Accountant vs Actuary

The key difference between an accountant and an actuary is that accountants are responsible for the accounting of the financial transactions that have occurred in the past by the company. In contrast, the actuaries are responsible for predicting the financial impact of the different events which may occur or may not occur in the company in the future.

The accountant exists to simplify the whole accounting process, while the actuary is to determine the insurance company's risks and work with underwriters to derive the rates. Both work with the same information set, generate statistics and handle financial data, but each has a different purpose and performs different business functions.

• Actuaries are mostly employed in the insurance industry or sometimes in investment banks, and they deal primarily with risk. It provides a statistical probability of an event to occur in the future and how to reduce any likely financial impact of adverse events as advice. They also advise on the premiums with their calculations on how much to charge and ensure which customers.
• On the other hand, Accountants handle monetary transactions by recording financial information while working with individuals or organizations. Auditing accounts, analyzing financial reports, acting as a consultant, and preparing tax returns on various financial matters. Their duties are broader than that of an actuary.

Let us now look at each one of them in detail -

• An accountant may get involved in issuing or receiving invoices which can involve recording account receivable and account payable. They can also issue recording an expense or an income that records outflow and cash inflow.
• At the end of a given period, they are involved in the bank statements' reconciliation. Several reports are produced by an accountant, including all kinds of financial statements i.e., balance sheet, statement of cash flows, and income statements. They also issue management reports, including sales, cost variance, and overtime analysis.
• Accountants sometimes issue tax reports regarding income tax, sales tax, and property tax.
• Within the scope of a business, an accountant may also be involved in creating several processes, for example, shipments to customers, receipts from suppliers, and cash receipts from customers.
• A person can specialize in chartered and cost accountancy, and become tax accountants, payroll clerks, general ledger accountants, or inventory accountants. Certified Public Accountant is the most prestigious certification an accountant may pursue. Before a person can audit a company's books, a CPA license is mandatory.

• Let's now understand the role of an actuary. This person is a business professional, managing and assessing the risks of a financial venture like risky investments and insurance policies are known as an actuary.
• They are experts in assessing financial risk using financial theory, probability, and computer science. To determine the relative risk of various decisions, private and public institutions rely heavily on actuarial science. Before actuaries are allowed to practice, they are tested and trained extensively.
• Insurance companies and many investment banks appoint several actuaries on a full-time basis. Actuarial science is applicable in a business where there is uncertainty or risks. Currently, actuarial science is one of the fastest-growing and better-paying segments in the United States.
• Actuaries are employed to examine the risks of investments from the financial aspect. Actuaries combine the analytical tools specific to a market and their ability to measure probability to statistically get the best possible results. The fluctuations of financial markets are not very easily predicted; hence an actuarial must acquire deep knowledge of the financial world.
• They are hired as retainers by most investment banks and insurance companies and as consulting actuaries for businesses making big one-time decisions.

These were the roles of Accountant and Actuary.

The Accountant and Actuary are important questions that have mattered over time.

• Being an accountant these days does not mean being geeky but being able to communicate and cooperate with other people and having the right skills like problem-solving and detecting errors. Accountants analyze revenue and expenses and recommend appropriate budgets, resolve discrepancies that require some judgment skills and, at the same time, maintain financial databases and manual filing systems.
• While being an actuary requires mathematical knowledge, computer skills, and probability and statistical techniques. Actuaries work specifically within the insurance industry, providing companies with statistical probabilities of future occurrences and handling data related to risk. They typically focus on losses associated with illnesses, accidents, and natural disasters and assist insurance companies in determining what premiums and coverage the client should be charged.

Both are important in their ways in the financial world. However, the roles and duties are broader for an accountant, and they are quite specific for an actuary. One cannot replace the other requires different skills and qualifications to succeed in their genres.

• Creating financial solutions
• Analysis and risk management
• Developing research data
• Create strategies for the benefit of the policyholders.

This has been a guide to Accountant vs. Actuary. Here we also discuss the top difference between accountants and actuaries, infographics, and a comparison table. You may also have a look at the following articles –

• Income Summary Account
• Differences Between Bookkeeper vs Accountant
• Accounting vs CPA Differences
• FRM vs Actuary