Every company requires an accountant to record its day to day financial and business transactions. Nowadays, accountants are also involved in tax planning. A qualified accountant can help the company’s management in obtaining important financial information for making key business decisions.
Accuracy and timeliness is critical in the preparation of various financial statements such as profit and loss account, balance sheet, cash flow and funds flow statement and so on. These financial statements are evaluated by various external parties in order to invest money or extend loans to the company. Therefore, it is essential for the accountant to understand business operations and to study the impact of day to day financial transactions on the business of the company.
It is important for the accountant to follow a systematic and organized approach in the management of accounting function. Depending on the size of the organization, the number of financial transactions to be processed/recorded on a daily basis may be very high. A mistake or error in recording any transaction may have a substantial impact on the accuracy of balances in the financial statements.
Five Important Steps To Be An Organized Accountant
Understand Flow Of Business Transactions
It is must for every accountant to gain an understanding of the business operations. Accountant may be required to manage the financial transactions of both the holding company and subsidiary company. In such cases, it becomes important to understand the flow of transactions between both the companies and other transactions conducted with outside parties (such as vendors, customers and so on).
Understand Relevant Accounting Principles And Standards
Financial statements are required to be prepared in accordance with various accounting principles and standards (such as GAAP or IFRS). Compliance with these standards is mandatory in order to ensure that financial statements represent a true and fair picture of the company’s financial position. Therefore, it is essential for the accountant to understand accounting standards applicable to the business.
Maintain Proper Records And Files
Accounting involves proper maintenance of various important documents such as invoices, vouchers, purchase orders, credit notes and so on. It is essential to maintain proper files for all of these documents. These documents are verified by external auditors to establish the fact that financial statements contain accurate and up to date information. In the absence of these documents, it may become difficult to track the transactions recorded in the accounting system of the organization.
Verify Financial Transactions And Documents
Even though company may have separate audit department or company may hire auditors from outside the organization, it is important for the accountant to verify various financial transactions with relevant documents. For instance, an invoice received from vendor should always be verified with the purchase order issued (by the company) before releasing the payment in favor of the vendor.
Report Discrepancies And Fraudulent Activities
A systematic and organized approach on the part of accountant can help him/her in identifying fraudulent issues and internal control deficiencies on time. Such issues should immediately be reported by the accountant to the management of the company.
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