A professional accountant is a multi-tasker, as he supports the top management in taking some major decisions. In this way, he keeps the management on toes all the time by providing them the runtime and periodic information about the business, so they can change or update the business operations and activities during and at the end of the financial period. Overall, there are four major duties of an accountant in a business firm, and we are discussing all of them briefly here:
Record-keeping and Bookkeeping Services
To keep the business operations and activities smooth and efficient, recordkeeping and bookkeeping are necessary, and an accountant NYC has the major responsibility to manage this system with full command and control.
Tax compliance is another major task, and the accounting department also takes care of it.
The basic responsibility here is to keep the tax preparation as per the tax laws.
It helps the management take necessary decisions according to the business internal situation and external factors that are also the responsibility of the chief accountant.
Internal Audit and Risk Management
The fourth major task of an accountant is to keep an eye on internal audits, analyze it, identify risks, and manage them in such a way that the business operations keep running without disturbance.
Another major role that is considered a pillar for an organization is management accounting.
It helps businesses take a clear picture of assets, liabilities, capital, cash, stock, and profit/ loss by implementing some accounting procedures and mathematical calculations.
When the actual situation comes in front of the management, they can take immediate, and sometimes, bold decisions to control the situation.
However, the most important role of a professional accountant is to help an organization manage internal audits and prepare it to face uncertain situations that may arise in the future. Moreover, it is an accountant, who keeps them aware of an organization about some uncertain situations through his risk management skills.
It is an additional but compulsory requirement, as, without risk management, the management cannot oversee the actual situation of the business without taking necessary measures regarding the internal audit.
Risk Management Accounting as a whole
Accessing all positive and negative risks in which the company’s business practices are involved, is risk management accounting.
The objective of a risk management accountant in New York is to address these risks, minimize or eliminate them to control the damages, which can affect the company’s resources.
There are numerous types of business practices that may create uncertain situations. Maybe, these activities and operations look normal, but in many cases, the companies are encountering some unavoidable risks.
We are presenting all those business operations that can be risky at some level here:
Let us list down all Malfunctioning of equipment
➡Breaking down the equipment
➡Becoming a Loan Defaulter
Types of Risks
While talking about the risks, there are two types, unavoidable and avoidable. The best accountants in NYC know that some of these risks are acceptable.
We can find numerous reasons that allow us to accept these risks, but overall, the concept behind it is known as risk tolerance.
However, when we decide to eliminate these risks, as an accountant in New York, we need to weigh opportunity and tradeoff costs.
To identify all the types, discussed above, we need to break them into small categories. In the upcoming section, we are discussing these categories separately:
Under this category, we include all those factors that create financial stability. It is a general concept that the management decisions and practices are involved in it.
Sometimes, the management decides to invest in those areas, where the chances of success are minimal.
Some managements are poor in assigning resources for tasks. These practices may raise financial risks.
In the case of finding judgmental and human errors during business activities or operational procedures, we will discuss them in human risks. The involvement of the human element is common in business, and the management accounting keeps the parameters on to calculate them and control accordingly.
These errors can affect the overall performance of the company, and sometimes, the company can face the loss of key workers or employees.
The losses due to natural disasters are not in control of the company. Sometimes, thunderstorms, floods, earthquakes, and other natural disasters may spoil your efforts. In some cases, power outrage and accidental fire in the units may damage your business activities.
To keep these outside influences under observations, the accountants discuss them under environmental risks. To achieve this target, they have emergency protocols and natural disaster plans.
This planning help control the damages to the maximum level.
In the case of losing physical losses, the accountants consider them under physical risks.
These losses can be in the form of any theft, drop in the prices of any land, building, or equipment, overall economic situations, and equipment miscalculation.
The role of an accountant in risk management
Let us identify some basic roles first before going into the details!
➡The professional accountants in NYC should develop a mindset to make sure that enterprise risk management (ERM) must be a part of accounting norms and procedures.
➡The businesses consider the accountants as risk experts, who know how to overlook the valuable insights of the business. This overall overview helps them get support from all related departments that will improve the level of response in case of giving responses against any certainty and handling it efficiently.
➡Business is the name of taking risks and grabbing the opportunities, and if the management does no, the chances of success can be increased.
➡Therefore, the responsibility of an accountant is not only to minimize the risks but also to give positive suggestions through opportunity management and effective risk management policy.
➡They also need to create value against the opportunities and preserve time to avail the success chances by keeping a competitive edge over competitors.
➡The intelligent risk-taking ability has also a key role to mitigate the risk chances as well. The company also wants to know about the chances of failure, and if there are any, need to know potential courses of action to minimize them.
➡Risk management has not become a key concern for many organizations. Normally, businesses adopt a reactive approach when they find any uncertain situation.
➡The companies do not hire a core competent team, which means that no specific strategy is there. In this situation, the involvement of an accountant in decision making against any uncertainty is minimal.
➡To handle this situation, the accounting department should develop some efficient and effective risk management processes to manage this issue with competence.
➡Enterprise Resource Planning processes have not been adopted yet by the finance and accounting professionals.
➡In the future, they need to advance towards ERM and try to resolve issues regarding risk management in their organizations.
➡Many accountants only have the basic knowledge about risk management; however, they do not have skills that can address the uncertainty in their organizations. It is necessary now!
➡The accountants do not know their role in an organization. The reality is that are the partners, who need to contribute to the success of the business.
➡For that, they should learn the basic principles of risk management and implement them in the organization to take part in finding opportunities, managing them, identifying threats in it, and making them a part of the existing control management cycle.
➡Risk oversight and management should be understood in detail. Currently, the accountants are not handling it with care because they have not developed their skills in this field yet.
➡This approach has created differences in interpretations, and the accountants have become ineffective in finding accurate results. It has been observed in recent times that a quantitative approach is being adopted in the organizations for finance management, measurement, assessment.
➡In recent financial crises and during the Covid-19 pandemic, this approach has been failed.
➡The chances of insecurity, health issues, digital and cyber crimes, and increasing the poverty rate have increased, and this reason has increased uncertainty for the businesses as well. It should be addressed on an immediate basis.
➡The accountants should know that mitigation policy against risks can affect the profits, as these factors increase the costs. They need to open new horizons for managing risks in a more productive and resilient way.
➡The companies also need to consider risk management, a key department. In the case of making risk management, more effective, the need is to take all departments and processes that should come under one roof.
➡Every department must know that collective efforts and organized strategy are the only way to help the business take productive risks for grabbing new opportunities, as these efforts will improve the business overall, and the effect will trickle down more effectively.
➡The organizations must know that uncertainty can be handled through a defined risk management process. Reacting against any specific event may help you avoid immediate losses, but overall, it will damage your performance in a great way.
➡Risk management is a way to decide after complete research, an effective approach, calculated figures, and an efficient mindset.
➡Do not implement an old approach for handling risk, as it is becoming obsolete.
➡It is also important to implement ERP processes in the organization, as it will give the managers, a better understanding of the threats for the businesses, and the ability to deal with them more effectively.
➡These processes will take all the departments on board to handle the risks and implement precautionary measures in the case of smelling the threats.
What does IFAS expect from the accountants?
According to IFAC, the accountants need to take responsibility for a few tasks. We can elaborate all in two key points here:
➡The first responsibility of the accounting team is to guide the management about their decisions in a fairway. They need to provide information about the leadership goals and objectives in such a way that they may get to know whether they can achieve them or not.
➡They also give suggestions through which the leadership can get success in achieving the business objectives.
➡The second responsibility is to forecast the chances of success or failure in implementing the strategy. They also have the responsibility to divide the strategy into phases and tell the leadership about the short-term goals as well.
➡In this particular way, the CFO provides complete information about the strategy and tactics that need to follow in the future.
The best NYC tax accountants are also involved in developing this strategy because of their estimations regarding taxing and tax laws. It will clear the picture in monetary terms as well after submitting the tax.
How to fulfill the expectations of IFAS?
➡ The CFO and his team need to understand what their actual role is. They need to compare the actual and budgeted figures, identify the current situation, develop the most realistic information, and define the risks that might happen in the near and late future.
➡The accounting team should also use those processes and tools that develop the most authentic information.
➡For forecasting, it is a key, as if there is a lack of information, ambiguity in results, or the information is not of sufficient quality, the risk management process will not provide the results, which are forecasted.
➡The accounting team also needs the best tax accountant to implement tax laws with full potential, forecast the future tax policies, implement the changes according to his best approach, and give his output in forecasting.
➡The CFO and his team should also identify the potential outcomes and their solution. The expected sales, customer outcome, and overall likelihoods should also be a part of it.
➡The steps to adjust the risk factors should also be considered. The overall projection of the project is also needed.
➡It is also important to mention how this adjustment will be more successful in the case of risk adjustment.
➡The CFO needs to inform all the decisions that have been taken place for risk management. During the process, the accounting team should also consider the positive effects of the future path.
➡Timeless and quality information is key for accountant NYC. If you are taking time in informing them about the risks, or not providing quality information, you are not sincere with your job.
➡The reason is that this information helps the management take the necessary decisions accordingly.
➡The accountant should provide information in a straight, simple, effective, and efficient way.
➡If this information is not enabling operational managers to understand, the results will be significantly impaired.
➡The last but not the least point is that the accounting team should not be an obstacle to organizational success.
➡The accountant should help the management take the right decisions at the right time and with the right mindset.
The Overall Role of an Accountant in Risk Management
The key responsibility of a professional accountant is to develop an internal control program that is also helpful in reducing and managing risks.
In the case of having a team of accountants, some staff manages basic tasks. The accounting managers need to take care of risk management, internal auditing, monitoring of risk management activities, take necessary actions in a state of uncertain situations, and implementing new strategies for improving business operations in an organization.
The managers also need to organize training sessions for the lower staff, so they can develop a familiarity with the latest standards, technologies, tools, skills, rules, and languages that are necessary to manage all the financial operations and risk management processes.
The accountants are the frontline force that help leaders consider all the circumstances, uncertainty levels, and approach towards the target before taking final decisions.
In this way, they become the strategists to the top management to help achieve all organizational goals and objectives.
How to become a good risk manager?
For an accounting professional, you need to complete the professional training program.
Most training programs related to accounting complete in four to five years. Under this training, numerous topics are covered like financial accounting, cost and management accounting, auditing, financial reporting, mathematics and statistics, corporate and major laws related to business, economics, management and marketing, business communication, monitoring and handling, risk management, cost-benefit analysis, international businesses, financial statements, capital management, management accounting, and decision making.
During these four years, you also pass through some general studies. However, you need to pass them in the first two years. After that, you study accounting strictly.
After completing this training program, you can become an accountant. However, to become a professional risk manager, you need to go for a post-graduation program.
Specialization in managerial accounting or business administration also helps you achieve your goal to become a risk management expert.
How to prove your capability as a Risk Manager?
Professional experience helps you achieve your target. However, before that, you must have credentials that show your commitment to the field, you have chosen.
Therefore, if you want to prove yourself as a risk manager, you must be a Certified Management Accountant. This qualification will prove that you have the skills to manage the internal audit.
It also proves that you understand the management of resources as well. The most specific qualification for a risk manager is the certification regarding cost and management accounting.
To qualify for this certification, the minimum qualification, which is required, is a Bachelor’s degree.
In the past, the accounting profession was not as technical as it is today. Now, the accounting professionals not only crunch the numbers but also need to be a strategic planner.
They not only provide bookkeeping, payroll, and costing service, but also participate in anticipating the future scenarios, suggesting policy and strategic changes, and taking part in decision making.
Overall, the accountants are the strategic partners of the businesses because they become responsible for all the situations after suggesting changes in the policies and plans for business improvement.
What are the benefits, an organization can achieve with the support of Risk Manager?
As described earlier, risk management helps organizations identify the risks and find ways to manage them through policy, structural, and operational changes.
Identification of risks at all levels and types is the key responsibility of a risk manager. Moreover, if such a professional in your organization, you, as a business owner, can expect the unexpected.
Along with this identification, if you find the solution against the uncertain situations, it will be a huge boost to your organization. The risk managers will also keep you aware of all the unexpected and pretended results that may occur soon.
If you have information about all the future events that can damage your business devastatingly, you can prepare your business to face them.
Do you want anything more? Well, let us develop a list of benefits of a risk manager that you can avail of!
➡You can alter the operations in the case of finding any uncertain risk.
➡You can continue with the risks if the risk manager finds it beneficial for you. It works wonderfully well when others are avoiding the threats related to the risk you have taken, and if you become successful, you will enjoy the definite competitive edge.
➡You can change the operational structure, change the location of business operations, increase or decrease the labor costs, or anything other, which can minimize or mitigate the risks, increase the chances of success, or revisit the policy as suggested by the risk manager.
➡You can also transfer risks in many cases with the help of a risk manager.
➡For example, you can buy insurance for a particular event or operation that will help you secure in case of loss.
Overall, by engaging risk management accounting in your organization, you are minimizing the probability, as you will find yourself ready to face unexpected loss. It is what your target for improving the organizational structure, business operations, and decision making.
However, the most important thing is the decision of hiring such a professional.
An experienced and skilled candidate will be suitable. In the case of saving money by hiring a low-profile candidate, you should be ready to face huge losses that will be obvious due to the underdeveloped plans for managing risks.