The 101 series: financial accounting

content financial accounting

Financial accountants play a vital role at the heart of almost all organisations. Working across sectors and entities large and small, financial accountants record, summarise and report all transactions resulting from business operations.

‘Financial accountants work in public practice, the private and public sectors, financial services and shared service organisations, and ultimately interact with all areas of business in order to fulfil their duties,’ says Steve Sully, regional director at Robert Half.

‘They are responsible for creating industry-standard reporting on behalf of the company they work for, and are tasked with recording and reporting all finances so regulators, investors and creditors can accurately assess business performance. They are also responsible for ensuring that business income statements align with strict reporting standards and act as the main point of contact for tax, pensions, auditing and other financial issues.’

In other words, they’re responsible for maintaining the financial accountability of an organisation.

‘Financial accountants maintain and keep track of an organisation’s financial activities by carrying out a range of accounting duties, such as the preparation of financial statements, balance sheet management, producing cashflow statements and ensuring accuracy in the tax position,’ says Lee Owen, a director at Hays.

How ACCA prepares you for a financial accounting role

As one of the three Applied Knowledge exams in the ACCA Qualification, the Financial Accounting (FA) exam introduces you to basic principles and concepts up to the use of double entry and other accounting systems. You can develop your knowledge further when you get to the Applied Skills exams, specifically the Financial Reporting (FR) exam, and in the Strategic Professional exams, specifically the Strategic Business Reporting (SBR) exam.

The ACCA Qualification prepares people to work as financial accountants all over the world.

‘I feel very lucky to have gained the ACCA Qualification, which has enabled me to work for companies registered in the UK, Australia, US, Trinidad and Tobago, Canada, Germany, Norway and Sri Lanka,’ says Rashmi Perera FCCA, a financial accountant at Seven West Media in Australia. ‘I’m also grateful that, in doing so, I’ve worked with colleagues from diverse backgrounds and have experienced different work cultures.’

How is financial accounting changing?

In line with what’s happening across most industries, technology – especially automation processes using software driven by AI and machine learning – is reshaping the profession. The modern-day financial accountant, while still tasked with traditional responsibilities, will be supported in their role with the integration of software. This will give them more time, but more data too – and not just financial.

Financial accountants will have access to data from across an organisation, which increasingly includes sustainability information, a new reporting area.

They will be expected to add value via greater collaboration with other departments, acting as business partners to develop synergies that ultimately bring about performance improvements, be that increased revenue, cost-savings or operational efficiencies.

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‘Financial accountants must be good at keeping up to speed with ever-changing regulations and audit requirements,’ says Owen. ‘A desire to learn new things and develop a knowledge of the latest news and trends in the sector are all important traits for accountancy professionals to thrive and adapt.’

Why financial accounting is important

Maintaining standards, building trust and encouraging transparency: Financial accountants follow strict rules and standards when preparing financial statements and reports. These are overseen by independent governing bodies and provide a basis for transparent reporting set apart from outside interference: for example, from an entity’s leadership. Financial accounting obligates organisations to disclose information about operational performance and risks, regardless of how well the entity is doing.

Decreasing risk: This consistency provides a highly reliable source of accurate information and is a cornerstone of financial responsibility to which organisations – corporate or otherwise – must adhere. It provides transparency and accountability, elements vital for lenders of credit, regulatory bodies, tax authorities, investors and suppliers that rely on financial information to manage risk.

Management insight: Usually associated with management accounting, financial accounting can also provide highly valuable intelligence to key decision-makers. By analysing an organisation’s finances, alongside other data streams that a company might provide, financial accountants can support leadership in making the best strategic moves.

Financial accountant: key skills

  • Analytical and curious mind
  • Ability to negotiate with leadership and colleagues in other departments
  • Ability to develop strong working relationships
  • Commercial and business acumen
  • Good communication skills
  • Eye for detail and desire to probe deep into data
  • Deadline-orientated and able to stick to deadlines

Financial accountant: key responsibilities

  • Preparing monthly profit and loss, and balance sheet reports
  • Tax reporting and inventory processing
  • Collecting and analysing data, which is then used to prepare weekly and monthly estimates
  • Advising on estimates for project funding
  • Creating KPI reports
  • Preparing weekly cashflow statements, and controlling expenditure and cashflow
  • Assisting with the preparation of year-end and statutory accounts
  • Responding to financial enquiries by gathering and interpreting data
  • Conducting internal audits such as wage reviews
  • Examining financial records to check for accuracy
  • Sustainability reporting
  • Managing, training and mentoring staff

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