Kenya’s business environment is dominated by small and medium enterprises (SMEs) that account for over 90% of businesses in Kenya and create around 80% of the total employment. Businesses under this category especially the small and micro enterprises do not engage professional accountants due to their constrained resources and the lack of knowledge. As a result, their businesses get in trouble due to the failure to apply the accounting knowledge in the business process. What these enterprises fail to understand is that they can access professional accounting services without having to maintain accountants in their payroll by outsourcing. Accountants perform specific duties that would help SMEs to unlock value thus creating competitiveness. Below are some of the key responsibilities of an accountant:
Bookkeeping– one of the principal responsibilities of an accountant is keeping records of transactions. Bookkeeping is guided by accounting principles, national accounting guidelines, and the international financial reporting standards (IFRS). Professional accountants are highly trained to ensure bookkeeping complies with the relevant regulatory framework. Proper bookkeeping helps an entrepreneur to ensure resources are not wasted.
Preparation of financial statements- another duty of an accountant is to ensure the preparation and maintenance of proper financial statements. The main financial statements are the income statement, the balance sheet, and a cash flow statement. An income statement gives details about revenues and expenses that are used as a basis for determining whether an entity is making profit. A balance sheet defines the business’ state of affairs by showing the assets, liabilities, and owners’ capital. Both the balance sheet and the income statement guides the determination of the value of a company. A cash flow statement gives a breakdown of the sources and uses of cash which helps to assess the ability of a business to meet its liabilities as they fall due. It is, therefore, the duty of an accountant to ensure these financial statements meet the right standard to guarantee their usefulness.
Tax duties– the Kenyan taxation environment presents opportunities and threats. It is the duty of an accountant to ensure clients exploit these opportunities and at the same time putting measures to avert taxation threats. Concerning opportunities, the Kenyan tax laws have loopholes that can be exploited to reduce the tax liability a practice known as ‘tax avoiding.’ Also, KRA gives tax incentives such as capital and investment deductions that can be exploited to reduce the tax burden. The main taxation threats facing SMEs are non-compliance and tax overpayment. KRA punishes non-compliance by imposing huge fines that can bring SMEs to their knees.
Internal control – the function of internal control systems is to prevent fraud and errors. It is the duty of an accountant to make proposals to the management regarding policies and procedures needed to create a record-keeping environment that is free from errors and fraud. The integrity of financial statements is compromised when the books of account are characterised with misstatements.
Enhancing compliance- SMSs are governed by a regulatory framework that is directly linked to accounting activities. Failure to comply with the existing laws leads to fines and litigations that are threats to profitability. Statutory deductions and tax laws are some of the areas that raise compliance issuers.
At Blue Ocean Outsource we help SMEs to unlock value through business process outsourcing. Our services are tailor-made to meet specific client needs. Some of our services include payroll processing, bookkeeping, feasibility study, market survey, company registration, and business writing (business plans and proposals, donor funding proposals, strategic plans, and company profiles among others). Contact Us