Text 2d. Accountancy as a profession

Accountancy (profession) or accounting (methodology) is the measurement, statement or provision of assurance about financial information used by managers, investors, tax authorities and other decision makers to make resource allocation decisions within companies, organizations, and public agencies.

Practitioners of accountancy are known as accountants. The work of the accountant is rather complicated. It's diverse in nature and vitally important. Financial accounting is one of its major branches. Historically it has involved processes by which financial information about a business is recorded, classified, summarised, interpreted, and communicated. Tax accounting is the accounting needed to comply with jurisdictional tax regulations.

This work is diverse in nature but basically it deals with recording, summarising, analysing and verifying business transactions in books of accounts. This task is of great significance because the accountant provides information necessary for economic management. And the accountant is effective if he supplies meaningful information promptly and in a clear language. Thus, the modern accountant is playing an increasingly important role in today’s business activity. All that explains why very often accounting is referred to as the «language of business».

Really, it is impossible to manage a business operation without accurate and timely accounting information. The primary users of accounting information are managers. The firm's accounting system provides the information dealing with revenues, costs, accounts receivable, amounts borrowed and owed, profits, return on investment, and the like. This infor­mation can be compiled for the entire firm; for each product; for each sales territory, store, or individual salesperson; for each divi­sion or department; and generally in any way that will help those who manage the organization.

Managers and em­ployees, lenders, suppliers, stockholders, and government agen­cies all rely on the information contained in financial statements. These two reports — the balance sheet and the income statement — are summaries of a firm's activities during a specific time period. They represent the results of perhaps tens of thou­sands of transactions that have occurred during the accounting period. Accounting information helps managers plan and set goals, organize, motivate, and control. Lenders and suppliers need this accounting information to evaluate credit risks. Stockholders and potential investors need the information to evaluate soundness of investments, and government agencies need it to confirm tax liabilities, confirm payroll deductions, and approve new issues of stocks and bonds. The accounting system must be able to provide all this information, in the required form.

A good accountant has to be interested in things like figures and calculations to be able to master techniques for compiling and presenting accounts. He should be able to think clearly, to express his thoughts and conclusions in a simple and clear language, so that they could be understood not only by other accountants, but also clients or management without accountancy training.

Some of the qualities of the accountant are inborn, others must be acquired by education and experience. Among the most important qualities are the following: a good knowledge of the theory of accounting and the ability to apply its principles in practical life; a broad general outlook and understanding of economic trends and events; responsibility, decision-making ability, the knowledge of accounting techniques; the ability to get on with colleagues, personnel and people in general.

Adequate computer skills are very important too, so the demand for computer knowledge in accounting is growing.

The accountant has to know his own mind and have confidence in his professional judgment. It is essential that the advice he gives should be impartial like his accounts.

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