We are set out in this article to provide an answer to the question; ‘who is an investment accountant?’ An investment accountant is a finance professional who specializes in and is saddled with the responsibility of; identifying, collecting, collating, analyzing, interpreting, and communicating financial information to the investment community. We also talked about what knowledge is required for one to be an investment accountant and the functions of investment accountants.
For one to be an investment accountant, the person must firstly become a certified or qualified accountant and then acquire the necessary skills required to be an investment accountant. An investment accountant perform similar job with fund managers and financial analysts.
Apart from the accounting qualification aspect of becoming an investment accountant, an individual who wants to become an investment accountant must actively seek knowledge in the following fields:
MANAGERIAL ECONOMICS: managerial economics helps you as an accountant understand the variables of investment, supply, demand and consumptions. This is one of the reasons managerial economics is taken as a course in the university. The problem however is that the depth and breath of the amount of topics covered in managerial economics is not enough to see you through in your investment accounting career. Buy good books on managerial economics and read them up for more knowledge of investment accounting tools.
FINANCIAL MANAGEMENT: your knowledge of financial management will assist you as accountants make informed financial decisions in the light of alternatives. Investment accountants make investment decisions, financing decisions, and dividend decisions regarding the investment under their care.
COST ACCOUNTING: cost accounting is the informational pipeline of managerial accounting and other decision related fields. Through cost accounting, unit costs are generated to aid in decision making. You need this knowledge to be successful in investment accounting.
QUANTITATIVE ANALYSIS: this is basically mathematical tools that are employed to aid quantitative decision making. Tools like linear programming are used to allocate scares resources. Investment accountants are well equipped to face investment challenges in today’s world. So, accountants with this skill are an indispensable person in investment team.
OPERATIONS RESEARCH: operations research is a highly quantitative skill that every accountant, not only investment accountants need to really face tough risky investment landscape.
MANAGEMENT ACCOUNTING: management accounting analyses and interprets information generated from cost accounting. Managerial accounting takes ordinary cost information and makes the best economic decision from it. As accountants, you need to be well grounded in managerial decision making tools that management accounting information system supplies.
TAXATION: taxation if not well planned can –through a process known as tax planning can cause an investment that would have been profitable to become unprofitable. Taxation knowledge is a must for every investment accountants. You can even join professional tax bodies for more benefits.
Though, the accounting curriculum imbedded some tax courses into the training of accountants but that alone would not be enough to equip you with the right skills needed to make sound investment decision in the face of complex tax system- this becomes even more complex when your company is a multinational company – this goes beyond calculating PAYE using excel. A multinational company is a company with branches in other country aside the original company of incorporation. This is not the same as a company that is engaged in international business- import and export.
STOCK MARKET: the easiest form of investment is the investments made in the stock market. As easy as this form of investing is, people still make a lot of mistakes in making the right kind of investment i.e picking the right stocks or shares. This now made it a common practice to engage the service of accounting firm as assets managers to help manage your investments in shares. For an accountant to effectively meet the requirements of share-investors, they have to be happy with the operations of stock markets.
DERIVATIVES MARKET: derivatives market is a place where underlying products are sold. Derivatives are financial products devised to stimulate real products thereby reducing the risk that may be experienced from dealing with the real product. As an investment accountant, you must have adequate knowledge of derivatives (pricing and uses included.)
COMMODITY MARKET: you have to know how a thing operates before you can be called to manage or handle it. If you don’t have knowledge of commodity market as an investment accountant, how then can you fit in the shoes of investment manager which you are?
INFORMATION TECHNOLOGY: The pervasiveness of ICT in modern day business environment has made it almost impossible for anyone in any field to make any meaningful impact without being savvy in business technology. You may want to learn computer programming like I did if that is something that interests you. Read my post on how accountants use technology for more.
Notice that there are accounting softwares that can aid your performance in efficiently executing all the above functions. In fact, the importance of accounting software in investment process cannot be over emphasised.
From the above, it is glaring that accountants play significant roles in the investment community ranging from making people understand what is investment to ensuring that investments are safe as a whole. Investment accountants are vital in the stimulation of investment and economic activities in every economy and should be engaged by all. If you have not engaged the service of an investment accountant and you are claiming to be an investor or you are in business, I would advice you look for one today considering the importance of investment in this modern age.
Functions and roles on Investment Accountants
Below are lists of functions and roles of investment accountants as it relates to modern day investment ecosystem.
- Investment Account reconciliation: It is best practice to periodically reconcile investment accounts and this is purely within the purview of the investment accountant.
- Maintain the investment accounts: This is similar to the function of reconciling the investment account but it differs in the sense that the maintaining aspect has to do with journal postings into the investment accounts.
- Monitors the investment accounts: This is self explained. It is the responsibility of the investment accountant to ensure that the investment accounts of an entity are adequately maintained.
- Prepare taxes and assists in investment tax planning: Every organization wants to save a little bit more by any legal means. One of the importance of having an accountant as your fund manager is that he or she assists in proper tax planning when the need arises.
- Validates completeness and accuracy of data: One thing that really puts clients off is when they receive their statements and find the slightest error or mistake in it. It is the role of the investment accountant to ensure that data that goes in as input into the accounting information system are validated for accuracy and completeness.
- Makes input in valuation: Techniques of valuation has of recent become a core component of accounting degree curricular. An investment accountant is very handy when it comes to making useful contributions in stocks and investment valuation process.
- Develops financial strategy: Funds are scarce and as such must be properly managed. One thing that can be done to manage fund is to implement a well thought out financial strategy. Financial strategy ranges from sourcing funds to investing the funds. This area should be the bread and butter of any investment accountant.
- Provides assurance (Internal control and compliance): Accountants are by nature compliant professionals and control freaks. their duties in investment management as regards to assurance should not be relegated to the backgrounds.