What Is the Purpose of Accounting Firms?

Accounting firms come in all sizes and specialties. Some have annual revenues reaching into the billions while others bring in less than $1 million. Several accounting firms have more than100,000 employees while others have one. One thing remains the same however; they are all in business to provide accounting, financial record keeping and compliance support to their clients. Accounting firms may specialize in one area of accounting or offer multiple services to their clients. Either way, the business of accounting is one that is vitally important to the health of our economy.

Financial Record Keeping

An accounting firm's primary responsibility is to provide unbiased financial record keeping for their clients' businesses and organizations. This helps the client maintain an understanding of how well or how poorly the organization is doing financially. Without financial records, businesses compete blindly. The financial data produced by the record keeping give an accountant a financial picture that can be turned into ideas, opportunities and new business suggestions. In times of poor performance, the hard data can be assessed to determine weakness, inefficiencies and operations that might need to be discontinued.

External Audit

Accounting firms also provide a checks-and-balances system for the financial management practices of companies through external audit services. The accounting firm audits the financial statements of public companies and issues an opinion on the accuracy of the stated financial data. This process provides the public and investment community with information that they use to assist them in making wise investment decisions. This process should help stem corporate fraud and financial mismanagement. It also should keep the shareholders informed of how well the executive leadership is doing in leading the company.

Tax Compliance

Many firms provide tax compliance services for businesses and individuals with federal, state, sales and use, franchise and property taxes. This work is usually complex and difficult. The firms' employee-certified accountants are professionally trained in tax compliance requirements and tax law. This allows them to complete the compliance requirements, meet the mandatory deadlines and accurately calculate the client's liability. In addition, these same firms act in proactive ways to decrease their client's future liability through proper planning techniques.

Business Consulting

Accounting firms also provide business consulting services. They assist with difficult business decisions, capital expenditures and growth planning. These services are just as important as the tax compliance and financial checks and balances. Without crunching the data into usable information, a company might not have any idea of how or where to increase their business. These evaluative services provide a foundation for solid management decisions.

Internal Audit & Risk Management Services

Accounting and consulting firms also provide internal controls and risk- management services. The internal control audits help a client maintain proper separation of duties to help stop internal theft and fraud. Accounting firms test the controls in place, the safety of proprietary information and the computer infrastructure to determine where possible weak points could be. These firms also provide risk services such as risk of entering global markets, credit risk, policy and strategy risk as well as operational risk. These services are vital to companies that are growing fast and entering new markets.

Specialty Services

There are several specialty services that many large accounting/consulting firms offer. These firms offer a service that helps companies convert their accounting systems from Generally Accepted Accounting Principals to International Financial Reporting Standards. This is a difficult process that cannot be completed without special training. The firms also provide support in taking a private company public. Meeting the requirements to make an initial stock offering and enter the public markets is complex. These specialty services are offered through both short and long-term engagements.