What is accountancy?
Accountancy is all about trained professionals using their expertise to record, maintain and analyse a business’s financial information. Accountants will relay this financial information back to the business’s senior representatives and provide advice on how they may improve and maintain accounting operations…and make as much money as possible!
Accountancy really is an age-old practice which has developed over hundreds of years from when people first started to record their stock and transactions. As business practice has grown into what we recognise today, this area has evolved to reflect these developments and ensure there is a tight grip on the books.
Accountants will conduct calculations from their clients’ financial documentation such as invoices and records of expenditure in order to produce accurate financial reports. They could do this on an annual basis for each client – perhaps in an overall audit of the company’s finances – or they may focus on a particular department.
The government requires all registered companies to submit financial information and meet certain standards. An accountant from an external organisation will perform an audit to fulfil this statutory requirement and advise companies accordingly if their books and practices aren’t quite as healthy as they should be by law, or if they are at financial risk.
Larger companies will often conduct their own internal audits in addition to those required by law. You can almost think of it as a check-up at the GP! Managers want to know that their departments are running as efficiently as they can be with maximum productivity. They call on the accountants to conduct a thorough financial analysis to see if that’s the case, or if there is anything to be done to improve their operations or in the way they use their budget.
As long as there are businesses, there will always be demand for accountancy expertise. Accountants can either work for an in-house department in a company, specialist accountancy firms or a professional services firm, which provides accountancy services amongst other specialist business advice to individuals and private, public and governmental organisations of all sizes across the world.
Why is accountancy important?
Accountancy is a pillar in the professional services world. Businesses simply wouldn’t be able to succeed without accountants! No matter what the type of company or its size, it is essential that they are fully aware and in control of their finances and obligations, for example by law, or any debt to be paid, in order that they don’t run the risk of going under or breaking the law. Accountants will be able to tell businesses if they are in the financial position to expand via mergers or acquisitions, or whether is it is necessary for them to downsize.
The importance of accountancy in the business world is represented by the sheer size of some professional services firms. In some cases they are as big as their own clients as businesses in their own right!
Areas of accountancy
Advisory – There are many different accounting standards for organisations to uphold. Accountants in advisory will use information collated via thorough financial analysis to provide the best guidance on how to achieve and maintain standards as well as improve business efficiency and maximise profits.
Audit & Assurance – This area involves analysis of clients’ financial records to ensure the books are correct, financial obligations are upheld and whether a company is ready and able to action further investments or sales. There is a statutory requirement for this procedure, and companies like to conduct regular recurring audits too in order to make sure everything is working as it should and if there are any processes they can improve for optimal efficiency and productivity. A bit like an MOT!
Bookkeeping – It’s essential for businesses to keep accurate, up-to-date records of all of their transactions. This age-old practice is all about entering all transactional information into ‘ledgers’ (old school books) or new computerised systems.
Corporate Finance – Accounting for larger companies who have a duty by law to provide financial information about their business to various regulatory bodies and the public.
Fraud & Forensics – Accountants in this area of accountancy are real-life Sherlocks. It involves investigation of financial documents, contracts and records at the instruction of a client or solicitor to provide evidence for legal disputes and court cases.
Insolvency, Restructuring & Recovery – When a company or individual gets into trouble with their ability to pay off their debts, accountants can provide suitable advice and undertake accounting processes in order to help restructure operations and/or recover receivables (amounts from customers or other parties which represent assets).
M&A – Mergers and acquisitions are a huge element of the corporate world, and accountants are needed to keep the books in order when they take place.
Management Accountancy – This involves working closely with managers to prepare and analyse financial information to help them make viable business decisions.
Payroll – Another age-old business practice, payroll involves making the appropriate calculations so that employees of a business get paid the correct amount, whilst covering all tax obligations.
Public Finance Accountancy – Audit, assurance, transactions and tax accounting relating to the local and central government and public services such as education, social housing, defence, welfare and international development.
Taxation – Everyone and every company has to pay tax; accountants in this area can work for individuals or companies either in-house, as part of HMRC or a professional services firm to ensure everyone is paying what they should to the state.
Accountancy Interview Questions
Accountancy interviews are not too different from any of the other big sectors within the financial interviews, so make sure that you check out our general interview tips in the Advice section, but here’s some questions that seem to come up on a regular basis, as well as why they’re being asked and how to answer effectively.
Advising companies, great and small, on a wide range of accounting issues.
Audit & Assurance
If a company's finances were a car, an auditor would be the mechanic conducting the MOT.
The administrative heart of the accounting profession.
Supporting companies in their finance transactions.
Fraud & Forensics
The crime-busting bods of the accountancy world.
Insolvency, Restructuring & Recovery
Helping companies that are struggling or simply unable to pay their debts.
Guiding companies through the tricky business of mergers and acquisitions.
Providing a fresh perspective of solid accounting reasoning on any business plan or project.
Making sure people get paid.
Public Finance Accountancy
As an accountant in the public sector, you'll certainly be in "the thick of it".
Need To Know
- Accountancy: Key Skills for your CV
- Differences between public finance accounting & private accounting roles
- 6 ways to tell if a career in accountancy is right for you
- What’s The Difference Between Accountancy and Accounting?
- From Chef to Finance Chief – Interview with Kyle Tyrrell, Head of Finance, AXA Global Protect
Accountancy Stereotype Breaker
Smash 'em up
Accountancy Jargon Buster