The difference between finance and accounting might just be a matter of curiosity for some of us, but if you are about to choose a programme or career path, understanding the difference between the two is vital. In the battle between finance and accounting, one must understand that both fields fall under the same category (business management), but carry some nuances.
Both areas cannot be compared per se. We explain what are their unique characteristics as follows.
Finance vs Accounting
To start with, the sphere of finance is geared towards the future. Think of your own money management in your household. You would be likely to rely on your past expenses in order to invest anew or an assessment of your financial position to undertake new projects in the near future. Accounting, on the other hand, is keeping records and managing the spent of money. For instance, you would account how much money you have spent on car fuel in one month, and based on that information, you would make a decision for the future, whether to use your car to go to work during the next month or to take public transport.
Accounting is all about a detailed and error-free reporting of what has actually occurred and compliance with accounting standards and guidelines. As an accounting professional, you’ll be tracking and reporting flows of money on a day-to-day basis. Finance has a prospective approach by developing a pool of funds, taking calculated risks and alleviating losses.
Career Path Planning
Once, you have decided that you are going to pursue an accounting career, you will find that the accounting field is much larger and more diverse than you might have thought, with opportunities to apply your skills in a number of different areas. There are many types of careers in accounting, some types of accountants can be described as follows:
Government accountants are employed within public work sectors. They deal greatly with public funds management, investigate account frauds, perform financial statement audits for government agencies and conduct research on emerging accounting issues.
As one may expect, a managerial accountant would deal a lot with management reporting. A managerial accountant records and analyses financial information by means of collecting, interpreting and preparing financial data to the organisation or company’s management team. Their main task is to manage past accounting data and interpret it in way to facilitate decision-making.
The tax accountant work in compliance with tax legislations and regulations. Their main task is to ensure that companies and individuals comply with tax laws by filing their federal and state income tax returns.
Financial accountants are responsible for analysing the economic stability of the company and provide financial information to the relevant departments. They are also given the responsibility to ensure that financial statements are adequately reported to the management and comply with the International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS) standards.
We often hear about Chartered Accountancy and these qualified professional accountants cover specific activities, all within the field of accountancy. As a chartered accountant you will give advice, assess audit accounts and provide reliable information about financial records. This might involve different areas in finance and accounting such as financial reporting, taxation, auditing, forensic accounting, corporate finance, business recovery and insolvency, or accounting systems and processes.
If you choose finance, you also have different career opportunities. You could become a financial analyst, investment banker, financial analyst, personal financial advisor amongst others. You could work in consulting or corporate finance.
Which career path you choose rests on your level of interest in the areas each position necessitates. Sometimes an individual may serve in both capacities. Some people move from the accounting side of the business to the financial side of the business over time and become proficient in both capacities. Some individuals with a degree in finance also end up working in the accounting field in some capacity, though the skill set for an accountant is somewhat more structured and follows specific rules, established by the Generally Accepted Accounting Principles (GAAP). In Mauritius, many firms follow the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) for accounting practice.
Salary ranges could be the most important consideration when choosing a career path. An individual working in Accounting and Finance in Mauritius typically earns around 574,000 MUR per year. Salaries range from 232,000 MUR (lowest average) to 1,150,000 MUR (highest average, actual maximum salary is higher). It is also important to consider that salaries depend on one’s qualifications and experiences.
In essence, accounting and finance are stand alone programmes and offer unique characteristics to their functions. Based on experience, accountants can switch to finance quite easily since they already have the vital financial background required of accountants in most organisations. Nevertheless, some positions in the industry may require additional education or certifications.