Accounting functions in an enterprise

5/10/2021
The accounting & finance division of an enterprise is usually in charge of activities related to accounting, tax and finance. For small enterprises, these activities can be handled by just a small number of persons (normally under 3), but for large enterprises they may need more supporting sub-divisions under the accounting & finance division to just process detailed works. Hereunder is the description of the main activities of the accounting & finance division:
Accounting activities

As we all know, the accounting system is an indispensable part of any business. It provides information on financial performance for both internal users (like managers, directors,…) and external users (investors, bankers,…). Because of this, accounting activities in an enterprise include 2 types: management accounting and financial accounting.

Financial Accounting 

It is a process including gathering supporting documents of economic transactions occurred in the enterprise, processing them, reflecting them in the accounting system, and then preparing financial statements in accordance with accounting standards. The mission of financial accounting is to provide financial statements which truly and fairly reflect the enterprise’s assets, liabilities, equities, and profit and loss in accordance with accounting standards for internal users and external users (the principal users including investors, shareholders, business partners, tax authorities, banks, local authorities...) 

Financial accounting provides information basing on transactions that already occurred, therefore it has a high level of accuracy and reliability. In addition, it is because that information reflected by financial accounting must be based on accounting evidence and comply with accounting standards. 

Management Accounting 

It is a process including gathering, checking, analyzing data, and provide useful information for the enterprise’s management teams to help them in internal management and decision making relating to investment and operation. 

The mission of the management accounting is, through analyzing the financial accounting data and other related detailed data, to provide a closer and clearer look about the causes, features, and nature of costs, incomes, assets, liabilities,.. which were incorporated and accumulated through the enterprise’s activities. 

The management accounting has a different characteristic that it does incorporate not only events that already happened but also events that are happening and will happen in the future. Moreover, information provided by the management accounting might be associated with specific units or divisions of the enterprise, therefore such information is quite flexible and adaptive. 

Although the tasks of financial accounting and management accounting are different, they all provide useful information for the related users.  

Financial activities

Basing on the enterprise’s accounting data, the financial personnel will manage the enterprise’s finance and the cash flow to make more profits and control risks. 

Financial activities include reading financial statements, managing cash flows, analyzing profit and loss reports to estimate the balance sheet and cash flows of the business. When these reports show that the business is short of capital, the financial personnel will apply finance tools to make a strategic plan to help overcome the shortage. 

Based on the balance sheet, financial activities will help answer the following questions such as: 

  • How much money do the enterprise need to invest? 
  • Where to mobilize the fund, how to efficiently mobilize the fund? 
  • How to make the most use of the mobilized fund?
  • How to effectively and efficiently use or distribute the money that is earned from the investment? 

Basing on the above questions, we can see that financial activities are about the decisions relating to investment, capital sources, profit distribution. The overall goal of those decisions is to help maximize the value of the enterprise.

Tax activities

Tax activities are an important part of the finance and accounting division of every enterprise. Hereunder are the main tasks: 

  • Calculate tax payables (basing on the accounting data and necessary tax adjustments): Value Added Tax, Special Consumption Tax, Environmental Protection Tax, Personal Income Tax, Corporate Income Tax, other taxes...
  • Prepare and submit tax filings monthly, quarterly and annually
  • Make payments of tax for tax authorities on time
  • Update changes in tax regulations 
  • Archive and maintain invoices and supporting documents for future checking of local tax authorities and other parties.
  • Directly deal with tax authorities when necessary