Many bookkeepers in our world today define themselves as accountants, but what is the difference between a Professional Accountant and a Bookkeeper? This essay aims discuss and examine the relationship between each of the occupations, examine the differences that sets the two occupations apart and then explore what makes an accountant a professional in today’s world. Comments made by third parties will be looked at in depth in order to reach a fair conclusion.
Bookkeepers today have an important but restricted role in the business world. Their main role is to record the financial transactions of a business. As a bookkeeper, you will be employed to sustain all the ledger accounts, and maintain all the other documents up to the trial balance. The dictionary of Economics & Business by Christine Ammer & Dean S Ammer defines bookkeeping as, “keeping the financial records (books) of a business or other economic unit, recording all transactions in which it engages”.
This evidence clearly states that a bookkeeper is subjected to only recording the transactions until the accounting period has finished and the trial balance produced, and is then subsequently handed over to a more qualified member of staff to produce reports or statements.
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In the present time, accountants have a more complex role in the business world. As an accountant, you must posses all the skills of a bookkeeper, but in addition to that, an accountant must be able to use the information provided by the bookkeeper to produce and communicate clear statements and reports. The Oxford Dictionary of Business & Management states that “wherever accountants work, their responsibilities centre on the collating, recording and communicating of financial information and the preparation of analysis for decision making purposes”. By this comment, we are able to see the complexity of an accountants role in business and understand the services they provide.
You may be thinking that an accountant is just a more advanced bookkeeper, but there are many other differences. In order to become an accountant, you require formal qualifications. The typical entry route into being an accountant is to study a relevant subject for 4 years at university and then undertake a training vacancy with an accounting firm. On the other hand, bookkeepers require no formal qualifications in order to begin training. This is because accountants provide a range of services whereas bookkeepers provide only one service and there is a mechanical-like nature to the way they do their job.
As an accountant, one skill that is compulsory is communication; whether it be researching what the clients business does before providing services to them, finding out about the client’s needs or presenting the financial reports of an accounting period, a high percentage of your role would involve communicating with others. Communication in bookkeeping is not required as it is an office based job where producing the ledgers and other documents such as the cashbook and trial balance are the only tasks that are carried out.
The difficulty of the each occupation is reflected in each jobs average salary. The average chartered accountant earns £70,000 per year, whereas the average pay of a bookkeeper is £20,000 per year. This provides a clear comparison of the relationship between each of the occupations and each salary emulates the difficulty of the role entailed.
Accounting is a very important aspect of any business organisation, but there are many different roles in which accountants are engaged in. Among the most common financial services accounting firms offer are accounting, taxation and investment. Due to what they offer are professional services, it is essential for accounting firms to identify all factors and issues that would significantly impact their profitability and their reputation.
The Times states that the main role within accounting is “the creation of financial records of business transactions, flows of finance, the process of creating wealth in an organisation, and the financial position of a business at a particular moment in time.” , an excellent description of a Financial Accountant! However, if you are a qualified accountant, there are many different sectors in which you can enter into.
Directions.gov.uk shows the many different roles within the accounting profession, these include; “tax accountancy, external audit, internal audit, corporate finance and management accountancy”. Each role differs greatly from another however all are classed under the profession of Accounting.
There are many varieties of personalities within accounting which makes it hard to generalise, but there are fundamental personal & professional qualities that are essential for success within the profession. To begin with, ACCA paper F1 2008 (p94) states the 5 personal qualities as; “Reliability, Responsibility, Timeliness, Courtesy and Respect”. These are very important as accountants work with people from all walks of life and it is essential that they gain the trust of their client . To be a reliable accountant, you would have to ensure that your work was up to professional standards and completed before deadlines.
To be a responsible in the profession, you must take ownership of your own work and take fault if anything happens to it. Timeliness speaks for itself as it requires excellent time keeping whether it be showing up on time for work or meeting deadlines. The final personal qualities are to have courtesy and respect for others, being well mannered is essential in the profession as it portrays the reputation of accountants. On the other hand, ACCA paper F1 2008 (p94) states the four professional qualities of an accountant as; “Independence, Scepticism, Accountability and Social Responsibility”.
In order to be a professional accountant, you must be independent and go about your work diligently providing your professional services to clients. The work you provide must also be unbiased and have a fair and neutral view. ACCA paper F1 (P94) defines scepticism as “you should question information given to you so that you form your own opinion regarding its quality and reliability”. This means that you should question whether or not the data you have been given is true and you must not accept information and assume it is correct as it may have been forged. A vital part of an accountant is their ability understand recognise that they are accountable for their own actions.
As accountants deliver their services with an interest to the wider public, it is imperative that they have a high degree of social responsibility, this means that if you know someone is doing wrong you must report it. Not all people are gifted with these essential qualities at birth and so it is important that they work hard to acquire them as each is important to being a successful accountant. Professionalism is a major aspect of accounting today. It is defined as (L2 Notes By Paddy McAnena & Angela Dunlop) “a dedication to a certain type of work that requires a high level of skill with a commitment to the public interest.”
It also states that “professionals exercise judgement through knowledge, skills and expertise”. There are six main bodies operating within the United Kingdom; Institute of Chartered Accountants in England and Wales (ICAEW), Institute of Chartered Accountants in Ireland (ICAI), Institute of Chartered Accountants in Scotland, Association of Chartered Certified Accountants (ACCA), Chartered Institute of Management Accountants (CIMA) and Chartered Institute of Public Finance and Accountancy (CIPFA). The accounting profession has been dragged down badly by the media over the past few years which make professionalism in accounting today essential.
As a professional, you must adhere to the principles (L2 Notes By Paddy McAnena & Angela Dunlop); “Integrity, Objectivity, Professional Competence and Due Care, Confidentiality and Professional Behaviour”. Each of these represent professional behaviour, the ACCA rulebook define Integrity as “Members should be straightforward and honest in all professional and business relationships”. Objectivity represents the fairness and unbiased nature of work, ICAS states that “a Professional Accountant should not allow bias, conflicts of interest or undue influence of others to override professional or business judgements”.
Professional Competence and Due Care demonstrates that you should not take on work that you are out of date with. Confidentiality provides privacy and trust for the client, CIMA states that “You should not disclose professional information unless you have specific permission or a legal or professional duty to do so”. In order to avoid brining the profession into disrepute, all professional accountants must demonstrate professional behaviour.
The ACCA rule book describes professional behaviour as “Members should comply with relevant laws and regulations and should avoid any action that discredits the profession”. If the reputation of accounting is to rise, each and every principle must be demonstrated by every accountant in order to gain the trust and respect of the wider public and media once again.
Ethics and morality are about right and wrong behaviour. ACCA Paper F1 2008 (p88) defines ethics as “a set of moral principles to guide behaviour”. Ethics in accounting are rules, and without rules, there would be anarchy. An example of the chaos that could be caused by not following the code of ethics would be the Enron scandal which occurred in 2001 which led to the bankruptcy of the Enron Corporation. When Jeff Skilling was appointed CEO, he hired a team of executives that, through accounting loopholes and poor financial reporting, hid billions of dollars from failed deals and projects. They misled Enrons board of directors and led Enron to file for bankruptcy in December 2001.
Shareholders lost over 10 billion dollars and Enrons 63.4 billion dollar assets made it the largest corporate bankruptcy in US history. After the Enron scandal had taken place, the accounting reputation was hit hard in that the trust and respect of accountants had effectively been lost worldwide. Nowadays, ten years later, accountants are suffering from the effects of the Enron scandal. Essentially, all accountants within the profession must adhere to the principles in order to avoid such scandals happening again. It is vital that accountants comply with these rules, failure to do so may result in losing their job.
The code of conduct for each of the main accounting bodies are very similar as they emphasise the importance of serving the public interest and all follow the same 5 fundamental principles. However, as accountants contribute greatly to the wider public interest it is important that their main focus, contribution to economic activity, is not affected by this. All accounting bodies have the same conceptual framework in dealing with anything that could threaten an accountant’s compliance with the fundamental framework.
In conclusion, this essay has clearly identified the differences between a Bookkeeper and a Professional Accountant. The relationship between the two are similar in that to be an Accountant must have all the skills of a bookkeeper however Accountants must also serve the wider public and also create financial reports and statements of a business. Accountants in today’s world must also comply with the many rules and regulations in order to avoid any more accounting scandals which bring the profession into disrepute, and hopefully in the near future the profession can gain the trust of the wider public and media once again.
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