Activities and Responsibilities: The following is a generalized scenario of accounting department operation. Within the accounting department work operates cyclically, revolving around monthly and quarterly book closings and financial statement preparation at the fiscal year's end. Accounting clerks (typically with a two-year college degree) are chiefly responsible for the entry of all source documents (invoices, purchase orders, etc.) into the accounting system. In organizations with computerized systems, all accounting information is entered directly into the computer system; at the end of each month the various monthly accounting activity data are given out by the EDP department.
At month's end the accountant must assign, by a rational and objective procedure, the various transactions to general ledger accounts, which are the financial statement accounts. At this time junior staff commonly performs account analyses, whereby transactions and particularly irregular accounts are selected from the general ledger and traced back through the accounting "trail" to source documents. In essence, this is a "self-auditing" exercise. Also at this time, account accruals, deferrals, corrections, and adjustments to journal entries are entered into the computerized system, and the final product-the monthly financial statements-is put out. Quarterly closings are the compilation of three months of financial statements, and annual reports summarize the entire year's financial activity. As a staff accountant, you would perform much of the actual accounting work that results in financial statement preparation. This involves account analysis, journal entries, and performing bank reconciliations.
As you become more senior, your duties will involve more use of technical and accounting judgment, both in your own work and the decisions you make regarding staff accountants' work. Senior staff handles the preparation of more complex financial statement accounts, such as complex consolidations or foreign-currency translation.
Accountants are responsible for significant amounts of written work as well as numerical analysis. In accordance with legal requirements, financial and qualitative reports must be filed by qualified companies with various government agencies; these are prepared by staff accountants. Also, qualified organizations must file an official annual report and a 10K Form with the SEC, a report which includes, along with audited financial statements, detailed descriptions of the company's operations and policies. The staff accountant, in addition to assisting in the preparation of financial statements, may write a section of the 10K, explaining, for example, properties and leases or transactions with foreign affiliates. Similarly, senior staff assists in preparing the management notes to the financial statements, which are included in the annual report. Depending on the company's business, certain other government agencies, such as the Federal Trade Commission, or creditors and suppliers may require financial statements and detailed management reports.
At times, financial accounting functions overlap and staff accountants may perform special projects of a financial-analysis nature, such as creating specialized financial forecasts or investigating alternative investment methods. In the absence of a treasury or finance department, the controller and subordinates perform treasury-finance functions. Similarly, if a separate tax department does not exist, staff accountants may assist in tax-return preparation or tax planning, although due to the complexity of this area, a separate tax department or outside tax professional generally performs these functions.
When deciding whether to work for a small company or a large one, you must weigh the advantages and disadvantages involved. For instance, working in a small company may offer you higher visibility and exposure to top management, yet opportunities for advancement may be limited. On the other hand, large companies can offer you formalized training programs and diverse opportunities for advancement or transfer, yet the climb to higher positions may be a long one. Furthermore, you must weigh such considerations as what type of work will be most rewarding: general accounting work, where you would perform duties in all areas, or more focused work, where you would specialize in specific functional areas.
Educational Background and Training: The basic requirement for entry into the private accounting field is a Bachelor of Science degree in accounting. Some entry-level positions do exist for those without experience or educational background in accounting, especially in large corporations with training programs. In this case you would typically be assigned to temporary, rotating positions to facilitate immediate exposure to various accounting areas. But overall, prior accounting experience is a major factor when you are being considered for a private accounting position.
An accountant with public accounting experience, particularly with a Big Eight firm, is viewed as having excellent experience. Many college graduates join the Big Eight firms, work long enough to satisfy state CPA experience requirements, and then transfer into the private accounting sector, where they are enthusiastically welcomed. Public accounting firms do not object to this practice, as staffing present and potential clients with former staffers may ensure future client relations.
Former Big Eight accountants with advanced experience (at the managerial level and above) are often recruited directly into controller positions. In fact, some companies have a policy of hiring only accountants with public accounting experience. Thus, for college graduates desiring to begin their career in the private sector, some sort of accounting experience preferably in a public accounting firm-if only summer accounting experience-can be crucial in finding a position. Similarly, for MBAs wishing to follow the accounting career path to controller, experience is equally important. Although it is unusual, MBAs without accounting experience are sometimes hired into equivalent positions as BS graduates with experience but at larger salaries.
Attributes of Successful Private Accountants: The most important attribute a successful private accountant needs is a high degree of skill in working with numbers. This involves the ability not only to gather and organize accounting data, but the ability to analyze and develop the data into a form useful to company management in decision making. Thus, you must be comfortable with and enjoy working with numbers; this requires an organized and detail-oriented attitude.
In addition to adeptness at working with numbers, you must possess highly developed writing skills. As you attain higher job positions you will need to be able to translate accounting data into comprehensible written material.
Interpersonal skills are also necessary attributes, especially in higher management positions. Controllers, assistant controllers, and functional department heads spend a good deal of time communicating with subordinates, peers, and superiors as well as with external auditors, government agency representatives, and legal counsel. To communicate effectively with outside parties, you must keep abreast of current professional accounting standards, pronouncements, and issues, as well as with government regulations or laws affecting the industry as a whole, your company, and specifically the accounting department and its operations. Thus, the private accountant's interests and knowledge must expand outside the scope of the accounting profession to include the entire business environment.
CPA Certification: A Certified Public Account license is not a legal or professional requirement for working in private accounting, but it is advantageous. Generally, CPAs command higher salaries than non-CPAs, and in some cases receive first consideration for promotion. Although uncommon, certain state boards of accountancy will consider private accounting experience toward satisfaction of the CPA experience requirement, but only if that experience closely resembles public accounting experience. The candidate must first pass the CPA exam before petitioning the state board of accountancy for acceptance of the experience toward the license.
The National Association of Accountants (NAA) offers a "Certificate in Management Accounting," administered by an NAA-established institute, the Institute of Management Accounting. Candidates for the CMA must pass a four-part exam, and satisfy a two-year management-accounting experience requirement. To sit for the exam, applicants must either hold a baccalaureate degree (in any area) from an accredited college or university and achieve a satisfactory score on either the Graduate Record Exam (GRE) or Graduate Management Admission Test (GMAT), or be a CPA, or hold a comparable professional qualification. CMA's must also, upon receiving the license, satisfy a continuing education requirement.
While licenses in many cases are not a legal or employer requirement, they are generally advantageous in achieving a higher salary, promotion, or positive professional reputation.
