Accounting is the backbone of business. Ethical and professional practices form a clear financial image of a business and allow managers to make informed decisions, keeps investors up to date on developments in the business, and keeps the business profitable. It is also one of the oldest professions; businesses have been practicing accounting for thousands of years. Cuneiform tablets from the fertile crescent, for example, show clear evidence of these practices.
A number of disciplines are involved in accounting. At its root is bookkeeping. A bookkeeper keeps tracks of all of the funds that a business handles, including money paid to the business, money paid out, and assets that the business holds. His or her goal is to keep the ledgers of the company balanced so that anyone can assess, at a glance, the financial state of the company. Records handled by a bookkeeper include payroll, company ledgers, bank statements, and paperwork pertaining to real estate and investments.
Auditing is also included in accounting. Auditing protects employees, investors, and owners of a company from fraud, and it is usually performed by an outside agency. During an audit, an accountant will examine the ledgers of a company, along with many other records, to see if they provide an accurate picture of the financial doings of the business. If other financial records such as bank statements do not support the picture presented by the ledgers, the auditor must find out why. Part of accounting is establishing internal controls to keep a company's business clean, so that a company can fearlessly face an audit.
The financial records of a company are used to make important decisions, such as whether or not to make a major investment. Proper financial management supports company officials while they make these decisions, showing them whether or not an investment will be practical and if the company can afford it. Accountants prepare regular statements that are distributed to company officials so that they can follow the health of the business, and they also handle tax rolls and reports to government agencies.
The size of an accounting staff varies, depending on the company. In the US, the primary employees are typically certified public accountants, who must pass a test administered by their state. They may, in turn, oversee clerks who have bookkeeping training, but who are not fully certified. A single head accountant supervises the entire department, and ensures that work is being performed in a timely and accurate fashion. Typically, the head of the department performs an important role in a company, and will frequently meet with the company's head or board to keep them informed.