Roles Of Accountants In Economic Development

MR. SUNDAY OMOTOSHO BABATUNDE (ACA)

ROLES OF ACCOUNTANTS IN ECONOMIC DEVELOPMENT

Presented by

Omotoso Sunday Babatunde, ACA.

 During the reception of Adisa Kabiru Adeniyi Kulukulu FCA reception at his residence. 

For better understand of the roles of accountants, it is very necessary to start with types of accountants so that we can appreciate their functions.

1.         Auditors: Auditing is an intensive study of the records and reports of an enterprise by accounting specialists.  Auditors help to ensure firm’s efficiency by keeping public records accurate and confirm payment of taxes properly and on time.  Auditors analyze and communicate financial information for various entities such as companies, individual clients, and Federal, State, and local governments.  Other than carrying out the fundamental tasks of the occupation they provide information to clients by preparing, analyzing, and verifying financial documents. 

2.         Forensic Accountants:Forensic accounting is a special area of practice in accountancy where accounting, auditing, and investigative skills are used to assist the court in legal matters.  Forensic accountants are also known as forensic auditors or investigative auditors.  They investigate crimes including issues like securities fraud, embezzlement and bankruptcies.

3.         Public Accountants: A public accountant is a general accountant who either works for an accounting firm or has his or her own private practice.  Public accountants’ daily tasks are of a wide range that includes auditing, tax and financial planning, and consulting and providing advice about compensation and benefits.  

4.         Tax Professional: A tax professional is specifically trained in the field of taxation.  They represent taxpayers before all administrative levels of the Internal Revenue Service (IRS) for audits, collections, and appeals. 

5.         Financial Advisor: A financial advisor is a person who provides investment advice and financial planning services to individuals, organizations, and governments.  Usually, a financial advisor consults with clients with an intention to better their financial situations. 

6.         Accounting Consultants:Accounting consultants are persons with high subject matter expertise in preparing financial reports, pro-forma financial statements and reports.  They also analyze, interpret and evaluate financial statements and reports for various regulatory and statutory authorities and internal management of organizations.  Accounting consultants can help a business with all of its financial needs. 

Now, let us briefly consider how accountants paly their roles in bringing economic development.

1.         INVESTMENT DECISION TAKING

Without investments, the economy will not develop and grow. Also before committing scare resources into a project, there is need to appraise such project or investment. It is crucial that accountants are involved in the appraisal of investments. There is no other professionals that can determine the worthwhileness of investments the way accountants do. An accountant will consider both financial and non-financial factors using different appraisal tools before he/she will offer advice on the worthwhileness of an investment.

2.         COST SAVING

There is an old adage that one does not get rich by earning and throwing away. Same goes to economic development. Costs must be minimized for the economy to grow and develop. The knowledge accountants acquired from cost and management accounting make them to be the best cost savers. They are therefore in a better position to give governments and entrepreneurs the best advice on cost saving by proffering alternative courses of actions which will bring reduction in cost or increase in the benefits of an action.

3.         FRAUD FIGHTING AND PREVENTION

The world economy has lost so much from the activities of fraudsters. There is no way there could be a meaningful economic development in an environment where misappropriations and embezzlement is rampart and are without a sound machinery to check them. Accountants are trained to be at the front seat in the fight against frauds and a serious and sincere government will give accountants free hand to help in this wise. There is no other professionals that can institute sound internal control systems that will ensure adequate security of resources. Thetoday’s accountants are even more equipped to fight corruption and fraud by seasoning their knowledge with IT and law.

4.         REVENUE GENERATION

Recently, governments at all levels in Nigeria have woken up to the reality that in the area of revenue generation, they need the services of accountants. Apart from revenue from crude oil and port activities, internally generated revenue is very crucial to the survival of each tier of government. Accountants are well versed in the areas of tax and investments. They have good advice that can be invaluable to governments in generating revenues.

5.         ENCOURAGING AND ATTRACTING FOREIGN INVESTMENTS 

Accountants make it possible for both local and foreign investors to make investment decisions without necessarily being in the country of their investments. Investors no longer have to be physically present in their businesses for it to strive. Investors, especially foreign ones, want to monitor their investments by having trusted and knowledgeable persons representing their interests and also keeping them informed about the financial activities of their investments. All these are achieved through the financial statements and ratios that are prepared by accountants. 

There is need to know that economic development starts with an individual in the economy. This is the reason why accountants are always eager to help individuals to address their financial challenges. Some of the roles accountants play in ensuring the economic development of individuals are:

1.      Business Analysis and Strategy Development: Accountants objectively analyze the strategic position of business and then offer unbiased advice that helps an individual make economic decision.

2.      Preparation of Business Plan: Accountants are no doubt seasoned finance professional that know the ingredients that make up a workable and bankable business plan. There are many individuals who are full of business ideas, but their major problem is writing business proposal or plan to attract finance. Therefore, accountants who are experts in this area are in better position to assist. 

3.      Business Valuation: The process of assigning values businesses or assets are based on both quantitative and qualitative information. This goes beyond what non-accountants can handle because of what it entails. For instance, it is the accountants that prepare necessary financial information needed to successfully value a business. In active economy, shares and stocks are traded and an individual will need to be guided by the professional advice from accountants. 

4.      Financial Management: Wealth maximization is an important function of the management. Accountants are always available guide management in the best ways to manage the financial resources in order to increase the wealth of the resources’ owners.

5.      Funds Raising: One of the important areas of expertise of an accountant is identification of the best source of finance for an entity. An accountant will analyze all available sources of finance and recommend the one with the least cost. 

In conclusion, we have no excuse to offer concerning the despicable economic state we are because Nigeria is blessed by knowledgeable and professionals like accountants who have what it takes to make us rob shoulder with other developed nations like China and America. Our major problem is majority of our policy makers who are still snoring to realize the roles of accountants in economic development. It is crystal clear that if given the opportunity, accountants, with the collaboration of other professionals, can make Nigeria an economic power of reference in the next ten years.

Thank you.