The Accountants Responsibility

Kaplan University

ACC 502 – 01N

Professor Elaine Lerner

The Accountant’s Responsibilities

Introduction

Financial data can be hard to maintain and decipher at times.  Without the proper interpretation, it can be a pile of meaningless numbers.  This is why there is a need for accountants.  Accountants help to make sure than companies run the right way, records are kept properly and taxes are paid.  They are professionals equipped with the knowledge and necessary skill set to understand this data and present it in a manner that is understood by multiple parties, including their clients, the government and independent third parties. (Duska, 2005) Because of this, accountants have responsibilities to each of these parties.  However, an accountant’s top priority should be his or her client first.   An accountant’s duties include preparing financial statements and reports, analyzing financial information, and properly documenting and reporting financial transactions. (Causey, 1990)  

Accountants must also adhere to certain ethical requirements.  Most importantly, they must report information correctly.  Since accountants interpret financial data in a way that the “lay-man” can understand, it is important that the accountant present the data accurately and not try to manipulate the results.  They are responsible for reporting the information as well as protecting the interests of the company, investors, creditors and the government and regulatory bodies.

Responsibility to Clients

An accountant’s first priority is their client. They help to keep their clients’ financial information in order and also help to prepare tax returns.  These clients can be individuals or other businesses.  An accountant has a moral responsibility to provide honest information and ethical service.  This means that an accountant cannot manipulate data to make their client appear to look better.  It also means that an accountant cannot suggest anything illegal or offer misleading advice. (Ibrahim, Angelidis, & Howard, 2006)

Accountants working in large corporations have a duty to their employers.  Working in these larger compartmentalized corporations can be difficult, but it is important not to take short cuts and properly report all information completely and accurately.  These accountants typically work alongside other accounting professionals and bookkeepers to ensure that all reporting is completed and coordinated in a timely manner.

Responsibility to 3rd parties

Many businesses succeed or simply remain in business because of the funds of paid into the business on part of investors.  Some businesses are operating on funds loaned to them by creditors.  These investors and creditors are considered to be independent third parties.  Due to several cases of fraud, there has been increased regulatory action imposed on the accounting industry.  Accountants in large corporations are often required to report accurate data to independent auditors not employed by the company.  Accountants also have a duty to the public to make sure that all information is recorded and reported accurately.  This financial data is the basis by which people decide whether or not to invest in a company.  Numerous scandals in the recent past stem from accountants and executives attempting to make the company look better by providing false or misleading information in the company’s financial reports.  Examples of this kind of fraud include the Enron Scandal and the WorldCom Scandal.  Both of these scandals had the very large independent auditing firm, The Arthur Andersen Co., at the center of the scandal.

Responsibility to government

Government regulations govern every type of business.  There isn’t a single industry in the United States that is not subject to some form of government regulation.  Accountants have a duty to the government to make sure that all financial reporting conforms to a given set of rules and regulations.  This allows the government to quickly check for compliance.  

Government regulations can also set price limitations and restrictions on certain business activities.  Accountants are responsible for properly documenting all financial information for government purposes to ensure that all regulations are being adhered to.  Each year, the government performs a census of certain businesses in certain industries.  They collect this data to gauge the current state of the American economy.  Not all businesses are surveyed.  However, those that are, are required to respond by law.  I have completed this survey for a few of my clients over the years.  The information requested provides a general look at how certain industries are performing in general in across certain areas of the country.  As the accountant for my clients, it was my duty to provide the requested information accurately and timely.  The government uses these surveys in developing economic outlooks and forecasts.

The government also uses their regulations to control prices and restrict certain business activities.  An accountant’s responsibility to the government is evident in this area when they prepare financial statements that the government reviews to monitor the amount of items sold in these areas.  

Whistleblowing

Another responsibility of the accountant to the government comes in the form of whistleblowing.  Whistleblowing is basically a term given to the act of reporting violations of regulations to the authorities. (Liyanarachchi & Adler, 2011) Accountants are subject to certain reporting requirements from the SEC as well to provide accurate information to investors.  Since accountants and auditors have access to a company’s financial data, the accountant is in the best position to see acts of fraud and report them to the authorities.  This can also be considered a responsibility to the third parties as well as the government.  An accountant’s duties in this area can help the government investigate, indict, and convict (if necessary) the culprits in these scandals.  Should an accountant fail in their duties and report false or misleading information to the government, or should they know about cases of fraud and not report it to the proper authorities, the can lose their license to practice in this country.