Is the public accounting path the right one for you? How do you know you have what it takes to become a CPA in a public accounting firm? What should you know before you commit? This article hopes to spell out for you what it means to enter the public accounting world so you can decide whether it’s the right path for you.
The majority of accounting graduates choose the public accounting path to start out their career. But does that mean it’s the right path for everyone? Not necessarily. Let’s take a look at this common career path.
Public accounting is the branch of accounting where an accountant works with a range of clients to review and prepare financial documents that an individual or corporation is required to disclose to the public. In simple terms, public accountants work to verify important financial documents, reports, and disclosures from an outside perspective. Public accountants also work with individuals or corporations on their tax needs, including the completion of tax returns, tax filing, and tax consulting.
Private accountants, on the other hand, deal with the financial information of a single company they’re employed by, usually preparing or analyzing reports for an internal manager. Often, the work of private accounting professionals is reviewed and audited by public accounting firms—this provides a sort of independent stamp of approval verifying that their private internal accounting practices meet reporting standards.
The differences between public and private accounting may seem to be minimal. But this simple difference can make a big impact on what your life as an accountant could look like. Let’s take a closer look at some of the biggest factors to see whether you’re better suited for public or private accounting. The major factors in determining if public accounting is right for you are (1) work environment, (2) day-to-day duties, and (3) education/training.
While both public and private accounting have their busy times; for example, tax season for public accounting or quarter-end financial reports for private accounting; public accounting typically puts the most demand on a person’s work-life. Private accountants work for a single company and will be on a fairly regular schedule. A public accountant’s work environment isn’t quite as predictable. They often own their own businesses or work for public accounting firms. They work with a wide variety of clients—from individuals to corporations and potentially even the government. Public accountants travel to wherever their clients are located. They do their work wherever a client has space for them, and they are often under the pressure of strict deadlines—which can lead to long workdays.
The career path of a public accountant is straightforward: they will either advance through working as an auditor and audit manager to eventually holding a position as an audit partner, or they will work in tax accounting. Audit partners manage audit relations and work to bring in new business, while tax accountants work with tax returns and other forms of tax record keeping. The career path for tax accountants can include promotion to tax manager or tax consultant. For private accountants, career paths are more likely to vary. They can begin in one of several specialty areas and then advance to an assistant controller position. Private accountants can then become controllers or chief financial officers (CFOs). CFOs are responsible for all internal accounting functions, as well as treasury, risk management tax, and investor relations.
Many people assume one accounting job is the same as the next, but the different areas of accounting make for job duties that are worlds apart. Public accountants are responsible for ensuring that their clients’ financial documents are accurate and complete before being released to the public. Their daily job duties usually center on testing and analyzing the financial information their clients have prepared to make certain they’re error-free. Public tax accountants’ daily activities will be centered around assisting the client with their tax documentation and making sure everything is in order before the tax filing is complete. They can also be involved in providing consultation services to clients to help improve their tax position. Private accountants work with internal business or financial managers to plan their company’s cost of doing business and to evaluate fiscal performance. Their daily activities revolve around management reporting, including journal entries and performing account reconciliations or the completion of the corporation’s tax documents and filings.
Both private and public accounting positions require a Bachelor’s degree in Accounting. Beyond that, if you are going on to obtain your CPA credential, you’ll need to fulfill the education requirements as defined by your specific State Board of Accountancy. Public accountants need a CPA license in order to advance to the manager level, but the same does not hold true for private accountants. Therefore, a CPA license is usually more valuable to public accountants than private. There are other certifications that provide benefits to private company accountants. However, whether you are in private or public accounting, the CPA credential can give you a leg up in your career.
With regard to training, public accountants are trained to analyze accounting systems, collect evidence, and test to see if a business is running effectively. A public accounting professional also must have a keen understanding of accounting standards for financial statements or tax regulations for tax consulting or filings. Private accountants, on the other hand, are trained in the processing of a variety of accounting transactions, such as accounts payable and billings. The knowledge of private accountants may be limited to the work they are responsible for but will certainly expand as they advance within the organization.
Here is a short list of pros and cons of a career in public accounting.
Making the decision to enter public accounting can be very gratifying. Larger colleges/universities tend to push their graduates into public accounting, while small to mid-size schools will have a nice balance between public and private accounting graduates. If you choose the public accounting path and ultimately switch to private accounting several years later, the experience you gained as a public accountant will serve you for many years down the road.
If you’re ready to learn more about becoming a CPA, check out our free CPA Exam Guide. This handbook will tell you everything you need to know about becoming a CPA.
Want to see more blogs like this? Check out our Careers in Accounting blog series to see more insights from accounting professionals.
Valerie is the CPA Product Manager at Gleim. She holds a Bachelor of Arts in Business Administration/Management Information Systems from Saint Leo University. Additionally, Valerie holds a Certificate in Project Management from Villanova University. Valerie has spent over 20 years in the Accounting industry with involvement in Beta Alpha Psi, NASBA, the AICPA, and the FICPA. Valerie enjoys reading, traveling, and mentoring young professionals.