Accounting is the backbone of business. Ethical and professional
practices form a clear financial image of a business and allow managers
to make informed decisions, keeps investors up to date on developments
in the business, and keeps the business profitable. It is also one of
the oldest professions; businesses have been practicing accounting for
thousands of years. Cuneiform tablets from the fertile crescent, for
example, show clear evidence of these practices.
A number of disciplines are involved in accounting. At its root is bookkeeping. A bookkeeper
keeps tracks of all of the funds that a business handles, including
money paid to the business, money paid out, and assets that the business
holds. His or her goal is to keep the ledgers of the company balanced
so that anyone can assess, at a glance, the financial state of the
company. Records handled by a bookkeeper include payroll, company ledgers, bank statements, and paperwork pertaining to real estate and investments.
Auditing is also included in accounting. Auditing protects employees, investors, and owners of a company from fraud, and it is usually performed by an outside agency. During an audit, an accountant
will examine the ledgers of a company, along with many other records,
to see if they provide an accurate picture of the financial doings of
the business. If other financial records such as bank statements do not
support the picture presented by the ledgers, the auditor must find out why. Part of accounting is establishing internal controls to keep a company's business clean, so that a company can fearlessly face an audit.
The financial records of a company are used to make important
decisions, such as whether or not to make a major investment. Proper
financial management supports company officials while they make these
decisions, showing them whether or not an investment will be practical
and if the company can afford it. Accountants prepare regular statements
that are distributed to company officials so that they can follow the
health of the business, and they also handle tax rolls and reports to
government agencies.
The size of an accounting staff varies, depending on the company. In
the US, the primary employees are typically certified public
accountants, who must pass a test administered by their state. They may,
in turn, oversee clerks who have bookkeeping training, but who are not
fully certified. A single head accountant supervises the entire
department, and ensures that work is being performed in a timely and
accurate fashion. Typically, the head of the department performs an
important role in a company, and will frequently meet with the company's
head or board to keep them informed.