The concept of accountancy is as old as financial transactions have occurred, with its particular role growing as the development of financial entities like companies and corporations also grows.
Accountants are found to be a constant requirement in the general function of a company, regardless of its economic sector or financial position.
As such, it is not unusual for company executives to desire to know the particular amount of accountant employees or contractors they may need in order to retain the general function of their organization.
This will depend on several factors pertaining to the size and complexity of the company and its finances as well as the sort of work that must be performed by the accountants.
Why do Companies Need Accountants?
At its core, the function of an accountant within a company is the tracking of financial information relevant to said company, with financial actions such as expenditure and income acquisition being the bread and butter of any for profit company.
The usage of an accountant is not only reserved to the tracking of income and expenses, however, and sufficiently qualified or trained accountants may act in a far wider variety of roles than one would think, such as in a managerial capacity, as advisors to higher ranking members of the company or even as facilitators of communication during the course of a business deal.
Even from a simple compliance standpoint, the presence of an accountant overseeing and certifying financial information disclosures from a company can help avoid the unfortunate instance of a regulatory or governing body choosing to investigate the company for illegal financial practices, whether intentional or not.
Can Accountants Work in a Department?
Depending on the particular size of the company and its subsequent financial complexity, it is possible for entire departments to exist simply to carry out one aspect of accounting in relation to the company itself.
These departments are usually found to be consisting of one or two higher ranking accountants with a certain level of certification while the majority of the department’s working body acts as junior accountants or individuals with similar occupations in the field of finance.
While the majority of companies simply possess an accounting department meant to act in a general capacity so as to cover all matters of accountancy involved in the function of said company, there are a few instances wherein a particularly large and complex company will create multiple departments.
This is done so as to break up the workload, allowing each department to handle several parts of the company’s finances instead of its entirety.
How Many Accountants Does a Company Need?
The exact volume of accountants needed in the day-to-day function of a company can depend on its size and financial complexity, as previously mentioned, but also factors such as the presence of automated accounting software, point of sales systems, number of employees, the nature of the company and its products can all be brought into play as well.
Generally, however, most companies of medium size will only need a handful of accountants in order to retain a smooth level of financial function, with some even being able to act as contractors on a seasonal or intermittent basis instead of being directly employed.
This may also depend on the relative experience and skill level of the accountant or accounts being employed, as one or two more capable accountants can likely fulfill the duties of multiple individuals if given proper compensation.
Small Companies
Smaller companies without significantly complex inner workings and relatively simple finances may, in fact, only require a single accountant be employed. This is due to the fact that a properly certified and experienced accountant should have no trouble performing the basic tasks needed in the maintenance and growth of the finances involved in a small company.
The fact that only one or two accountants may be needed in small companies is all the more true in instances wherein other financially related professionals are also employed by said small company, such as book keepers or similar non-accountant individuals who will help share the work with the sole accountant.
In extremely small businesses such as single branch bakeries, automotive shops or non-chain convenience stores, it is also possible to not hire an accountant for the majority of the year, with accounting work likely being rare enough to be delegated instead to a bookkeeper.
In situations such as this, an accountant may instead be contracted on a case-by-case basis or as a part-time employee wherein they are not kept on retainer for any significant length of time, freeing up the accountant’s time and costing the small business less in salary disbursement.
Medium Size Companies
The exact number of certified accountants needed in order to facilitate the function of a medium size company is somewhat larger than that of a small company, all the more so in instances where said medium size company has not hired sufficient enough non-accountant finance professionals to aid in the financial work.
Medium size companies may require anywhere between two to six accountants kept employed year-round, with the occasional external accountant or two needing to be hired during tax season or in times of significant financial growth.
This is even more applicable in medium sized companies that specifically require multiple accountants in order to fulfill the total needs of the company, such as in the creditor and loan sector, or in companies that possess multiple geographical branches some distance apart from one another.
Large Scale Companies or Corporations
When large scale companies or corporations are brought into the question, however, the rules change somewhat.
Considering the fact that large scale companies can continue growing at an exponential rate for an indefinite period of time, it may be difficult to quantify the exact number of accountants that may be needed in order to maintain the internal financial structure of the company.
Large scale corporations tend to divide the accounting work into multiple departments, each dedicated to a certain section of accounting, and all of which are governed by a larger governing department meant to dictate the wishes of the corporation’s executives to these accounting sub-departments.
In large companies or corporations with multiple physical branches, there is usually a separate department entirely for each branch or location, meant to focus solely on that specific branch, with a larger accounting department existing that tallies and collects financial information from these separate branches.
Large scale corporations may have any number of accountants under their employ, from only a dozen with assistive software and other financial employees to hundreds of accountants being employed over a multitude of international branches.
Can Companies Outsource to Overseas Accountants?
While a somewhat uncommon practice owing to factors like communication barriers, distance, and the fact that overseas accountants may not be familiar with local financial law, it is entirely possible for companies to outsource their accounting needs to external accounting professionals located outside of the country.
This is most often done by companies with international branches located within the United States, wherein preparation of tax law would be an unfamiliar act for the company’s own domestic accounting department.
As such, it is likely that this company located outside of the United States will contract a local CPA firm in the area of their branch so as to receive advice and labor in the vein of tax filing.
Other instances where companies should contract accountants of other nations is in the case of foreign banking and financial transactions, both of which may be more difficult without an individual familiar with the local laws of the foreign country.
This is even more important in the event that the company may require an individual under their control to be actually physically present in the foreign country, which may be difficult and untimely for the company’s own domestic accountants.
Can Companies Use External Accountants Instead?
Though companies often employ several accountants full time within their ranks so as to always have access to financial accounting services and similar functions, there are certain instances wherein a company may instead wish to contract an accountant from external sources instead.
This is usually done through the contracting of lone freelance accountants or through an accounting firm that allows their accountants to be hired out.
Situations calling for this particular method of retaining an accountant are usually to do with matters of taxation, external auditing or even as a third party negotiator during business proceedings and the events in a court of law.
Smaller companies that do not require keeping an accountant under their employ year round may also choose to instead contract an accountant only during times when their services are needed, allowing the company to save money and the accountant to search for work elsewhere when otherwise uncontracted.
References
1 Mostyn, Gregory R., and Kim B. Tan. “Basic Accounting Concepts, Principles, and Procedures.” Issues in Accounting Education, vol. 25, no. 1, Feb. 2010, pp. 177–78. DOI.org (Crossref), https://doi.org/10.2308/iace.2010.25.1.177.
2 Lee D. Parker, Back to the Future: The Broadening Accounting Trajectory, The British Accounting Review, Volume 33, Issue 4, 2001, Pages 421-453, ISSN 0890-8389, https://doi.org/10.1006/bare.2001.0173.
3 ABBOTT, L.J., DAUGHERTY, B., PARKER, S. and PETERS, G.F. (2016), Internal Audit Quality and Financial Reporting Quality: The Joint Importance of Independence and Competence. Journal of Accounting Research, 54: 3-40.
4 Scott, William R. Financial Accounting Theory. 7. ed, Pearson, 2015.
