What is the difference between an Accountant and a Chartered Accountant?
As a chartered accountancy firm in Manchester we are often asked to explain the difference between an accountant and a chartered accountant, plus the difference between a bookkeeper and an accountant.
In our latest blog, founding Director Michael Chadwick, answers these questions and gives a brief overview of each of their duties.
What is a Chartered Accountant?
The trouble with the expression ‘accountant’ is that it is too broad. There is no legal definition of accountant and the responsibilities that it entails.
A chartered accountant is a professional who has studied intensively, trained for up to five years, then taken and passed some of the most demanding examinations in the industry. They will have had practical experience after having several years working within a firm of chartered accountants and will also be a member of a professional accounting organisation.
In contrast, someone calling themselves an ‘accountant’ can guarantee none of these. Whilst the law no longer insists that only chartered accountants may draw up and file financial statements with bodies such as HMRC and Companies House, this is still the case for large businesses and charities. Furthermore, many institutions such as banks, building societies and other lenders insist that certification of earnings and so on must be signed by a fully qualified accountant.
As part of the qualification to become an Associate Chartered Accountant (ACA) or Association of Certified Chartered Accountant (ACCA) qualified, all trainees and student accountants are educated in business ethics. This helps ensure that our independence and objectivity are never in doubt when reviewing and advising you and your business.
Chartered accountants have a professional duty to keep matters discussed between clients and themselves confidential. We are also obliged to present information fairly and honestly and we are committed to conducting our business with integrity and professionalism.
To summarise: using a chartered accountant gives you the reassurance that you are using a highly qualified expert who is a registered member of a professional accounting body.
Duties of a Chartered Accountant
Whilst there are no direct differences between the duties of those labelling themselves as accountants and those who have qualified as chartered accountants, the latter are usually more experienced, more professional and have a greater knowledge and variety in their field of expertise.
As chartered accountants, we aim to support the business itself and all the stakeholders therein. We guide the shareholders and the directors as they work through the business’s life cycle. As the business expands, we advise clients on ways of paying staff, registering for VAT and making a profit out of doing so. Tasks like filing accounts at companies house on the correct timeline comes as second nature to the professional chartered accountant.
As the business matures and profits start to become consistent and more predictable we can help you plan for tax mitigation, reinvestment, expansion or remuneration strategies for Director’s pay and perks.
Finally, if you wish to wind down your business, a chartered accountant can assist you in valuing the business and making it ready for sale or passing on to the next generation.
What are Chartered Management Accountants?
Chartered Management Accountants are usually employed within larger companies, helping with the numbers behind manufacturing a product in a very specialist, focused way. They use cost accounting to work out if a product will be profitable and the impact a project will have on the business as a whole.
The term ‘management accountants’ should not be confused with ‘management accounts’. The latter are a set of financial calculations usually based on recent historical information and performance. They are normally produced monthly or quarterly to assess how the company performed in that period.
What is the difference between a Bookkeeper and an Accountant?
A bookkeeper will help ensure the smooth running of your business on a day to day level. Often their duties will involve paying supplier invoices, chasing up debtors, reconciling the bank account, running the payroll and completing the quarterly VAT return. Bookkeeping can be complicated and time consuming for owner-managers.
Your accountant’s role is to oversee your bookkeeper, helping to ensure that their work is correct, filling in gaps in their knowledge and, in due course submitting the various returns to HMRC so that your business is fully compliant with the latest legislation.
Compiling the bookkeeping records is the first step towards creating your annual accounts. Your accounts form a picture of your financial year, where you have been and where you are going. These are not only a legal requirement but can also be used to analyse your company. Your accounts may show how reliant you are on one customer, indicate that you can now claim back the VAT from the customer who never paid, or perhaps that your business is growing and where that growth is originating from.
Manchester Chartered Accountants
As a firm of chartered accountants, we are able to provide all the services set out above. Be that a year-end only accountancy service, a full financial accounts audit or bookkeeping, we are happy to help.
Find out more about how a Chartered Accountant can benefit your business.
We offer a free, no-obligation, initial meeting where we provide information on:
- The accounts preparation process
- An assessment of where your business currently stands
- An explanation of accountancy fees
- Our organisation, history and the experience we can bring to your business.
All new clients are paired with a qualified partner and manager who will provide one-to-one contact throughout the year. We will meet with you regularly to discuss your financial performance, changes in your industry sector and any plans you have for your business. We take the time to understand your business, the challenges you face and provide meaningful recommendations to help improve profits and drive your business forward.