In the past ten years, a significant amount of research attention was focused on recognizing, analyzing, contradicting, favoring, and critiquing the changing roles of accountants. In the past ten years, we witnessed accountants assuming additional tasks such as strategy formulation, systems development, organizational re-design and a whole lot more. In the 21st century, we have seen accountants devoting much less of their time to routine financial analysis, transaction processing, auditing and statutory reporting. The roles of accountants in the business environment have become business oriented. These changes posed crisis for accountants as the profession’s credibility has been questioned.
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In this paper, we look into the traditional roles of accountants and compare such to that of the roles of the modern accounting profession. I discuss some ethical concerns binding these roles and express my opinion regarding these changes. This discussion leads to the main point of this paper- the importance of accountants in today’s business environment along with the demands for new roles of the accountants. Moreover, I also discuss various sources and types of information available to the accountants and the quality that this information should possess. Information, an increasingly important asset for all business organization, is necessary for accountants to satisfy these new demands for their expertise.
The Roles of Accountants
Accountants face dilemma as they face two contrasting roles at the same time. First, they are seen as watchdogs for top management while they are also seen as helpers of the management. However, the second role seemed to have increased its importance in the recent years and accounting systems was seen as impetus for organization’s improvement.
Specifically, the traditional roles of accountants include: auditing, managerial accounting, and tax accounting. These roles are the most basic functions that accountants are trained for as early as undergraduate education. On the other hand, the additional or modern roles of accountants are financial planning, business analysis and strategy, technology planning and consulting. Within these roles, the accountants serve more specified tasks. These are usually assumed in the actual practice; hence skills are acquired in the actual practice.
Auditing. This is theoretically, the basic and most important role of an independent accountant. The tasks of the accountant as an auditor are to check the organization’s estimate is in accordance to formulas that are used consistently every year. However, the importance of auditing as a business process has decreased recently. In a survey done among academicians, practitioners and students, audit preparation only received a moderate rank in terms of importance of this task by accountants.
Managerial Accounting. This is usually the role of in-house accountants who act as either controllers or internal auditors. The task of an in-house accountant is to give the most accurate picture of the economic status of the company and to respect the truth about the report.
Tax Accounting. This is the role of a book keeper or tax preparatory. The tasks of the book keeper include: determination and estimation of tax liabilities of the clients whether individual or corporate.
Financial Planning. This is a rising role for accountants. The demand for this new role is brought about by their knowledge and expertise on taxation laws and financial investment markets. Additional tasks under this role include: performing due diligence, organizing share-holder meetings, supervising cash management and payroll handling.
Business Planning and Strategy. This is the role of accountants to translate raw financial numbers into usable business information. Project accounting and knowledge management are also additional tasks under this new role for accountants. Under this role, accountants guide managers and business owners to improve productivity and maximize profitability.
Technology Planning. With the automation of various business processes, accountants also become involved in development and implementation of new information systems. Now, owners and managers rely on accountants to choose the most suitable technology solutions for financial and business management.
Consulting. Accountants also become consultants for financial management, income distribution, accounting and auditing functions as well.
The Key Drivers of Role Changes
It has been made clear in the literature that the roles of accounting have changed in the recent years and these changes are expected to continue. The roles of accounting shifted from information provision to extended information facilitation. Specifically, this shift in roles made accountants from book keeping, data analysis, and tax preparation into much wider range of duties in management. This is to say that the roles of accountants shifted into business oriented or entrepreneurial roles. This shift is brought about by the following key drivers: changes in business market conditions, re-designing organization, new managerial philosophies, more complex business processes, systems development, innovations in management techniques, and human resource development.
Because of these key drivers, changes in the roles of accountants are more likely to continue in at least another ten years. No longer bounded by numbers and formulas, accountants can feel free and rely on their creative and strategic side.
The Challenge for Accountants
Accountants will always be as important to business enterprises today. While others argue that change in orientation of accountant’ is a blow to the credibility of the profession, I believe this is rather a challenge that accountants need to glorify. Business oriented or entrepreneurial roles for accountants call for additional skills in these fields. In order to achieve credibility “again,” as others claim that the profession has lost it, accountants should master these additional fields to be considered experts of the field. Hence, this does them not mere practitioners of these new fields but experts as well.
This is a call to the accounting education research to dwell more on these additional fields so accountants may gain more in sights as to how these fields may be associated firmly with the traditional accounting practices. This is also a call to the academe to train the aspiring accountants to be flexible and well rounded ones in order to for them to satisfy the demands that awaits them in the actual practice. This is also a call for students to be open minded and be willing to accept these changing roles not as insults but rather a challenge and opportunity to become more significant in today’s business environment. Lastly, this is a call for certified and practicing accountants to get out of numbers and formulas and be willing to use their creative minds to do more analysis and strategizing- and more opportunities that may prove that accountants can satisfy the demands of the present business environment to them; without sacrificing of course, the core ethics of the traditional accounting profession. Accountants should hold on traditional ethics and values. It is the roles, skills, and practice that will change and re-oriented.
Sources and Quality of Accounting Information
Moreover, in order to satisfy the present demands for accountants, information is also a necessary. Now, information is a vital resource for the survival of all contemporary business organizations. It has become of the basic and most important resource for business intelligence and achievement of competitive advantage. In this section, I discuss the sources of information and the quality of this information needed by accountants.
In everyday business, various types and quantities on information flow to decision makers and users to meet internal organizational needs. The sources of information for the accountant may come from any of the components of information flow system within an organization. These include top management sources, middle management sources, operations management sources and operations personnel sources. This information flow is an exchange of performance information, day-to-day operations information and budget information and instructions.
Moreover, in order to be useful, accounting information should have each of the following qualities at a minimum degree:
Understandability. Accounting information should be comprehensive and understandable to users who have reasonable knowledge of business and economic activities and economic information. This quality serves as a link between decision makers and the accounting information at hand.
Decision Usefulness. Decision usefulness is also a qualitative characteristic needed to judge quality of accounting information. This is dependent on the availability of information and ability of the user to process the information for it to be used in decision making.
Relevance. Accounting information should also be relevant in order to help the user of information analyze the outcomes of the past and present and predict the outcome of the future events according to prior expectations. In order to be relevant, the information must have predictive and feedback value and timeliness.
Reliability. Accounting information will also be useful if it is reliable. This is to say that information must be free from error and bias; hence presenting faithfully what is intended to be presented.
Verifiability. Accounting information must also be verifiable for measures to agree with the selected method without error or bias. Verification is useful in reducing measure bias because the same method can be used to repeat measurements to reduce intentional and unintentional errors.
Comparability and Consistency. Lastly, accounting information must be comparable because information becomes more useful when compared with information from other companies. This allows accountants to identify and explain similarities and differences between two or more economic facts.
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