Accounting involves working with the financial records and processes of an organisation.
In general, accountants record and report on finances, with the ultimate focus being on how much profit is being made. They then share this with stakeholders like senior managers and investors.
But in reality, as well as deciding whether to work within private practice, in industry, or in the public sector, most accountants specialise in a particular area of accounting, and have a large variety of roles open to them. Let’s take a look at what’s involved in some common accounting specialisations.
Specialising in financial accounting
Financial accounting relates to historical financial records, and accountants in this area record and report on existing financial data.
Financial accounting is normally broken down into further specialisations. Often in accounting firms, and sometimes within industry, financial accountants specialise in either preparation, tax, or audit.
Accounts preparation: This involves preparing the financial statements, and producing the profit and loss statement and balance sheet.
Tax: Tax specialists use the prepared accounts to calculate the tax due for the company. They produce tax returns for both individuals and companies.
Audit: This involves checking the accounts that have been prepared to ensure they follow compliance surrounding accountancy.
Financial accounting is an ideal career move if you’re very methodical, organised, focused, and able to follow processes consistently. To embark on a career in financial accounting, accounting courses such as AAT are an excellent start.
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Specialising in management accounting
Management accountants look both forwards and backwards, producing budgets as well as things like profit and loss statements and statements of financial position.
Rather than simply recording and reporting on financial data, they analyse it in relation to organisational goals. For example, they report on costs month on month against budget, and assess whether required profits are being achieved.
When looking at the costs of products, management accountants advise on sales prices by drilling down into the costs of materials, labour, and overheads. They carry out cash flow forecasting, analysing how much an organisation can expect to pay out, and how much it can expect to receive. This helps underpin recommendations for further loans or investment.
Ultimately, management accountants are responsible for contributing to future growth.
As with financial accounting, you’re most likely to be successful in management accounting if you can focus, stay organised, and work methodically. However, you also need an extra measure of analytical ability.
It’s also essential that you can communicate financial information to people with varying levels of financial knowledge, whether it’s accounting colleagues or operational managers.
If you’d like to progress into a management accounting role, CIMA is ideal.
Specialising in analysis
Those who specialise in accounting analysis focus on spending and income trends, which then contributes to future organisational plans.
They analyse things like which of a company’s products or services sell best, cost most, or make the most profit.
They analyse variables that affect things like cash flow and profit, as well as looking into peaks and troughs in sales, relating these back to specific products and other factors.
To succeed in analysis, you clearly need to be super analytical, as well as being able to closely examine data and identify patterns. As with management accounting, you should also be able to communicate complex financial information to those from non-finance backgrounds.
Specialising in forensic accounting
A slightly less common specialisation, forensic accounting involves analysing financial documents to uncover wrongdoing and criminal activity.
You might be working with the police and courts to provide testimonies for cases of fraud, or supporting insurance companies to get to the bottom of embezzlement.
Essentially, forensic accountants are financial detectives, using their expertise to investigate complex financial issues.
You must be analytical and process-oriented to succeed in this accounting specialisation.