Role and functions of the Accounts Office

1. Section 9
Objective 1
ACCOUNTS AND FINANCIAL SERVICES
Ayanna Charles-Ford

2. Introduction
• Capital is required to start any business – to pay for
assets and consumables, goods and services, creditors,
employees and to set aside for future contingencies.
• All business organisations deal with money. This involves
three main activities – receiving money, paying out
money and keeping accurate records of these events.

3. Importance of the Accounts Office
• The accounts office in any organisation is extremely
important. In a small organisation the accounts may
be kept by one person but in a large organisation
there will be a full accounts department.
• An accounts office records all purchases and sales,
and the receipt and payment of money. It also
records the expenses of running the business.

4. Functions of the Accounts Office
• The Accounts office is responsible for maintaining the
company’s accounting records for statutory, regulatory and
management purposes. It is also responsible for the day-to-
day financial transactions of the company including:
Preparation of payroll
Credit control
Collection of accounts
Credit and debit notes
Preparation of accounts for audit
Working with different types of bank accounts, for
example, current, savings, fixed deposit.

5. Functions of the Accounts Office
• The Accounts office is responsible for maintaining the
company’s accounting records for statutory, regulatory and
management purposes. It is also responsible for the day-to-
day financial transactions of the company including:
Preparation of payroll
Credit control
Collection of accounts
Credit and debit notes
Preparation of accounts for audit
Working with different types of bank accounts, for
example, current, savings, fixed deposit.

6. Preparation of Payroll
• The payroll lists the money paid to all staff las
wages for a week or month. The accounts
office must ensure that each individual’s pay is
calculated and payments are made on time,
for example at the end of each month.

7. Credit Control
• The accounts office must monitor the amount
owed by individual customers and chase
overdue payments for items that was
purchased on a credit basis.

8. Purpose of credit ontrol
• Reduce the risk of ad debts.
• Ensure customers are not given credit beyond
their credit limit.
• Allow credit only to customers who have
shown the capacity to repay or have
established good creditworthiness.
• Avoid tying up too much capital in credit.
• Maintain adequate funds to meet the firm’s
financial obligations.

9. Collection of accounts
• The collection of payments on accounts is
done by cashiers.
• The first step in collecting money owed is
sending an invoice. A supplier normally sends
an invoice after the goods have been delivered
and this asks for payment of the items.

10. Treatment of debit and credit notes
• These documents are used to correct mistakes
on an invoice.
• Debit note is issued for the additional amount
if too little is charged.
• Credit note is sent if too much is charged.

11. Preparation of audit
• An audit is the evaluation or assessment of the
financial records of an organization to
determine whether they are accurate and
complete, and to determine the fairness by
which its financial statements are presented.
• Auditors are employed by accountants or
specialist financial companies that are
independent of the business being audited.

12. Steps in preparation of audit
1. Ensure there are documents to support any
amounts disclosed.
2. File all documents for future reference.
3. Use the correct method to value assets.
4. Check the balancing of the accounts.
5. Prepare financial statements.
6. Make physical checks of inventory.

13. Working with different bank accounts
• Banks offer a wide range of service to business
and private customers.
• Accounts staff must know which bank
accounts are used by the business, how to
deposit money received and how to make
payments by cheque from an account.

14. Types of bank accounts
Savings account
• An account in which money is placed regularly
with a banker.
Fixed deposit account
• An account in which a specified sum of money is
placed with a banker for safe keeping for a fixed
period at a higher rate of interest.
• Current account
• Loan account

15. Types of bank accounts cont’d
Current account
• An account in which money is placed regularly
with a banker for safe keeping from which money
is withdrawn without notice, by using a cheque
book or debit card.
Loan account
• An account in which a certain sum of money is
borrowed from a bank at a fixed rate of interest
for a specified period – to pay for goods and
services.

16. KEY TERMS
• Credit
 Refers to any situation where money is allowed to be owed.
• Credit period
 This the length of time a customers is allowed before they must
pay the amount owing.
• Credit control
– Monitoring the amount of money owed by individual customers
and chasing up overdue payments.

17. KEY TERMS
• Debit note
 This states the extra amount owed to correct a shortfall on an
invoice.
• Credit note
 States the amount that can be deducted to correct an
overcharge on an invoice.
• Audit
 This is an independent check of a business’s financial affairs.

18. References
• Carysforth, C. et al (2012), Office Administration for
CSEC – A Caribbean Examinations Council Study
Guide, Nelson Thornes UK.
• Ramtahal, F. (2013). Office Administration, (2nd ed.)
Caribbean Educational Publishers Trinidad.
• Whitcomb, A. (2012), Heinemann Office
Administration for CSEC, Pearson Education.