Businesses and individuals looking for professional financial advice often get confused between the words “accountant” and “chartered accountant.” Although they seem similar, a huge gap exists between them, and understanding these distinctions is crucial in order to make a decision on which professional is most suited to your needs. In this article, let’s delve into the differences between an accountant and a chartered accountant.

Who is an Accountant?

An accountant is employed in an organization or an accounting firm for handling financial records, generating reports, and implementing standard accounting jobs.

Roles and responsibilities

• Bookkeeping
• Generating financial statements
• Entering and managing financial records
• Handling payroll
• Balancing accounts
• Recording transactions
• Paying tax returns for huge firms
• Ensuring compliance with tax laws

Who is a chartered accountant?

A chartered accountant is a highly qualified accounting professional who has received rigorous training and education in domains such as financial management, taxation, business strategy, and auditing. They need to clear complex certification exams, generally conducted by a recognized chartered accounting body (such as ICAI in India). They possess a wide range of expertise and offer varied services to firms related to finance and accounting.

Roles and responsibilities

• Preparing, evaluating, and auditing financial statements
• Providing specialized advice in areas such as auditing, tax regulations, and financial analysis
• Offering services in business consulting, financial planning, and risk management
• Providing services related to taxation such as tax planning, tax compliance, tax advisory, tax audits, etc.
• Performing forensic accounting
• Performing budget management
• Controlling financial systems
• Offering corporate finance services
• Offering applied finance services
• Providing services in business recovery and insolvency

Key differences between an accountant and a chartered accountant

• Qualification and Training

The qualification for an accountant is a Bachelor’s degree in accounting or a related field. On the other hand, a chartered accountant requires a certificate in the theory of accounting and other higher certificates in accounting science along with a Bachelor’s degree. They have to undergo exhaustive training programs and clear difficult exams. For example, in India, chartered accountants are required to complete three levels in the CA course to become a certified CA.

Compared to accountants, chartered accountants possess a wider range of expertise. Also, unlike accountants, they are required to fulfill the highest ethical codes of conduct.

• Nature of work

Chartered accountants offer a more extensive range of services compared to accountants.

An accountant generally assists you with day-to-day services like invoicing or annual tax returns. On the other hand, a chartered accountant will be able to help with extremely complex matters and transactions like forensic accounting, financial planning, cash-flow projection, etc. Also, they can assist in areas related to corporate finance such as tax mitigations, reinvestment, mergers and acquisitions, etc.

If you hire a chartered accountant for your business, he/she would attempt to have an in-depth understanding of your business in order to offer suitable advice. They can assist with the accounting systems and operations in your business. Using their expertise in strategic forecasting and skills related to finance, auditing, taxation, and accountancy, they can work to drive your business forward. Moreover, they can help your business avoid costly risks in the future, both from the financial as well as the legal perspective. 

• Authority

Accountants can manage financial reports and taxes, but they are unauthorized to sign audited financial reports or provide customized financial advisory services.

On the other hand, a chartered accountant has the authority to sign audited financial statements, assume the role of a tax advisor, represent clients in legal financial issues, and perform forensic accounting.

When to consult an accountant vs a chartered accountant

If one needs financial assistance for individual purposes or for running a small business, using an accountant would be the best option.

If you need complicated financial services, such as audits and forensic accounting, or customized financial consulting, a chartered accountant would be the better choice. Particularly, if you are running a firm that is required to present audited financial reports or a company that is dealing with complicated legal tax matters, a chartered accountant would be your go-to option.

Conclusion

Accounting science plays a critical role in the running of your company. Therefore, understanding the roles of an accountant and a chartered accountant is extremely vital for any organization. In order to keep your finances running smoothly and make your business prosper, consult an accounting professional who is most suited to your needs. For the best financial services, check out the best Accounting Firm in Bangalore. Explore our services here.