Drawing the Line – Differentiating Bookkeepers from Accountants

By admin, July 1, 2016

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Both wore the ‘pen up their sleeves’ at work. Both slept on their calculators and sacrificed their cell phones. Both worked with heaps and mounds of papers.

Alas! The world called one a “Bookkeeper” and the other an “Accountant”.                                    

The fine line that draws the distinction between a bookkeeper and an accountant keeps changing with every evolution in accounting software. The difference lay in the overall responsibility, technical competence and the position held within an organization. For years, bookkeepers have been called ‘accounting clerks’ by companies to denote the primary ‘accounting’ tasks they perform as a ‘clerk’. However, they weren’t equivalent to qualified accountants. These accounting clerks or ‘bookkeepers’ mostly work with data entry without having an indepth knowledge of accounting theory.

Accounting organization may segregate their accounting functions based on daily business transactions and then will prepare the financial statements. An accountant will prepare the financial statements where one will take on a role of an advisor. A bookkeeper on the other hand will focus on performing basic financial transactions “data entry”.

What is the difference between them?

The terms accountant and bookkeeper can be interchanged to a great extent. Bookkeepers perform basis accounting duties. They maintain financial records, keep track of supporting documentation and verify the accuracy of the company’s general ledger.

An Accountant prepares the annual reports, assesses the correct accounting logic within an organization, advices on tax regulations.

Why do we need both a Bookkeeper and an Accountant?

For a business to operate effectively, it requires both an accountant and a bookkeeper. While a bookkeeper is expected to perform day-to-day work and an accountant is said to be responsible for the overall accounting function of a business.  Greater the size and complexities of an organization, the more it becomes necessary to have a good Chartered Professional Accountant to supervise a bookkeeper. A CPA performs an advisory role providing relevant suggestions and up-to-date information.

Having understood the difference between a bookkeeper and an accountant, it is a business decision on how you wish to shape the accounting processes of your organization. Getting everything done within your organization will demand a lot of attention, coordination and supervision. Outsourcing will provide the easiest and most most effective solutions.