There are several types of functions fulfilled by the accounting department within a business. These accounting functions are:
- Financial accounting. This group records accounting transactions and converts the resulting information into financial statements. Its primary responsibility is to generate financial statements and the related disclosures that fairly reflect the financial results and condition of the organization. Its primary beneficiary is outsiders, such as investors, creditors, and lenders.
- Managerial accounting. This group examines the financial and operational results of a business, looking for opportunities to enhance the results and financial position of the entity. They can also advise management in regard to the setting of prices. Their primary beneficiary is the management team.
- Tax accounting. This group ensures that the business complies with the applicable tax regulations, which usually means ensuring that tax returns are completed correctly and filed in a timely manner. The group can also engage in tax planning, with the intent of deferring or eliminating tax payments. Their primary beneficiary is the management team.
- Internal auditing. This group examines company processes and controls to spot control weaknesses, fraud, waste, and mismanagement. They can also advise on the best control systems to apply to different processes, or how to alter existing controls. Their work benefits both the management team (by eliminating excessive expenditures) and investors (by reducing the risk of loss).
Some positions within the department may be involved in several of these functions, though internal auditing personnel usually have no other duties.