What is technical accounting and how does it work?

By Indeed Editorial Team

Published 7 November 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Accounting is vital to ensure businesses meet their legal requirements and maintain a practical overview of their financial health. If you have strong analytical and technical skills, working as a technical accountant can allow you to develop a more advanced skill set beyond standard accounting. Learning about technical accountancy, including how it works, can be useful for those that want to pursue an accountancy career. In this article, we explain what technical accounting is, outline how it works, look at its importance and list the advantages of this type of accountancy.

What is technical accounting?

Technical accounting involves utilising many skills that are necessary for performing standard accountancy responsibilities. In addition to this, it involves applying advanced knowledge and skills to complete technical, high-level processes that allow businesses to make crucial decisions and gain an in-depth understanding of their finances. Technical accountants use their advanced abilities to fulfil standard accountancy tasks while conducting research, reviewing the work of other financial professionals and analysing financial data. Most technical accountants fulfil the responsibilities of a traditional accountant or may share that responsibility with another professional to accommodate different areas of their job.

To complete their tasks, technical accountants typically require excellent analytical skills, knowledge of policies for examining and executing financial systems and the ability to follow generally accepted accounting principles (GAAP). Businesses that adhere to the International Accounting Standards (IASs) and International Financial Reporting Standards (IFRS) typically hire technically-trained accountants to cover the advanced responsibilities necessary to address complex accounting matters. For example, a technical accountant might produce high-level financial reports and analyses to ensure that a planned transaction is viable.

Read more: A guide to accounting standards (UK GAAP and IFRS)

How does technical accountancy work?

Below, you can find out how technical accountancy works:

Following accounting regulatory requirements

A key part of technical accountancy involves ensuring that a business follows specific regulatory guidelines. For instance, these might apply to how a business collects, stores and manages its financial data. A technical accountant uses their advanced knowledge of regulatory requirements and accounting standards to help a business do this, in addition to researching the latest industry regulations.

Analysing and reporting on financial data

Financial accountancy primarily involves using financial information to perform in-depth analysis and create complex reports that businesses utilise to make critical financial decisions. For example, a financial accountant may create specialised financial reports by using advanced software that helps to support operational decisions. These advanced tasks require additional training and knowledge of financial equations and analysis processes to achieve the ideal outcome.

Related: Software for accounting: 8 software options to consider

Utilising financial documents to report on a business's financial health

Financial health is an integral indicator of a business's success and whether specific measures are necessary to improve the company's finances. Technical accountancy involves studying and collating a business's financial documentation to gain a clear overview of the business's financial health, which the business's finance department and senior management team can then use. These reports are essential for key business decisions, such as whether the company can invest in a high-cost transaction in the current financial quarter or if it's best to wait until the next one.

Conducting internal audits

Technical accountancy also involves completing internal audits within a business to determine whether the business's current financial records comply with financial regulations. For instance, a technical accountant may regularly monitor the business's financial records to ensure that the business's financial documentation is correct, which ensures that the business is adequately prepared for its year-end reporting and can confidently face external audits. By doing this, technical accountants help to prevent potential compliance issues for their employers.

Applying advanced financial techniques to complete tax returns

Technical accountants may support other accountants within a business to prepare tax returns. In this scenario, a technical accountant may use advanced financial techniques and processes to facilitate this. For instance, they might implement a system for analysing, collecting and reporting data to prepare a business's tax returns, which can involve using advanced methods to reduce the time taken to complete this.

Researching and applying financial standards

Technical accountancy also involves researching and applying financial standards. A technical accountant uses their up-to-date knowledge of different financial standards to ensure that any financial documentation produced meets these standards and that their employer complies with relevant financial regulations as they change. These accounting professionals may also play a key role in updating a business's financial policies to ensure compliance with these standards throughout the business.

Related: What is quantitative research? (With definition and uses)

Completing day-to-day operational accounting tasks

In addition to completing more advanced accounting tasks, technical accountancy may also involve performing more general finance-related duties for operational purposes. This includes preparing standard financial statements, performing bookkeeping duties and managing debits and credits for the business. Generally, technical accountants may perform both standard accounting tasks and more advanced technical duties when working for a smaller organisation.

Read more: What is basic accounting? (Principles, jobs and education)

What is the importance of technical accountancy?

Some of the main reasons why technical accountancy is crucial include:

Providing advanced insight into company finances

The different techniques and methods that technical accountants use to collate financial data and explore various documentation can allow businesses to gain more oversight over their finances. For example, a technical accountant may know how to complete advanced calculations and reports by using specialist software. These reports can help businesses to make financial decisions, understand their financial position and submit necessary documentation with greater clarity.

Related: Public vs private accounting: similarities and differences

Measuring an organisation's financial health

Technical accountants often work as internal auditors within an organisation's finance department. For example, a trained technical accountant may review all of a business's in-house documentation and data over a specific period to ensure all the information provided matches and aligns with regulatory requirements. Continual internal audits help keep a business's finances in good condition throughout the financial year, alongside clearly indicating the organisation's financial position, which can be useful when making crucial cost-related decisions.

Completing industry-specific financial processes

Depending on the industry, technical accountants may use their high-level skills to complete specialised reports and contribute to the necessary documentation for meeting particular industry standards. For example, in the banking sector, technical accountants may produce daily specialist reports, which allows the organisation to meet that sector's high financial control requirements. As technical accountants have additional training in advanced techniques, this knowledge is integral for businesses that are under significant financial scrutiny from governing bodies.

Technical accountancy benefits

The main benefits of technical accountancy include:

Expert knowledge from an in-house professional

Technical accountants have advanced skills in numerous finance areas, which means they can provide businesses with expert knowledge that can help them to comply with financial regulations, prepare their tax returns and execute new accounting systems. Businesses that hire technical accountants can usually reduce their costs by completing more work in-house and relying less on seeking external support to complete more advanced accounting tasks. Moreover, as technical accountants can also complete a traditional accountant's responsibilities, their services can be highly valuable for organisations.

Related: 12 types of accountants and different areas of accountancy

Full compliance with new and upcoming regulations

It's necessary for businesses to comply with all regulatory standards within their industry and country. To achieve this, businesses can hire a technical accountant to conduct research and revise their internal policies and processes to meet these requirements. Moreover, a technical accountant can help businesses proactively respond to changing regulations, which helps to reduce the pressure on finance departments while ensuring that their employer meets these requirements as quickly as possible.

Related: How to get a job in compliance (with roles and skills)

Greater financial insight

The reports, techniques and insights that a technical accountant can provide are beneficial for businesses as they allow them to gain a detailed analysis of their financial health. By having a clear idea of the business's present financial health, in addition to an indication of the business's future financial wellbeing, a business's decision-makers can use that information to plan costs and transactions. This insight helps to maintain a business's financial health due to a technical accountant analysing all financial data with high-level techniques and reporting methods.

Please note that none of the companies, institutions or organisations mentioned in this article are affiliated with Indeed.

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