What is Cost Accounting?
While all accountants review, examine, and prepare financial documents, the type of documents they work with and the venues they work within can vary considerably. Even in a specialized role, such as cost accounting, the job duties and responsibilities can fluctuate depending on the business. Typically, cost accounting involves the management of all financial information for organizations.
The Bureau of Labor Statistics (BLS) projects that, as trade markets and industries become more globalized, the cost accounting field should continue to expand 6% from 2018-28. Organizations with effective cost accounting run financially efficient operations with optimized budgets and effective asset management. Read on to learn more about the cost accounting profession, what they do, the training they need, and where they find employment.
What is a Cost Accountant?
A cost accountant can mean different things to different organizations, but they typically oversee the preparation of organizational budgets, operational costs, and purchasing. Depending on the employer, these professionals may take on different duties and different job titles. Due to the flexible and varying nature of the career and its daily demands, cost accountants often need a diverse skill set and knowledge base to thrive in the profession.
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The following information outlines the cost accounting career, including some available specializations, possible employment venues, and the education they need to perform their jobs.
What Does a Cost Accountant Do?
In general, a cost accountant takes ownership of an organization’s financial health. They tend to focus on developing and maintaining effective budgets and costs associated with an organization’s operations. This may involve examining the organization’s purchases and supply chains to spot areas of improvement or inaccuracies. They may compare projected and actual costs to create their own budgets, or they may simply present their findings to their employer.
Cost accountants constantly look for new ways to improve the financial health of their employers, using their in-depth understanding of finances, facts, and figures to optimize operations.
On the operational level, cost accountants may seek out inefficiencies in many ways, including analyzing and evaluating employee performance, logistics, and suppliers. When they detect inefficiencies, these professionals may need to identify the problem, provide a solution, and possibly even implement or manage the revised processes. Cost accountants constantly look for new ways to improve the financial health of their employers, using their in-depth understanding of finances, facts, and figures to optimize operations.
In addition to these primary roles and responsibilities, cost accountants may take on a variety of focuses and specializations. They may concentrate on working with financial investments, government policy, logistics, payroll, benefits, or taxes. Accountants can influence the direction of their career and open the door for these specializations through education, certifications, and professional experience. While cost accountants may work in one concentrated field, some employers, especially smaller organizations, require cost accountants to take on a wide range of duties.
In addition to these primary roles and responsibilities, cost accountants may take on a variety of focuses and specializations.
To best perform the high number of tasks required of them, cost accountants need a large skill set and the ability to apply their skills in different ways. They need communication skills to take orders and translate their findings to various channels. These accountants must possess the mathematical and computer skills necessary to work with numbers and operate accounting software. They also need critical-thinking skills to approach and solve problems.
Organizations of all shapes and sizes benefit from the services of cost accountants. Since smaller businesses tend to hire these professionals from third-party organizations, accounting services represent the largest venue for accountants, as per the BLS. When working within specific organizations, cost accountants may find employment in the government, finance and insurance, consulting services, and trade organizations.
Since cost accountants primarily work with facts and figures, they need the ability to use many different tools and applications. Accounting computer software, for example, allows accountants to complete otherwise complex tasks simply and efficiently. While individual employers may use different applications, a familiarity with the most common programs should be a sufficient start. Some common tools of the trade include Microsoft Office products and database, enterprise resource planning, and financial analysis software.
Even in the field of cost accounting, the job titles can vary considerably, including titles like management accountants, corporate accountants, and industrial accountants.
Due to this professional flexibility, the job titles in accounting can fluctuate and apply to a range of careers. Cost accountants may find employment as payroll accountants, public accountants, or bookkeepers. Even in the field of cost accounting, the job titles can vary considerably, including titles like management accountants, corporate accountants, and industrial accountants.
Professionals trained as cost accountants may also be employed as government auditors, budget analysts, management analysts, and cost estimators. These careers require professionals with financial expertise and knowledge of the rules and regulations that govern the industry. Due to these variances, cost accountants should look for careers based on the roles and responsibilities, rather than the job titles.
What Are the Responsibilities of a Cost Accountant?
Develop and Analyze Operational Budgets
Cost accountants explore ways of improving organizational budgets. They may analyze current expenditures and seek methods for saving money or increasing efficiencies. Accountants may also develop and maintain their own budgets for which they present reports and demonstrate how close actual operations came to the proposed budgets.
Analyze Financial Statements
Cost accountants are often the financial experts in their organizations, which allows them to understand financial statements and documents. Employers may lean on their accountant’s knowledge, asking them to analyze documents for accuracy and legal compliance. This may include looking at orders, payments, tax information, and investment information.
Examine Accounting Books
Accounting books can be quite complex and require an experienced eye to ensure accuracy. Cost accountants may take on the responsibility of maintaining an organization’s books, which can include payroll, benefits, and accounts payable/receivable. Organizations may ask accountants to review the books at specific times to make sure they follow all guidelines and standards.
Present Reports and Solutions
After analyzing the operational costs and budgets of an organization, a cost accountant may need to present their solutions to management. This can include creating and presenting written or oral reports. They need to convey their solutions in a way that others can understand and appreciate.
Prepare All Financial Documents
Cost accountants often need to prepare, or at least review, all financial documents for organizations. This ensures that all regulations, policies, and laws are adhered to, allowing the accountant to catch any errors and identify any areas for savings or improved efficiencies.
Assist With Investments
For organizations that do not employ separate financial managers or advisors, cost accountants may take over the management of investment planning for their employers. This may include anything from simple communication with an investment firm to actively choosing investments and presenting management with their options.
What Qualifications Do You Need to Become a Cost Accountant?
* Mathematics Accountants need to be comfortable working with numbers and calculations to manage organizational budgets and operational costs.
* Critical Thinking Critical-thinking skills allow accountants to tackle complex problems with reason, logic, and creativity.
* Communication Accounting requires professionals to possess strong communication skills to understand their tasks and convey their discovered solutions to management.
* Technology The accounting field uses technology in many aspects of the profession, making the ability to use and learn new technologies very important.
* Deductive Reasoning Deductive reasoning allows accountants to approach problems from a logical standpoint and apply general rules and best practices to arrive at solutions.
* Comprehension Accountants need the ability to understand oral and written instructions to complete many of their tasks.
* Number Facility The ability to make quick and effective mathematical calculations is a primary component of an accountant’s job.
* Accounting Accountants must possess in-depth knowledge of accounting principles, current rules, and industry guidelines.
* Business Operations Cost accountants must understand a company’s processes and operations to analyze and improve its operational budgets.
* Government Laws In dealing with the financial world, cost accountants must know the various laws and policies for their work, given the sensitive nature of the information at hand.
* Computer and Applications Possessing knowledge of computers and the most common accounting applications can give accountants a professional advantage.
Learn More About How to Become a Cost Accountant
How are Cost Accountants Employed?
Where cost accountants find employment can vary as much as the other elements of this profession. Professionals can influence the direction of their careers based on the courses taken during school, their personal interests, and experience. Some of the most common venues available to these professionals include trade organizations, financial organizations, government, consulting services, and accounting services.
According to the BLS, more accountants find employment in accounting services and perform the services of a cost accountant as a third party than anywhere else. Similarly, cost accountants that work with consulting services typically perform cost analysis and management tasks for organizations as third-party consultants. In the government, accountants may serve as auditors of government policies and regulations. As in-house professionals in trade and financial organizations, cost accountants develop and analyze operations budgets for their employers.
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Professional Organizations for Cost Accountants
- Society of Cost Management SCM helps advance the industry through the development, education, and support of professionals. Members gain access to a professional network, training opportunities, and industry standards and practices.
- Institute of Management Accountants As the association of accountants and financial professionals in business, IMA strives to advance the profession by empowering its members with training and educational opportunities, providing access to publications, and helping with the certification process.
- Association of Chartered Accountants in the United States Supporting accountants across the country, ACAUS provides its members with networking and career opportunities, along with access to industry news, publications, and resources.
- American Institute of Certified Public Accountants AICPA provides accountants and aspiring accountants with professional support, offering career guidance and certification information for new professionals, along with providing continuing education opportunities for experienced professionals.
- The American Accounting Association The AAA acts as the primary resource for aspiring accounting professionals and those in academia. The association provides its members with access to educational resources, research, and industry news and information.