Introduction to Accounting Framework and Role of Accountant
The theoretical framework of accounting means the set of frameworks, methods, and assumptions that are used to study and apply accounts in financial situations. This also refers to the study of the official changes that affect financial framework and financial reporting by authorities.
An accounting framework is a set of norms that are used to measure, recognize, and present the information that appears in an entity's financial statements. A conceptual framework is defined as a set of ideas and objectives that leads to the creation of a persistent set of rules and standards.
The theory of accounts comprises both the study of historical accounting methods and also the accounting practices that are used in the current financial applications. It also examines the official changes that are made to the financial framework and financial reporting by authorities.
A person, who carries out such an accounting process individually or in any organization, is referred to as an accountant. An accountant is a professional who carries out accounting activities such as audits and financial statement analysis. This process can also be called account analysis. Accountants get employed with any accounting company with an internal accounting department. Sometimes they start their practice individually.
What is the Role of an Accountant?
An accountant carries out all financial activities that are related to the accuracy, collection, analysis, recording, and presentation of financial operations. Generally, the accountant also handles all the third parties, like vendors, customers, and financial institutions. He/she should also be responsible for holding other administrative functions in an organization.
The other roles of an accountant include statutory auditing, internal audit, and taxation. Some of the functions of an accountant are maintaining a book of accounts, statutory audit, internal audit, budgeting, taxation, investigation, managing advisory services, and other roles to act as liquidator, cost accountant, arbitrator, etc.
Roles and Responsibilities Accountant
Now, if we talk about the major role of an accountant in an organization, he plays a significant part in its growth and long-term profitability just like other key stakeholders.
The main responsibility of an accountant is preparing asset, liability, and capital account entries by collecting and analyzing account information.
The basic role of an accountant includes establishing accountability of all the assets under an individual’s control. The image below gives an idea about the role of an accountant.
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Accountant Roles and Responsibilities
To prepare accounts and tax returns
To maintain payrolls and control the income and expenditure
To auditing financial information
To collect and present reports, budgets, business plans, and financial statements
To analyze accounts and business plans
To provide tax planning services about current legislation
To finance forecasting and risk analysis
To deal with insolvency cases
To negotiate the terms of business deals and moves with clients and associated organizations
To meet and interview clients
To manage colleagues, workloads, and deadlines.
Role of Chartered Accountant
It is the responsibility of a chartered accountant to give advice, audit the accounts, and provide accurate information about all the financial records. This might also include financial reporting, forensic accounting, auditing taxation, corporate finance, business recovery, insolvency, or accounting systems and processes.
It is the chartered accountant’s responsibility to implement the accounting systems, prepare monthly financial reports, control the master data of the general ledger, and ensure compliance with the state revenue service.
Most of us would have observed how our parents work and receive their salaries. If we have parents working in the accounting team of an organization or running their business, we will even be familiar with certain accounting terms!
A theoretical framework usually consists of a structure that includes methods and theoretical assumptions which can facilitate the execution of an idea or task. In a financial situation, theoretical frameworks are used to devise accounting norms that can measure, analyse and present financial data as it appears in an organization’s records and reports. Setting out financial objectives also helps create a standardized set of accounting rules and regulations adhering to a strong conceptual yet practical framework.
Theory in accounts today comprises a combination of accounting methods used since historical methods and modern-day financial applications and methods. A qualified professional who sets up, analyses and manages accounting systems and processes for an organization is known as an accountant. They might be employed with a firm that has a robust finance team or is in the process of setting up one. Experienced accountants might also choose to have their consultancy firms. Traditionally, accountants have been responsible for carrying out internal financial audits and analyzing financial statements and reports for the organizations.
FAQs on Theoretical Framework Of Accounting-Role Of Accountant
1. Describe the role of an accountant in an Organization.
A good accountant should organize his work to maximize productivity and allocate time for undisturbed research and analysis. An accountant should be able to document all the financial transactions by entering account information. He should also justify financial actions by analyzing accounting options. He has to keep track of regular business activities like the balance amount in the company’s bank account, the amount that is due from creditors and also the amount that the company owes to the suppliers. He should be able to give detailed information about any transaction. He should be good enough to evaluate the performance and work efficiency of all departments in the organization.
The role of an accountant in an organization is to write up accounts and prepare financial statements and audit the accounts. He should act as a management accountant and sometimes cost accountant. He supports the government, income tax, and revenue department. He also plays a major role in merger liquidation. All his functions and activities make an accountant a key person in a business or an organization.
2. What are the basic principles of accounting?
Any organisation is required to adhere to five basic accounting principles when filing their financial statements or reports for the year:
The Principle of Revenue - It refers to documenting the revenue that is earned by the business.
The Principle of Expense - These are the expenses incurred by the organization when accepting commodities or services from other firms or bodies.
The Principle of Matching - It is the function of matching every revenue item correctly.
The Principle of Cost - It is to maintain a record whereby the historical item of an item can be used instead of the resale cost.
The Principle of Objectivity - It is to maintain a strict record of factual and statistically verifiable data and never resort to using subjective measurements for values.
3. What are the roles and responsibilities of an accountant?
An accountant is responsible for preparing and establishing accountability for various assets of the company, preparing liabilities and capital account entries. He does this by collecting and analysing data received from the client. The accountant is the one who maintains payrolls and monitors the income and expenditures of an organisation. He audits financial information and is responsible for analysing accounts and business plans for their financial viability. He also collates and presents budget plans, reports, business plans and financial statements. He provides tax planning services, forecasting finances and conducting risk analysis. He deals with insolvency cases and negotiates terms and conditions with clients and organisations as well as manage personal workloads and deadlines.
4. What is the need for an accountant in an organisation?
The accountant is a highly beneficial position for an organization. He is responsible for ensuring all the financial activities of the company such as accuracy of financial data, collection and analysis of data and the recording and presentation of financial operations. The accountant or the accounting team also handles financial transactions with vendors, customers and other financial institutions such as an external auditing or crediting firm. The primary roles an accountant fulfils are to conduct internal audits, statutory audits and filing for tax returns. They also handle payrolls and bank transactions for the company. They might also offer advisory services, perform arbitration and act as a liquidator when needed. Budgeting, financial forecasting, revenue and expenditure management, maintaining a book of accounts, etc are other crucial functions executed by an accountant.
5. What is the role of a chartered account?
The primary role of a chartered accountant is to perform accurate and credible financial audits for the company. They also perform advisory and financial forecasting functions. When they have to provide reliable and accurate information about the financial records of a company they will engage in compiling financial reports, conduct tax audits, perform forensic accounting, look into corporate finance and insolvency issues, help business recovery if needed and establish solid accounting systems and processes in the firm.
The chartered accountant’s primary responsibilities include -
Implement strong accounting systems for the company
Prepare monthly and yearly financial reports or records
Control the master data in the financial ledger
Ensure that the organisation complies with the state’s revenue and taxation regulations
6. What are the skills an accountant must possess?
Primarily, an accountant must possess strong written and oral communication skills as they will be required to communicate with the management, employees and external functionaries such as vendors and customers and banks all the time. They should possess good analytical problem-solving skills as finance is the core of any business. A crucial skill is mathematical thinking and reasoning and performing systems analysis. Time management is another soft skill as an accountant’s job includes multiple aspects. They are also required to be critical thinkers and people-friendly.