(1/5) What is An Accountant? – Part 1…

The Big Picture: Overview, Number 1 of 5 in this Series introducing accountants and their role in business.

According to Wikipedia, that late-night refuge of students and deadline-pressed bloggers everywhere, an accountant is “a practitioner of accounting or accountancy” which is “the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources.” What’s interesting about this description is that, although it does, in fact, capture many of the aspects of an accountant’s role in a company, it fails, in my view at least, to convey the spirit of the work that an accountant really does.

The disclosure and provision of assurance about information, that is, the provenance of your tax return, the veracity of your accounts as a whole, submissions to Companies House and so on, relates to compliance. Compliance is, the set of activities that every company must perform in order to operate within the law. True, for many small businesses, this is the only service that an accountant provides, but, for any larger business, and certainly for every serious entrepreneur and every multinational corporation that there is, the true role of the accountant lies in what are frequently called “Added Benefit Services.”

The name itself is misleading. “Added Benefit Services” are at the heart of real accountancy. They include – as the original definition suggests – the gathering of data on every aspect of a company’s finances from KPIs to cashflow, derivatives to debt-age indicators, but beyond this, the dispensation of advice about financial matters, as part of strategic planning and management. This is particularly important in the modern world, where sudden change and volatility are the norm. An experienced accountant can help a company navigate safely through uncertainty and even harness unstable conditions to their advantage.

The posts that follow in this series look in more detail at these aspects of accounting, beginning with the next post which deals with compliance and offers a good look at the basic services that accountants provide. The other topics are “Added Value Services”, Types of Accounting and Specialties, and Accounting in a Hostile Environment, which you might also like to look at.

Feb 20, 2013