If you are a budding entrepreneur or a business owner you must have come across the terms like accountant and chartered accountant (CA). In general, people tend to think these terms are synonyms and can be used interchangeably, which is not true. Whether it is scope, meaning, implementation or usage – the terms accountant and chartered accountant significantly vary from each other, though there is significant overlapping as well. In this blog, we will discuss in detail the difference between a chartered accountant vs accountant.
The role and relevance of accountants in general are indispensable and ever-growing given the expanding business order all across the globe. Research and studies show that the global market value of accounting services was $544.06 billion in 2020 and is expected to reach $735.94 billion in 2025. The accountancy industry is clearly expanding but at the same time, there is a shift in the accounting market as well. Today’s business orders are witnessing frequent and complex regulatory changes, and adhering to the same could be quite a challenge. This accentuates the need for specialised accounting services. This is where a chartered accountant can help bridge the gap of changing accounting services.
Let us now understand the role and scope of an accountant vs chartered accountant so that you can make an informed decision on what kind of services you should avail for your business. If you are a new business in London, understanding the difference between the two is necessary before you look for accountants in London to streamline your finances.
A Brief on Accounting
Accounting is an indispensable component of any business. It won’t be wrong to say that accounting is one of the pillars of running a successful business. Accounting is the process of systematic maintenance of records so that they can be evaluated, analysed, summarised and presented as the financial information, necessary to make decisions of the business. Such proper documentation and maintenance of the business records, provide a clear view of the businesses or the organisation’s financial health, its performance and the future course of actions that the business needs to take regarding its financials. It is important to note here, that accounting is a multi-faceted need and subsequently, it has multiple sub-domains too. One such sub-domain of accounting is chartered accounting. Some other sub-domains of accounting consist of financial accounting, forensic accounting, cost accounting, management accounting etc. Accounting is an umbrella term which includes all these sub-domains as mentioned above and more.
A Brief on Chartered Accounting
Chartered accounting is a specialised and designated wing of accounting. Chartered accountants are those who offer these specialised and core accounting services, for which they have to complete a qualifying program which is rigorous and highly comprehensive in nature. Only after clearing the final exam of these qualifying chartered accounting programs, which are recognised by a governing body, one can become a chartered accountant. CA is considered one of the most difficult exams and it has a relatively very low pass percentage. While this observation may appear overwhelming, it also indicates the expertise and specialisation that chartered accountants offer.
There is a unique aspect of being a chartered accountant – while the services rendered by a chartered accountant typically come under the purview of accounting, the rank, qualification and experience of a chartered accountant are comparatively higher than a general accountant. Also, chartered accountants are essentially members of a recognised professional body.
This unique aspect can make it confusing for people to understand the difference between a certified accountant vs chartered accountant.
Difference Between a Chartered Accountant and an Accountant
Within the world of finance and accounting, the role of chartered accountants and accountants is indispensable. While both chartered accountants and accountants in general deal with the operating functions of accounting and finance, there are significant differences between the two. To begin with, the following are the major differences between chartered accountant vs accountant –
•Qualifications
One of the most distinct differences between an accountant vs chartered accountant lies in their qualification. To become a CA, one has to go through a highly structured or layered process which is also very demanding. Aspiring chartered accountants are required to complete a rigorous professional qualification program that consists of multiple tiers, varied subjects and a low passing percentage, because of its difficulty level. The exam covers subjects like accounting, taxation, auditing, finance, compliance etc. The contents of the professional CA qualification program are such that it equips the candidate with in-depth and comprehensive knowledge of finance and accounting.
Accountants, on the other hand, is a generic term and is co-related to a wide range of educational qualifications and backgrounds. One is not required to qualify for a specialised professional course to be called an accountant. Some accountants may have certifications like Certified Management Accountant (CMA), or Certified Public Accountant (CPA). Some others may have accounting as their subject in their undergraduate course.
•Regulatory Overseeing
Regulatory overseeing is another major difference between certified accountants vs chartered accountants. The role and scope of a chartered accountant are strictly guided by the regulations and ethical standards of operations laid down by the professional body that recognises them as CAs. These bodies oversee the knowledge acquisition, training as well and the professional conduct of the chartered accountants. It is done to ensure that the CAs who have cleared the qualifying exam recognised by these bodies adhere to best practices and the industry standards of finance and accounting. Failure to adhere to these standards can call for disciplinary actions and in extreme cases, even a revocation of the certificate of clearing the chartered accounting exam.
While accountants also have to adhere to the standards of ethical conduct and practice, it primarily depends on the qualification they hold as an accountant and the scope of the certification basis on which they perform their role. Accountants who hold certifications like CPA, CMA etc. have to be compliant with the regulations and standards set by their governing body, but others may not have to deal with stringent rules or there may be fewer obligations on their part.
•Scope and Specialisation
There is a major difference in the scope of work between chartered accountant vs accountant. Chartered accountants have to do a rigorous study before qualifying for the professional exam, during which they go through extensive and specialised training. This hands-on training along with the comprehensive and deep theoretical knowledge helps qualifying CAs better manage a wide range of financial tasks and responsibilities. A chartered accountant specialises in several financial functions like book-keeping and accounting, auditing, budgeting, tax planning, making and analysing financial statements, compliance management for its client and even representing its client in front of the tax authorities.
In comparison to chartered accountants, certified accountants or accountants in general have a relatively limited scope of work, and it is usually restricted to financial management. Their primary role usually consists of bookkeeping and accounting, which is also a complex and layered role in itself. Accountants are highly skilled in preparing financial statements and maintaining records. A certified or experienced accountant can also help in budgeting and offer financial advisory services within a narrower domain.
•Authority to Carry Out Auditing
Auditing is an essential function of finance and accounting. Depending on the scale of operations and revenue, most of the businesses have to get their books audited. There exists a major difference in terms of authority to carry auditing between chartered accountants vs accountants in general. Chartered accountants have the authority to carry out auditing and offer assurance services to their clients. They have the authority to access, analyse and review financial statements to verify that the statements are accurate, and ensure that accounting standards and regulations are well complied with.
Not every accountant has the authority to audit financial statements. In the case of auditing, general or even certified accountants need to showcase that they have the relevant skills. Furthermore, the permission to carry out auditing has to be issued by a higher authority. They by the mere virtue of their qualification cannot become auditors. To carry out auditing, accountants are required to hold specific certifications and licenses.
These are the broad and major differences between chartered accountant vs accountant that both individuals and businesses should be aware of. If you are a business owner, it becomes all the more important to be well aware of the difference in the scope of the work of chartered accountants and accountants, in general.
We Can Help You
Whether you are an individual or a business, we at Unicorn Accounting are well-equipped to optimally manage your finances. If you are confused about whether you should avail the service of an accountant or need the specialised expertise of a chartered accountant, we can help you with that too. Based on the nature of your finances and the corresponding assistance you need, we can help you determine who should you consult with – an accountant or a chartered accountant.
Whatever your financial requirement, we can help you with the same. Be it taxation, managing your financial statement or if you need financial advisory services – we assure you that we will offer you the optimal solution for your cause. We specialise in delivering specialised accounting services to meet your unique needs. If you are looking for accountants in London, then connect with us today and let us ease your accounting woes.