The accounting department is responsible for a large number of administrative functions within an organization. Though considered "back office" activities, these functions are essential to the proper operation of a business. The most common responsibilities of the accounting department are:
- Billings. A billings group assembles information from the shipping and customer order departments to create invoices that are sent to the company's customers.
- Collections. The accounting department is responsible for keeping track of overdue invoice payments from customers, and uses a variety of methods to extract payment from them, including dunning letters, phone calls, and attorney letters.
- Financial statements. A reporting group within the department creates adjusting journal entries to bring the company's initial financial results into compliance with the applicable accounting framework, writes footnotes to accompany the financial statements, and releases financials following the end of each reporting period.
- Internal reporting. A cost accounting staff can provide considerable value by calculating the profitability of various products, product lines, services, customers, sales regions, stores, and so forth. The areas of analysis may change on a regular basis, so that management can view different aspects of the business, with an emphasis on improving financial results.
- Payables. The payables staff collects supplier invoices and employee expense reports, verifies that the billed amounts are authorized for payment, and issues payments to recipients on scheduled payment dates. These employees also watch for early payment discounts, and take the discounts if it is economical to do so.
- Payroll. A specialized group collects time worked information from employees, as well as pay rate information from the human resources department, calculates tax and other deductions from employee pay, and issues net pay amounts to employees, either in cash or via checks, pay cards, or direct deposit.
- Taxes. A specially-trained group of accountants estimates the amount of taxable income that the business is likely to generate, and periodically remits income tax payments to the government, based on this estimated amount. The tax group also issues tax filings in a number of other areas, such as franchise taxes, sales taxes, use taxes, and property taxes.
There are several additional areas in which there is some question regarding which department should take responsibility. They are:
- Credit. The granting of credit to customers can be considered a treasury function, but is usually placed within the accounting department in smaller companies where there is no treasury staff.
- Human resources. The human resources function generates a large amount of paperwork, some of which is used by the payroll staff to determine employee gross pay and pay deductions. This function could be placed within the accounting department, or maintained as an entirely separate department, perhaps reporting to the CFO.
A large number of control responsibilities will likely be integrated into the preceding areas.