role of the bookkeeper
If you have read the page entitled what is bookkeeping, you will have a pretty clear idea about those particular tasks. But what of bookkeepers themselves?
There is often confusion between the role of bookkeepers and the role of accountants. Indeed, Wikipedia has this to say on bookkeeping:
Many people mistakenly consider bookkeeping and accountancy to be the same thing. This confusion is understandable because the accounting process includes the bookkeeping function, but is just one part of the accounting process. The accountant creates reports from the recorded financial transactions recorded by the bookkeeper and files forms with government agencies.
They are correct in how they define the bookkeeping process, but in the next sentence they draw the wrong distinction between bookkeepers and accountants. Well, perhaps we should say they are applying too narrow a definition. Here they say:
A bookkeeper (or book-keeper), also known as an accounting clerk or accounting technician, is a person who records the day-to-day financial transactions of an organization. A bookkeeper is usually responsible for writing the "daybooks." The daybooks consist of purchases, sales, receipts, and payments. The bookkeeper is responsible for ensuring all transactions are recorded in the correct day book, suppliers ledger, customer ledger and general ledger.
The bookkeeper brings the books to the trial balance stage. An accountant may prepare the income statement and
balance sheet using the trial balance and ledgers prepared by the bookkeeper.
This confusion is understandable, and may be in part due to conflating the core duties of bookkeeping with the wider role that bookkeepers carry out in the public domain.
A Certified Bookkeeper with the appropriate accredits, can go far beyond merely preparing trial balances. Certified Bookkeepers are able to produce the income statements and balance sheets for sole traders and partnerships and draft accounts for limited companies, as well as produce VAT
returns, cash flow forecasts, management accounts, manage payrolls, and on a personal level, prepare tax returns and act as “agent” with HMRC.
Accounting technicians may be entrusted in addition, to preparing financial accounts that include computations of corporation tax for limited companies and filing with the appropriate authorities as well as give consultations on implementing accounting systems.
bookkeepers and accountants compared
The simplest and least contentious method is to take a look at the training syllabi of both. I will compare the ICB with ACCA (Association of Chartered Certified Accountants).
Level I Certificate in Basic Bookkeeping
Level II Certificate in Manual Bookkeeping
Level II Certificate in Computerised Bookkeeping
Level III Diploma in Manual Bookkeeping*
Level III Diploma in Computerised Bookkeeping
Level III Diploma in Payroll Management
Level III Diploma in Self Assessment Tax Returns
Level III Diploma in Small Business Financial Control
Level III Diploma in Legal Bookkeeping
Level IV Diploma in Financial Management
*Level III in manual bookkeeping includes preparation of income statement and balance sheet for sole traders and partnerships.
Fundamentals (nine papers in total)
F1 - Accountant in Business
F2 - Management Accounting
F3 - Financial Accounting
F4 - Corporate and Business Law
F5 - Performance Management
F6 - Taxation
F7 - Financial Reporting
F8 - Audit and Assurance
F9 - Financial Management
Professional (five papers in total)
P1 - Governance, Risk and Ethics
P2 - Corporate Reporting
P3 - Business Analysis
options (2 to be completed)
P4 - Advanced Financial Management
P5 - Advanced Performance Management
P6 - Advanced Taxation
P7 - Advanced Audit and Assurance
AAT syllabi duplicate much of the ICB but their Level III includes cost accounting, and their level IV includes financial reporting, business and
personal tax and a project on internal control in accounting systems. I have completed training to AAT level IV as well as sitting the ICB entrance
exam in advanced bookkeeping.
The point of this rather detailed overview of training syllabi, is to show that bookkeepers can indeed be qualified beyond the basic roles of recording transactions. Of course, Chartered Accountants have in-depth training in complex areas of corporate law, management, audit, business analysis and risk analysis. But most of this is simply not relevant to the needs of the small business.
Indeed, many accountants are so specialised in these areas that they have little involvement in the day to day recording of transactions. This is why
when you are thinking about accounts, you should think "bookkeeper".
Think accounts - think bookkeeper