A Student's Guide to the Accounting Profession!
They call accountants bean counters, but while you have to be good at math to be an accountant, counting is only the means to a more important end: ensuring that financial information is truthful. An accountant's work can range from an audit, which is a formal analysis of an organization's financial statements, to the day-to-day reckonings of a bookkeeper making sure a small business pays its suppliers and gets paid by its customers. An accountant makes sure that a corporation is telling the financial truth to its shareholders, an individual is coming clean on his tax returns, or a company has been paid all of its accounts receivable.
Accounting is a much more dynamic and intriguing job than you might initially think. You have the potential to have a really big impact on a client company with what you do. The accounting profession requires a certain amount of technical training, and most accountants come into the field fresh out of school. Although there are a variety of other jobs that belong to the extended accounting family - bookkeeper, accounts payable clerk, accounts receivable clerk, and so on - the high-status positions in this profession come with three letters attached, CPA.
Fewer than half of all accountants in the U.S. have passed the CPA exam and been certified. As you step into the wonderful world of accounting, you have three obvious career options: (1) work for a Big Five public accounting firm—Arthur Andersen, Deloitte & Touche, Ernst & Young, KPMG, or PricewaterhouseCoopers; (2) work for a smaller national or regional public accounting firm; or (3) work in the accounting department of a private or government organization.
If you go the public accounting route (options 1 and 2), you'll typically start by studying for and taking the CPA exam and then working for several years on a variety of tax or audit assignments. At that point, assuming you want to remain in accounting, you'll either leave to join a client or stay and try for the partner track. If you start in the private sector (option 3), you won't be able to get licensed as a CPA (you have to have experience working for a public accounting firm to do this), but you will learn about one business in far greater depth than your public accounting pals will in their short-term auditing assignments. All three options can eventually lead to lucrative and interesting responsibilities in senior management. All three will also serve as excellent preparation for a variety of business careers should you want to leave the world of debits and credits behind.
Changing Services: The business of accounting, which remained stable for decades, has been changing for the last several years. Recent growth in the industry has come from adding new services—most notably, business management consulting—to the traditional audit and tax functions. But this has created its own challenges. For example, within each of the Big Five firms, accounting partners maintain their grip on management—and monetary rewards—even though consulting revenues are growing by leaps and bounds. That has led to power struggles between consultants and accountants.
Increasing Use of Technology: As recently as 1990, you'd go into an audit with nothing but a legal pad and a couple of sharp pencils, notes one senior accounting recruiter. Now, auditors arrive with far more-serious electronic artillery in tow, in some cases boasting expertise in various specialized software applications that automate accounting tasks, from spreadsheets to ledger packages. To do well in this field, you'll still need to have your journal entries down pat, but increasingly you'll need to be able to use computers.
Globalization: Like so many other facets of economic life, accounting is increasingly immune to international borders. As corporations become multinational, so do their accounting firms. While each country still has its own canon of standard accounting practices, there is a gathering movement toward international accounting rules. Numerous issues have been raised by globalization, but few if any have been resolved. One thing is sure, however: International accounting bodies, such as the International Federation Of Accountants (IFAC), the International Accounting Standards Committee (IASC), and perhaps the Institute of Social and Ethical Accountability (ISEA), will have more influence than in the past.
HOW IT ALL BREAKS DOWN!
The obvious breakdown in accounting is the one we made above: Big Five, smaller public-accounting firms, and private and government accounting. In public accounting, most people will go into either audit or tax. In private accounting there's a wider range of jobs.
The Big Five: Subject to change, they include Arthur Andersen (not to be confused with Accenture, which has become an independent company, Deloitte & Touche (of which Deloitte Consulting is a part), Ernst & Young, KPMG, and PricewaterhouseCoopers.
These are unquestionably the most prestigious employers for accounting grads—largely because they are accountants to the Fortune 1000 and because the training they provide is excellent. The best and brightest from your accounting classes invariably end up at one of these firms, at least for a few years. Hours, workload, and travel demands are not extreme, except during tax season, and the payoff, most would agree, is substantial. In particular, the large percentage of people who don't stay around and become partners have become hot commodities on the job market by the time they've completed a stint at one of the Big Five.
Regional Firms: Although the Big Five get most of the publicity, there are many smaller, less well-known national and regional public accounting firms that do a lot of accounting and hire lots of people. Representative national firms include Grant Thornton, Cherry Bekaert & Holland, McGladrey and Pullen, BDO Seidman, and Moss Adams. Within different regions of the country, there are also strong regional players that usually affiliate themselves with some national network of other such players. Insiders tell us that the hours are often a little better than at the Big Five, the path to partner a little quicker, and the work itself more varied and interesting. If you go to a Big Five firm, your only responsibility for three months might be to audit the cash account at IBM. Ugh! According to one insider, at a regional firm you'll be a bigger fish in a smaller pond, which will result in more variety in your work experience.
In-House Accounting: Whether publicly traded or not, every company has internal accountants to set budgets, manage assets, and keep accurate track of payroll, accounts payable and receivable, and other financial matters. For medium-sized and large firms, the internal staff works closely with the public auditors at the fiscal year-end and with senior management and IT staff year round. Controllers and CFOs at smaller firms often enjoy even more important and influential roles in running and developing the business. These jobs are just as demanding as those in public accounting, but they're generally less stressful. Most accountants in the private sector stay in one place, in one job, working with the same colleagues, for extended periods. However, should you choose to move around, accounting skills are very portable.
Government: Although it's not the biggest blip on the radar screen of aspiring accountants, the government hires a lot of people with accounting skills. The biggest federal employers are traditionally the Department of Defense, the General Accounting Office, the Securities and Exchange Commission, and the Internal Revenue Service. In addition to monitoring individual and corporate tax returns, government accountants at the state and federal levels formulate and administer budgets, track costs, and analyze publicly funded programs.
Independent: As an accountant you can always hang out your own shingle, individually or in partnership with other accountants, especially once you have your CPA. There is plenty of business preparing tax returns and advising small businesses, provided you have the relevant expertise, such as a thorough knowledge of tax laws. You also will need to be able to market your services and manage your own business, time-consuming activities that not everyone enjoys.
According to the U.S. Department of Labor's Bureau of Labor Statistics (BLS) accounting employment will keep pace with the average for all occupations through the year 2006. Companies want more from their accounting firms—more information, more kinds of information, faster delivery of information. That means there will be a need for more accountants. On the other hand, the tendency of a growing economy to create new jobs will be offset by increased automation and heavier workloads for proportionately fewer accountants. In any case, competition for accounting jobs will be vigorous.
For more detailed information on the Accounting Industry and some helpful advice, check out the following links:
Thank you to WetFeet.com for this information.