Audit + Accounting: Summing It All Up

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More than just taxes – what do accountants do?

accountants, accounting, taxesUpon telling someone that I’m an accountant, the most common response I’ve received is, “Oh, so you do taxes?” I then explain that the only taxes I prepare are my own. There are several different areas of accounting and types of accountants, both internal and external.
First, there are several types of internal accountants. An accounting staff for a business can range from one or two people to a whole team of people, depending on the size of the business. These accountants may include financial, managerial or cost accountants.

Financial accountants

These are the individuals that are working to gather the accounting information into financial statements. These statements generally include a balance sheet, income statement and cash flow statement that are typically presented to individuals outside of the organization – bankers, investors, etc.

Managerial accountants

These individuals are responsible for providing information to managers within the organization on the status of the organization’s business health. Their jobs may involve planning and budgeting, risk management and profitability analysis. The information provided by managerial accountants is typically used in making strategic business decisions. An individual who works as a managerial accountant may choose to become a Certified Management Accountant (CMA), which is a professional credential obtained by a combination of education, experience and licensing.

Cost accountants

These individuals are a type of managerial accountant that focus on improving processes to save money within the organization. This is usually done by examining the organization’s supply chain expenses in detail and putting together a profitability analysis and budget.

There are also different types of external accountants. Certified Public Accountants (CPAs) are individuals that have earned a professional designation through a combination of education, experience and licensing. It should be noted that internal accountants may or may not be CPAs, but external accountants are typically CPAs or working to become CPAs. There is only so much room for advancement as an external accountant without your CPA designation.

Auditor

While some organizations may have internal auditors, when most people think of an audit, you’re thinking of an independent contractor that is hired outside of the organization. High level, the auditors are tasked with providing reasonable assurance over the accuracy of the organization’s financial statements. This is done by examining the financial statements, inspecting account books and accounting systems and performing detailed testing. There are varying levels of assurance that can be provided by the outside CPA, but each of them results in a report after the work is complete. This report, along with the financial statements, is usually provided to a third party (banker, investor, etc.).

Forensic accountant

These individuals go one step further than an auditor. They usually work in either investigative or litigation support and can sometimes be expert witnesses in court proceedings. Typically, a forensic accountant is brought in when fraud is suspected, or found, to dig further into the details than a normal auditor. In addition to the CPA certification, forensic accountants may decide to also become a Certified Fraud Examiner (CFE). This designation is specific to individuals who are trained to identify the warning signs and red flags that indicate evidence of fraud and fraud risk.

This just scratches the surface of what we do and the different types of accountants that are out there, but hopefully this gives you a better understanding of what services we provide outside of tax preparation.

Courtnee A. Greshner, CPA