What is an Accountant?
An accountant is a professional who performs accounting functions such as audits or financial statement analysis. Accountants can either be employed with an accounting firm or a large company with an internal accounting department, or they can set up an individual practice. Accountants are given certifications by national professional associations after meeting state-specific requirements, although non-qualified persons can still work under other accountants or independently.
Accountants must abide by the ethical standards and guiding principals of the region where they practice, such as the International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP). The most common accounting designations are the Certified Internal Auditor (CIA), Certified Management Accountant (CMA) and Certified Public Accountant (CPA). A Certified Internal Auditor doesn't need to receive any license in order to practice, and neither do Certified Management Accountants.
Accountants can have more than one designation and may perform multiple types of accounting duties. The type of educational background and designation that an individual has will determine his or her professional duties. Accountants have bachelor’s degrees and may need to get a certificate, which can take up to a year to obtain depending on the type of certification being pursued and the state in which those requirements must be met.
In the U.S., certification requirements for accountants can vary from state to state, but one requirement that is uniform in every state is the passing of the Uniform Certified Public Accountant Examination, an exam that is written and graded by the American Institute of Certified Public Accountants.
Legal Responsibility of Accountants
Certified public accounts have a legal responsibility to be honest and to avoid negligence in their duties. CPAs have real influence over their clients, and their judgments and work can affect not just an individual but an entire company, including its employees, its board and its investors. Accountants may be held liable for paying uninsured losses to creditors and investors in the case of a misstatement, negligence or fraud. Accountants can be held liable under two different types of law: common law and statutory law. Common law liability includes negligence, fraud and breach of contract, while statutory law includes any state or federal securities laws.
The Historical Importance of Accountants
The first professional association for accountants, the American Association of Public Accountants, was formed in 1887, and CPAs were first licensed in 1896. Accounting grew as an important profession during the industrial revolution. This was largely because businesses grew in complexity and the shareholders and bondholders, who were not necessarily a part of the company but were monetarily invested, wanted to know more about the financial well-being of the companies they were invested in.
After the Great Depression and the formation of the Securities and Exchange Commission (SEC), all publicly traded companies were required to issue reports written by accredited accountants. This change increased the need for corporate accountants even further. Today, accountants remain a ubiquitous and crucial part of any business.