What is a Bookkeeper?

The bookkeeper position

What is a Bookkeeper?

Introduction

The bookkeeper position covers an exceptionally broad range of activities. It requires a person to be able to shift rapidly between many activities during a typical business day. In this article, we discuss the main requirements of the position, the qualifications needed by a bookkeeper, interactions with advisors, and related topics.

The Bookkeeper Position

In essence, a bookkeeper is a person who is broadly responsible for the basic functions of the accounting department. The bookkeeper creates financial transactions, as well as financial reports that summarize those transactions. These activities will likely require the bookkeeper to create or record information from a variety of source documents, such as invoices to customers, cash receipts, and supplier invoices.

The bookkeeper is also responsible for the accuracy of the accounting records, which calls for considerable attention to the filing of the accounting records, consistent recordation of information, and the examination of accounts to ensure that they are correct.

The principal accountabilities of the bookkeeper are as follows:

Billings and Cash Receipts Activities

  • Issue invoices to customers
  • Collect Goods & Services Tax (GST) from customers and remit them to the government
  • Ensure that receivables are collected promptly
  • Record cash receipts and make bank deposits
  • Conduct a monthly reconciliation of every bank account

Payables Activities

  • Pay supplier invoices in a timely manner
  • Take all reasonable discounts on supplier invoices
  • Pay any debt as it comes due for payment
  • Monitor debt levels and compliance with debt covenants

Asset Oversight

  • Ensure that a system of controls is being followed
  • Maintain the petty cash fund
  • Tag and monitor fixed assets
  • Depreciate fixed assets
  • Compile the cost of inventory

Recordation Activities

  • Maintain an orderly accounting filing system
  • Maintain the chart of accounts

Financial Statements

  • Conduct periodic reconciliations of all accounts to ensure their accuracy
  • Create and issue financial statements
  • Notify management of any issues appearing in the financial statements
  • Assemble information for the year-end audit
  • Provide information to a tax advisor for the creation of tax returns

Reporting Activities

The bookkeeper is not usually considered part of the management team. The reason for this exclusion is that the position is essentially clerical – the bookkeeper is not being called upon to actively manage the business, but rather to compile its results.

Tip: Some organizations give their bookkeepers titles that exceed their actual job duties, such as “Accounts Executive.” If there is any question about the functional title of a person, the ultimate test is whether the person is solely and individually responsible for all accounting activities. If so, the person is a bookkeeper.

Bookkeeper Qualifications

There is not necessarily a firm requirement for a bookkeeper to have a university degree in accounting. It is entirely possible that a person has learned a sufficient amount on the job to be quite a competent bookkeeper. However, it certainly helps to have some formal training in accounting. Consequently, we recommend obtaining at least a diploma in accounting or business administration.

It is possible that prospective employers will also require experience with the accounting software package that they currently use. We do not believe that this is necessary, since the smaller organizations that typically hire bookkeepers operate accounting systems that are quite easy to learn. A competent bookkeeper should be able to learn the essentials of one of these accounting packages within a short period of time.

The Full Charge Bookkeeper

The full charge bookkeeper title is sometimes found in advertisements for accounting positions. A full charge bookkeeper is the same as a bookkeeper, except that the “full charge” part of the title designates the person as being solely responsible for all accounting activities. This means that the full charge bookkeeper reports straight to a finance management team, such as the CFO, or Senior Finance Manager and may interact directly with the company’s auditors.

The position may be assisted by an outside accountant who advises on how to record certain of the more complicated business transactions. The full charge bookkeeper may supervise various accounting clerical positions. For example, a billing clerk, payables clerk, or payroll clerk may report to the full charge bookkeeper.

The full charge position is most commonly found in smaller organizations where there is no need for a controller, and which has relatively uncomplicated accounting activities. If the company grows to a larger size, supervision of the accounting function is likely to be shifted to a controller. In this case, the full charge bookkeeper may be converted into an assistant controller position, with responsibility for some aspects of accounting operations.

Relations with the Company’s CA

A Chartered Accountant (CA) is an accountant who has passed all parts of the Singapore CA Qualification (SCAQ) examination, as administered by the Singapore Accountancy Commission (SAC), and who has also completed all additional work and educational requirements. The CA can be used as an advisor to sort out how certain of the more complicated transactions are to be recorded.

A CA firm can be the auditor of the company who audits a company’s financial statements can also provide tax services to the company. This is usually an excellent idea, since the CA firm already has access to the company’s financial records and considerable knowledge of its business, and so can prepare tax filings with a high degree of efficiency. The CA firm usually has a much deeper knowledge of tax laws than the bookkeeper, as well as ongoing changes to those laws, and so is more likely to prepare tax filings that can reduce the tax liability of the business.

However, the auditor must maintain independence from the company in order to preserve his or her ability to render an opinion on the company’s financial statements. This means that the auditor cannot become actively involved in actually recording transactions for the company, or in designing its accounting systems. If this type of more detailed assistance is required, it makes sense to hire a different CA firm to provide advisory services to the bookkeeper. The result is a consulting relationship with one CA firm, and an auditing relationship with another CA firm.

The Difference between Accounting and Bookkeeping

A common question is whether there is any difference between accounting and bookkeeping. Bookkeeping is essentially a subset of the larger topic of accounting, as was defined earlier in the Bookkeeper Position section. Bookkeeping transactions are mechanical in nature; that is, the bookkeeper follows a prescribed set of procedures on a repetitive basis to record a common activity.

In addition, the broader accounting concept encompasses the following activities:

  • Creating the chart of accounts
  • Setting up the general ledger
  • Designing the financial statements
  • Issuing customized management reports to address specific issues
  • Altering the classification or recordation of transactions to meet the Singapore Financial Reporting Standards (SFRS)
  • Creating a budget and comparing it to actual results
  • Compiling tax returns from the financial information
  • Creating a set of controls within which the financial system operates
  • Designing a record-keeping, archiving, and document destruction system

Usually, there is at least one trained accountant responsible for the accounting operations of a medium to large-size business, who sets up the procedures that are then followed by a larger number of bookkeepers or clerks.

In short, the difference between accounting and bookkeeping is that bookkeeping focuses on repetitive business transactions, and so is a subset of the much larger set of tasks that can be encompassed by accounting.

There are also significant differences between the bookkeeper and accountant positions. The bookkeeper role is broad-based, with one person typically handling all of the accounting transactions for a small business. The bookkeeper tends to be very experienced but is more likely to be lacking somewhat in formal accounting training. Conversely, the accountant is more likely to work exclusively on a specific area, such as the general ledger, and is more likely to have formal training in the accounting function.

A brief perusal of the table of contents will make it clear that we are covering more material in this book than is strictly necessary for the typical bookkeeper. We are addressing additional topics in order to give the bookkeeper a better knowledge foundation regarding why accounting operates in the manner that it does.

Summary

The main concept for the bookkeeper to grasp in relation to his or her job is that this position handles all day-to-day accounting processes. This means that the position is multi-faceted, requiring a broad knowledge of billings, payables, inventory, assets, cash, financial statements, and other areas. We have referred to a number of terms in this chapter, such as transactions, invoices, and accounts. In the next chapter, we address what these items are, and how they fit into the work of the bookkeeper. We also note a number of conceptual issues that the bookkeeper must be aware of in order to conduct many of the core accounting tasks.

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