The role of accounting in an organization

 I. Introduction

As a Graduate Trainee at an SME providing accounting and financial services in the UK. I have a duty to prepare a blog providing information about accounting for the purpose of marketing and promoting the accounting services at my company to new and existing clients. 

II. Purpose of the accounting function within an organization

1. The purpose of accounting

Accounting is concerned with recording and reporting a company's financial data, financial position, financial results, and cash flow. This data will be used to help the company develop investment strategies and manage the business (Bragg, 2022).

2. The scope of accounting in organizations

The accounting scope includes all transactions and activities of a company, including bookkeeping, and capturing financial information so that timely reports can be issued. Accounting also helps businesses make important decisions by monitoring performance and measuring profitability, liquidity, and solvency (Mamgain, 2021).

3. The branches of accounting and job skillsets required for accountants

a. The branches of accounting

The most popular accounting majors are financial accounting, cost accounting, and tax accounting.

• Financial accounting: Using financial statements, record, summarize, and report the company's business transactions. Financial statements provide creditors, investors, and tax authorities with information about a company's operations. (Javed, 2018)
• Cost accounting: A cost accountant is in charge of recording, analyzing, and reporting all expenses for a company. Cost accounting is classified into four types: Standard cost accounting, activity-based cost accounting, lean accounting, and marginal cost accounting are all types of cost accounting (Javed, 2018)
• Tax accounting: Tax accounting focuses on the transactions that affect the tax of the business and the objectives related to tax calculation and proper tax documentation preparation. Help determines the company's tax liability and reports it to the government (Javed, 2018)

b. To be able to become an accountant, the following basic technical skills are required:

• Using accounting software: An accountant needs to know how to use basic accounting software such as Excel, and Google Suite, ... This will help to automate statistics, reduce working time, and be more efficient (Gallagher, 2022).

• Financial statement preparation skills: Financial statements are a very important thing for businesses, so the knowledge of how to create financial statements is an essential skill of an accountant. Accountants are responsible for creating, tracking, and reporting balance sheets and income statements (Gallagher, 2022).

Soft skills of an accountant:

• Communication: Accountants need to know some basic communication skills as they will have to attend meetings with clients, colleagues, and stakeholders. As well as will have to communicate financial updates as quickly as possible so that the company can make timely strategies (Gallagher, 2022).

• Time management and organization: The workload of accountants is a lot, so the arrangement of time is very important. It is also important for accountants to keep in mind the important deadlines for tax filing and financial reporting (Gallagher, 2022).

• Problem-Solving: This is a very essential skill of an accountant, they need to know how to solve problems that arise, and take effective measures to help the organization meet its goals (Gallagher, 2022).

III. The accounting function within the organization in the context of regulatory and ethical constraints

1. Regulation requirements in accounting

Accounting regulations frequently include entry and licensing requirements, as well as requirements for specialized knowledge (IFAC, 2007). Accounting standards are principles that are standardized and define policies and practices. The UK currently employs GAAP - the 'Generally Accepted Accounting Principles' - as outlined in the FRS, which promotes transparency in financial reporting and allows for comparisons of different companies' financial positions (ICAEW, 2023). Accounting standards vary by country and include revenue recognition, allowable depreciation methods, stock measurement, and more.

2. Ethical requirements for accountants

The most important thing to be able to become an accountant is to be ethical. Therefore, the American Institute of Certified Public Accountants (AICPA) is an organization that has developed professional accounting ethical values, including:

• Integrity: This is a fundamental factor, requiring accountants to be honest and straightforward with clients' financial information. Accountants should refrain from obtaining personal gain through the use of confidential information (Vitez, 2019).
• Objectivity and independence: Accountants must not have conflicts of interest and shady business relationships when performing accounting services. Objectivity and independence are also important ethical values for auditors (Vitez, 2019).
• Carefulness and competence: Carefulness requires accountants to exercise their capacity, diligence, and caution while working. Competencies are often based on education and experience, and a sound understanding of financial information (Vitez, 2019)

IV. The context and purpose of the accounting function in meeting organizational, stakeholder, and societal needs and expectations

The role of accounting is very important today, there are 2 main types of users using accounting information: internal users and external users. Each member of the target group uses accounting functions with different contexts and purposes

• Government Agencies: To be able to plan activities for a financial year, government agencies have to depend on accountants. Accountants help prepare budgets, and financial statements, and prepare for audits (Writers, 2019)
• Employees: Employees use accounting information to learn about their finances, sales, and profits so they can determine how well they're doing. Moreover, they are also interested in salary and benefits for employees (Siddiqui, 2015).
• Supplier: Suppliers use financial information to be able to assess the current financial position of the company. They use financial information as part of the due diligence process, helping to identify the risks associated with doing business with their clients (Codjia, 2017).
• Creditors: Creditors need to determine the creditworthiness of the business, so they need to pay attention to accounting information. The accounting information will help the creditor to evaluate based on pre-established credit terms and standards. Thereby helping them to easily analyze as well as make rational decisions (Siddiqui, 2015).
• Investors: When investors want to invest money in a company, the first thing they do is look at the financial statements of that company. This helps protect their investment. Moreover, accounting makes it possible for them to determine the value of assets, and estimate the profitability as well as the risk of the investment (Blokhin, 2021).

V. Critical evaluation of the role of accounting in informing decision-making to meet organizational, stakeholder, and societal needs within complex operating environments

Today, in a complex operating environment, when technological change is increasing, it is also the time when the economy and people must change to keep up with the global trend. Technology's rapid advancement has had a significant impact on all industries. AI, IoT, and other technologies have created trends for all professions in society, particularly accounting. The most significant impact of technology on accounting is the gradual adoption of computerized systems to track and record financial transactions (Ghasemi et al., 2011). It is clear that the impact of technology 4.0 has caused the role of accounting to change dramatically, from the traditional system to the technology system.

As can be seen, technology has significantly altered the role of accountants, but it also makes the job of an accountant much simpler and more efficient. Internet-related technologies enable greater control and better corporate financial reporting. For example, cloud computing enables accountants to access the company's financial data at any time, from any location, and in real time, allowing financial information to be delivered faster, more accurately, and in real-time (II, 2022). Accountants can uncover insights, plan, and generate a wealth of effective value information by utilizing advanced analytics, AI, machine learning, and a variety of other cutting-edge technologies. Accounting plays a critical role in every business, so accountants must quickly adapt to the new technology era in order to ensure that the company's financial system is reliable and sustainable (Heller, 2022). As a result, accountants play an important role in decision-making because they are the ones who provide the company's financial position through the identification of economic problems, analysis and presentation, and the application of financial statements technology. These jobs will become more efficient and easier as technology advances (Jain, 2021).

Furthermore, as all processes become more automated, accountants must develop new skills and expertise to benefit the business. They must improve their knowledge of cloud-based payroll and human resource information systems, as well as ERP (Beaver, 2021). Transactions are becoming increasingly complex as technology advances. Accountants must constantly innovate and learn in order to handle transactions efficiently and effectively, thereby assisting businesses in meeting their objectives.

Reference list

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ICAEW (2023). Researching UK accounting standards. [online] www.icaew.com. Available at: https://www.icaew.com/library/research-guides/uk-accounting-standards.

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