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← Chapter 1 · Introduction to Accounting
In these notes · Roles of Accounting and Accountants
1.1Roles of Accounting and Accountants1.2Stakeholders and Their Decision Needs1.3Types of Businesses1.4Forms of Business OwnershipChapter Summary
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1.1

Roles of Accounting and Accountants

Key Concepts

Role of Accounting

Accounting is an information system that collects, processes, and communicates financial information about a business.

Its purpose is to provide accounting information for stakeholders — people with an interest in the business, such as owners, lenders, and the government — so they can make informed decisions about:

  • how to manage the business's resources; and
  • how to assess its performance.

Roles of Accountants

Accountants perform two key roles:

  1. Set up and maintain the accounting information system — they record, organise, and report the business's financial information. This role is about producing reliable accounting information that owners and other stakeholders can use to make decisions.
  2. Act as stewards of the business — a steward is someone trusted to look after and safeguard the business's resources on the owner's behalf, and to account for how those resources have been used. This role is about safeguarding resources and being accountable for them, not just producing information.

Professional Ethics

Accountants must observe professional ethics in all their work:

EthicMeaning
IntegrityBeing straightforward and honest in all professional relationships
ObjectivityNot letting bias, conflict of interest, or undue influence from others affect their professional judgement
Cher
How to Remember
  • Role of accounting: Think "inform to decide" — accounting informs stakeholders so they can decide.
  • Two roles of accountants: Set up accounting information system + Stewards of business = two S's.
  • Ethics pair:
    • Integrity = your own Inner honesty.
    • Objectivity = resisting Outside pressure from others.
Worked Example
Scenario: Elaine works as an accountant at Clear Path Advisory. She prepares monthly financial reports so the owner can decide whether to hire more staff. A supplier offers Elaine a gift in exchange for a favourable report.

Which professional ethic applies here, and what should Elaine do?

1
Identify the issue

The supplier is trying to influence Elaine's professional report using a gift to pressure her into changing her report.

2
Name the ethic

This relates to Objectivity — Elaine must not allow this undue influence to affect her professional judgement.

3
State the correct action

Elaine should refuse the gift and prepare the report based solely on factual accounting information, free from bias.

Final Answer:
The ethic is Objectivity. An objective accountant does not let bias, conflict of interest, or undue influence of others override his or her professional judgement. Elaine must refuse the gift and prepare an unbiased report.

Common Mistakes
1

Confusing the role of accounting with the role of accountants. Students who mix these up lose marks on questions that specify which one is being asked.

  • The role of accounting is to provide financial information for decision-making.
  • The roles of accountants are to set up the accounting information system and act as stewards of the business.
2

Giving a vague answer for professional ethics. "Be honest" is not enough for a mark — you must name the specific ethic (Integrity or Objectivity) and explain what it means precisely.

3

Confusing Integrity with Objectivity.

  • Integrity is about your own personal honesty.
  • Objectivity is about resisting external pressure or influence from others.
Check Your Understanding
Name the two roles of an accountant.
Reveal answerHide answer
(1) Set up and maintain the accounting information system; (2) Act as stewards of business.
An accountant discovers an error that would make the business look less profitable. His manager tells him to ignore it. Which ethic applies, and what should the accountant do?
Reveal answerHide answer
Objectivity. The accountant must not allow the manager's undue influence to override his professional judgement, and must correct the error.
True or false: Objectivity means the accountant must always do what the business owner asks.
Reveal answerHide answer
False. Objectivity means the accountant must not let others override his or her professional judgement.