountants' customers are more broadly defined which is included engineers, operations, marketing, cross functional teams and cellular work teams. Therefore, the role of management accountant has been become wider such as provision of expect advice, team leadership, leadership in using statistical/analytical techniques, the design and management of information measurement systems, providing information, guides, analysts, internal consultants, and interpreters and managers.
According to Gray and Bebbington (2001, p.9), "there are other types of accountant which will also needed by the company such as system accountant which their role is to change the management information system and change the financial reporting systems". Besides that, project accountant also has the same role as the management accountant which is investment appraisal. The function of this role is to have some investment techniques to make people to have the consideration into investment decisions (Gray & Bebbington, 2001, p. 165). They also implies that "project accountant will develop an environmental audit of propose corporate deals which to follow directly the procedures for adopting the current standards as enshrined in" (Gray & Bebbington, 2001, p.97).
Lastly, Gray and Bebbington (2001, p.9) also mentioned that the accountants will act as internal auditors. Internal auditors are to ascertain the truth of the effectiveness of the company's accounting system such as mismanagement, waste, or fraud. They will examine and evaluate the company's financial and information systems, management procedures, and also to ensure that the records they made are accurate (Occupational Outlook Handbook, 2007). Aside from that, the auditors will review the company's operation, evaluate their efficiency, effectivess, and compliance with the corporate policies and the government regulations by using computer system as they will record the transactions automate and make the information readily and it also help the management evaluate the effectiveness rather than personal observation (Occupational Outlook Handbook, 2007)