The Nine (9) Functions of Accountants

The functions of accountants are multi-facet because it covers all the process involved in the conception of a business idea, the birth of the business, its sustenance, and possibly the winding-up of the business if need be.

1. Maintenance of Books of Accounts

This function includes the preparation of all the subsidiary books of account namely sales day book or journal, purchases journal or day book, returns inwards day book or journal, returns outwards day book or journal, cash book, petty cash book, and journal proper.

The above records are prepared and transferred to the appropriate accounts in the ledgers by the accountant before the preparation of the trial balance.

The accounting records above are kept to know the amount of cash and cheques received and paid so that the organization will know how much money it has at any particular time.

It’s also to reveal the goods purchased and sold on credit and for cash. This enables the organization to know who owes it money, those to whom it owes money, and how much.

2. Preparation of Financial Statements

One of the functions of an accountant is to prepare financial statements that can be relied upon by business organizations and other third parties.

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The financial statement prepared by accountants should include a statement of profit or loss and other comprehensive income, a statement of financial position, a statement of changes in equity, and a statement of cash flows.

The above statements provide the required information on business income, expenses, profit, assets, liabilities, and capital. It’s the accountant that prepares these statements at regular intervals but they must be timely and accurate.

3. Interpretation of Financial Statements

In addition to the preparation of financial statements, accountants’ functions include the analysis and interpretation of the prepared statements to different groups of users of the statement because not all users of financial statements have the required technical expertise to understand or decode the accounting language with which financial statements are prepared.

The contents of financial statements that are prepared by appropriate laws and regulations are further broken down into simple language and calculations to explain the statements to different users by the accountant.

This function enables the non-accountants to understand what financial statements contain and their implications for the business organizations in both the short and long runs.
Without accountants, financial statements will not make any meaning to many people.

Accountants, therefore prepare some analyses such as returns on investment, cash ratio, liquidity ratio, leverage ratio, returns on capital employed, average stock, cost of capital, and return on equity from the financial statements.

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This analysis will show the profitability of the business, whether the business will be able to pay its debts or not, the level of activity and productivity, and the effect of loans on the organization’s profitability and financial stability.

4. Statutory Audit

As explained in chapter one auditing is a branch of accounting, this can be auditing carried out to meet stated laws and regulations which is referred to as a statutory audit.

Accountants that choose to be auditors provide external auditing services as external auditors to both trading and non-trading organization in compliance with government regulations.

The external auditing service provided by accountants is to ensure that complete and reliable financial statements are published or released to the public by companies so that creditors, government, investors, and other users can rely on it for decision-making.

The auditor is expected to form an independent opinion on the audited financial statement after gathering various forms of audit evidence from the audit exercise. The auditor’s report should show the ‘true and fair view of the financial statements audited and the scope of work carried out.

5. Assets Safeguarding

One of the accountant’s functions is to safeguard the assets of an organization through proper documentation and internal control mechanism such that the correct amounts of money are paid to those entitled to them at the right time and collection of the company’s debts when due.

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6. Tax Services

Companies are required by law to pay levies and taxes at different periods to the local, state, and federal governments depending on the nature of the organization’s business and the sector to which the company belongs.

The calculation, preparation, and remittance of appropriate tax payable to the government are the function of the accountant.

Accountants, therefore ensure that they are conversant and versatile in taxation to represent the interest of their organization accurately so that the company will not be subjected to tax penalties for non-compliance with relevant tax laws either in full or in part.

Accountants also engage in tax planning for organizations with the possibility of minimizing the tax payable. The government also engages the services of an accountant to investigate the adequacy of taxes paid by organizations.

7. Financial Advisory Services

Financial advisory services are not too common and unique service es provided by experienced accountants for different organizations. These services include share registration with the company’s registrar and the stock exchange.

Formation and liquidation of companies, investment analysis and appraisal for current and new investments, and business expansion consultancy service which include loan packaging from financial institutions.

8. Management Advisory Services

Many organizations rely heavily on the multi-disciplinary and extensive knowledge of accountants to provide management advisory services to them. Accountants render professional advice in the area of mergers, takeovers, and acquisitions between two or more companies.

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Any organization that wants to issue shares to the public also needs a reporting accountant as provided for by government regulation. There is no end to the services that accountants render in their capacity as management advisors.

The services include recruitment, assurance, outsourcing as the company’s representative, installation, and training on the computer-based accounting system to adopt and advice if an organization should enter a new line of business or divest.

9. Investigation Services

Internal control systems are instituted by men and there are people in organizations that want to commit fraud and therefore look for ways to subvert the control system.

Since no organization is immune to fraud, the services of accountants are engaged to investigate fraud at different levels in organizations because of their technical competence to trace financial transactions from the beginning to the end.

Accountants also provide services to investigate any other matter in addition to fraud for which investigation services are required by an organization.

In summary, an accountant is a person who carries out accounting functions for or within an organization. Accountants include financial accountants, cost accountants, management accountants, and auditors.

In addition to the preparation of financial statements, accountants’ functions include the analysis and interpretation of the prepared statements to different groups of users of the statement because not all users of financial statements have the required technical expertise to understand or decode the accounting language with which financial statements are prepared.

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