Focusing on modern accounting is important if you own a business and aim to keep it running in Ireland’s vibrant economy. This profession provides essential financial services and examines your regulatory framework to maintain compliance.
They not only record and analyse your financial statements to understand the current economic situation in your business but also focus on maintaining compliance, looking for trends, forecasting finance, and so on.
This blog will discuss the history of accountants and their importance in our modern business environment.
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What is accounting?
Accounting refers to recording, categorising, summarising and analysing financial information and producing financial reports for stakeholders. These reports play a vital role when applying for investments or loans. Investors or money lenders usually ask for your financial statements to understand your present economic situation and determine how your business will run in the future.
Now, the question is, what are the basic requirements for accounting?
For small businesses, you can try DIY practices and use accounting software. You can also hire a bookkeeper for your accounting and financial needs.
However, as your business grows, your financial complexities increase. It is when you can hire an in-house accountant or outsource your accounting needs to an agency.
What is the brief history of the accounting profession?
Accounting is considered one of the most traditional professions that dates back to the ancient Mesopotamian, Egyptian and Babylonian civilisations. Even if you read Roman History, you will see they kept detailed financial records. However, the modern accounting system has existed since the early 19th century.
Luca Pacioli made accounting a profession and is therefore called as the father of accounting and bookkeeping. He wrote a book on the double-entry accounting system in 1494. However, the ICAEW officially recognised accounting as a profession in 1880 and introduced multiple accounting systems that accountants use today.
Why accounting is important?
Accounting is essential for every business, irrespective of its size and domain. Firstly, accounting practices help your company understand its current financial situation and help make important decisions related to investments. Then, there are numerous other reasons why accounting is essential.
If you are keeping accurate financial statements, it can convince potential investors to allocate funds to your business. Plus, you can understand how much money you have to meet your immediate requirements. Proper accounting practices help you determine your accounts payable and receivable and save you from fines and penalties.
Moreover, such practices ensure you file your tax returns correctly and pay the right tax amount to the government. Accountants can also make strategic plans to reduce your tax liability. Finally, they ensure you stay compliant with the changing rules and regulations in your country and globally.
What are the different types of accounting?
Accountants may be required to record transactions or work on specific information sets. For that, this profession is broadly divided into four main types: financial accounting, managerial accounting, cost accounting, and tax accounting.
● Financial accounting
It mainly focuses on creating quarterly or yearly financial statements, including your balance sheet, cash-flow statement, and income statement. Financial accounting involves measuring your business performance accurately and assisting in securing funds from investors and loan providers. Additionally, they follow Ireland’s accounting standards and regulations to ensure your business maintains compliance.
● Managerial accounting
They use data similar to financial accounting but organise and use them in different ways. For example, managerial accounting uses your financial statements to make crucial decisions on how your business will operate in a specific condition. They also help in financial forecasting and budgeting and use multiple tools to analyse your financial data to assist you in making important decisions.
● Cost accounting
Similar to managerial accounting, which helps businesses make essential decisions, cost accounting helps you make decisions related to business costs. It considers all expenses related to producing your goods.
This information is further used by economists, analysts, managers, business owners, and accountants to calculate how much the cost of their products should be. In cost accounting, money acts as an economic aspect of a company’s production, whereas in financial accounting, it is the measure of how your company is doing financially.
● Tax accounting
Tax accounting focuses on multiple regulations as set by the local, state, and federal bodies to create your tax return. They ensure compliance with tax regulations and assist in reducing your tax liabilities legally through strategic decision-making.
What are the types of careers in accounting?
While a bookkeeper can handle your day-to-day basic accounting needs, experienced accountants can only meet complex financial requirements. These people have certificates from recognised bodies in Ireland and experience in the domain.
The most recognised accounting qualifications in Ireland include Chartered Accountant (CA), Certified Public Accountant (CPA), and Association of Chartered Certified Accountants (ACCA). Some of the popular accounting job titles include the following.
● Forensic accountant
Such professionals use their accounting skills in solving civil and criminal cases and non-legal investigations. They mainly focus on fraud detection, calculating loss of financial benefit, asset tracing, valuations, financial investigations, and dispute resolution.
Forensic accountants are hired by banks, government agencies, insurance companies, police forces, and other organisations.
● Management accountant
A management accountant is responsible for providing valuable business data and analysis to managers in an organisation. They prepare and submit detailed reports on audit findings to the management and details on asset utilisation and recommend changes in operations and financial activities.
These accountants are also responsible for collecting and analysing data to detect deficient controls, extravagance, duplicated effort, fraud or non-compliance with regulations, standards and management policies.
● Financial advisor
Independent financial advisers offer financial advice to individuals and businesses according to their needs. They interact with the clients to discuss their current situation and financial needs and recommend appropriate products and options to improve their financial situation.
● Taxation consultant
Tax advisers are experts in tax work, and their duties include everything from tax preparation to advising on tax structure and implications. The demand for taxation consultants will keep rising as tax is complicated.
They are responsible for researching, analysing, and interpreting tax legislation, working with tax laws and standards, and preparing and submitting compliance tax returns.
● Financial controller
A financial controller is a business’s accounting and auditing expert, often known as a Financial Control Officer. Their primary role is to oversee the accounting process, create the company’s financial statements, ensure cost accounting, monitor internal controls, tax compliance, and multiple special analyses.
Conclusion
Accounting has been playing a significant role in every business for years. It ensures you keep track of your business finances effectively, prepare financial statements, focus on better opportunities, and stay compliant with regulations and accounting standards.
Though it may often seem expensive for your business, having them at your back can save you from bigger mistakes.