17 important hard skills accounting professionals should possess
Looking to add accounting professionals to your business team? Here are 17 important hard skills they need to possess.
Accounting services play a vital role in the financial health and operational efficiency of companies, both big and small. They offer invaluable insights into a company’s economic status, allowing businesses to make informed strategic decisions.
The importance of these services is multifaceted and profound, and includes:
- Ensuring financial compliance: In an evolving regulatory landscape, businesses need to ensure they abide by existing tax laws and financial regulations. Professional accounting services help companies navigate these complexities and avoid legal repercussions.
- Facilitating strategic planning and decision making: Accountants meticulously record, analyze, and report financial data to provide a clear picture of a company’s profitability, cash flow, and overall financial health. Such information is crucial in making investment decisions, budgeting, cost management, and expansion planning.
- Maintaining financial transparency: Accounting firms provide key stakeholders, such as investors, lenders, and shareholders, with accurate, reliable financial information. This transparency enhances stakeholder trust and confidence – something critical for business reputation and growth.
- Risk management: By spotting financial anomalies, inconsistencies, or potential fraud, accountants can help businesses identify and mitigate risks that could potentially harm the company.
To accomplish these things, accounting professionals need a diverse range of hard skills to excel in their roles.
17 important hard skills accounting professionals should possess
Whether you’re putting together an in-house team to handle accounting tasks or outsourcing in the Philippines (or some other country), here are 17 key abilities you need to look for in professionals in the field of accountancy.
1) An understanding of accounting principles and standards
A fundamental skill for any accounting professional is a thorough understanding of key accounting principles and standards. These include generally accepted accounting principles (GAAP) or the International Financial Reporting Standards (IFRS) which form the backbone of all accounting tasks, from general ledger entries to the compilation of financial statements.
Familiarity with these standards ensures accuracy, uniformity, and compliance in financial reporting.
Accounting is a numbers-driven profession, so numerical competence is crucial.
This means having a firm grasp of basic arithmetic, algebra, and statistics. The ability to interpret financial data, perform accurate calculations, and apply numerical concepts is integral to the various roles in the field of accounting.
3) Proficiency in accounting software
With the digitalization of businesses, proficiency in accounting software has become increasingly vital.
Familiarity with programs like QuickBooks, Microsoft Dynamics, or SAP can dramatically improve efficiency.
Furthermore, knowledge of Excel or other spreadsheet software is crucial for data manipulation and analysis. Also, the ability to adapt to new technologies and tools is also necessary, as software solutions continue to advance.
4) Knowledge of taxation
To handle a range of tasks, such as preparing, filing, and managing tax statements and returns, accountants need to have a solid understanding of taxation.
They also need to be aware of the latest tax regulations, deductions, and exemptions to ensure businesses meet their tax obligations while maximizing their tax benefits.
5) Financial data analysis
Accountants need to be adept at interpreting financial data to be able to evaluate a company’s performance and financial health. This includes skills in ratio analysis, cash flow analysis, and budgeting, as well as a firm grasp of statistical methods.
The ability to extrapolate and analyze trends from financial data is also crucial to facilitate strategic planning and decision-making.
The audit process involves examining an organization’s financial records to ensure accuracy and compliance with laws and regulations.
Since auditing is a core function of accountancy, a keen eye for detail, an understanding of audit procedures and standards, and the ability to identify inconsistencies or anomalies are essential prerequisites for accountants.
7) Knowledge of business law and industry-specific regulations
Certain tasks of accounting professionals are subject to various business laws, especially ones related to taxation, corporate structures, and financial reporting.
Depending on the industry they work in, accountants may need to be familiar with specific regulations and compliance requirements. For example, accountants working in healthcare might need to understand regulations related to health insurance and patient privacy.
Having a working knowledge of industry-relevant laws enables accountants to navigate the legal landscape and ensure their companies remain compliant.
8) Budgeting and forecasting
Both budgeting and forecasting are crucial skills for accountants to assist businesses in planning.
Budgeting involves creating detailed plans that lay out a company’s financial expectations, while forecasting predicts future financial outcomes based on historical data.
The bookkeeping process involves recording financial transactions – an essential part of maintaining accurate financial records.
It includes managing invoices, payments, expenses, and salaries. An accountant’s mastery of bookkeeping ensures that financial data is current, comprehensive, and organized for analysis.
10) Cost accounting
Analyzing costs associated with goods or services produced by a company is what cost accounting is all about.
Accountants with cost accounting skills can help businesses understand their cost structures, thereby informing pricing strategies and cost management initiatives.
11) Ethical standards
While ethics is not a technical skill, accountants are expected to have a firm grasp of ethical standards, especially in the realm of business.
Accountants have a responsibility to provide accurate, fair, and compliant reporting. Breaches in ethical conduct can lead to severe legal and reputational repercussions.
12) Professional certifications
Obtaining professional certifications, such as Certified Public Accountant (CPA) or Chartered Accountant (CA), can significantly enhance an accountant’s credibility and marketability.
With these certifications, an accountant is perceived to have a high level of expertise and commitment to the field.
Though not traditionally treated as a hard skill, communication abilities in accounting are paramount.
Accountants often need to present complex financial information to colleagues or clients who may not have a financial background. Therefore, the ability to distill and communicate intricate data clearly and concisely is an indispensable skill for accountants.
14) Risk management
Accountants play a significant role in identifying and managing financial risks. This requires an understanding of financial markets, investment analysis, and various risk management strategies.
They need to be able to evaluate potential investments, acquisitions, or contracts and assess their potential risks and rewards.
15) Project management
Managing financial projects, such as internal audits, budgeting, and financial planning, are part and parcel of the accounting profession.
Project management skills can help accountants plan, execute, and oversee projects effectively, ensuring they meet their objectives on time and within budget.
16) Financial reporting
Accountants must be adept at preparing various types of financial reports, including income statements, balance sheets, and cash flow statements.
These reports provide critical insights into a company’s financial health and performance.
17) Critical thinking
Accountants apply critical thinking in analyzing and solving financial issues.
Considered both a hard and soft skill, critical thinking involves using logic and reasoning to identify strengths and weaknesses in financial data, and finding the best solutions to problems.
The breadth and depth of hard skills required for accounting professionals are extensive. These range from foundational mathematical and bookkeeping skills, to a deep understanding of accounting principles, proficiency in relevant software, and expertise in financial analysis.
Coupled with sector-specific knowledge and the ability to communicate complex financial information clearly, these skills equip accounting professionals to excel in their roles and add significant value to the organizations they serve.
Eric Enriquez is a Talent Consulting Lead at Emapta, a leading outsourcing company operating in the Philippines, Sri Lanka, Colombia, Macedonia, and Malaysia.
He sources top talent for finance and accounting roles with his background as a Certified Public Accountant (CPA) and accounting trainer responsible for upskilling new hires in various accounting practices and tools, such as Xero, MYOB, and QuickBooks.