Accounting is the procedure of classifying, calculating and communicating financial information to the various users whilst audit is the procedure of investigating the financial statements to delivering a judgment as to whether the financial statements are reasonably presented. As we can see, accounting provides financial information to users of such information, and auditing is a means to ensure such information is consistent and dependable and is in consonance with recognized rules and regulations.
Nature of the Work
Accountants and auditors prepare, analyze, and verify financial reports and taxes, and monitor information systems that furnish this information to managers in business, industrial, and government organizations.
Four major fields of accounting are public, management, and government accounting, and internal auditing. Public accountants have their own businesses or work for public accounting firms. They perform a broad range of accounting, auditing, tax, and consulting activities for their clients, who may be corporations, governments, nonprofit organizations, or individuals. Management accountants, also called industrial, corporate, or private accountants, record and analyze the financial information of the companies for which they work.
They also are responsible for budgeting, performance evaluation, cost management, and asset management. They are usually part of executive teams that are involved in strategic planning or new product development. Internal auditors verify the accuracy of their organization's records and check for mismanagement, waste, or fraud. Government accountants and auditors maintain and examine the records of government agencies and audit private businesses and individuals whose activities are subject to government regulations or taxation.
Within each field, accountants often concentrate on one aspect of accounting. For example, many public accountants concentrate on tax matters, such as preparing individual income tax returns and advising companies of the tax advantages and disadvantages of certain business decisions. Others concentrate on consulting and offer advice on matters such as employee health care benefits, and compensation; the design of companies' accounting and data processing systems; and controls to safeguard assets.
Some specialize in forensic accounting-investigating and interpreting bankruptcies and other complex financial transactions. Still others work primarily in auditing-examining a client's financial statements and reporting to investors and authorities that they have been prepared and reported correctly; however, fewer accounting firms are performing this type of work because of potential liability.
Increasing numbers of accounting graduates are working in private corporations. Management accountants are needed to analyze and interpret the financial information corporate executives need to make sound business decisions. They also prepare financial reports for non-management groups, including stockholders, creditors, regulatory agencies, and tax authorities. Within accounting departments, they may work in financial analysis, planning and budgeting, cost accounting, and other areas.
Internal auditing is rapidly growing in importance. As computer systems make information timelier, top management can base its decisions on actual data rather than personal observation. Internal auditors examine and evaluate their firms' financial and information systems, management procedures, and internal controls to ensure that records are accurate and controls are adequate to protect against fraud and waste. They also review company operations-evaluating their efficiency, effectiveness, and compliance with corporate policies and procedures, laws, and government regulations.
There are many types of highly specialized auditors, such as electronic data processing auditors, environmental auditors, engineering auditors, legal auditors, insurance premium auditors, bank auditors, and health care auditors.
Accountants employed by federal, state, and local governments see that revenues are received and expenditures are made in accordance with laws and regulations. Many persons with an accounting background work for the federal government as Internal Revenue Service agents or in financial management, financial institution examination, and budget analysis and administration.
Working Conditions
Accountants and auditors work in offices, but public accountants may frequently visit the offices of clients while conducting audits. Self-employed accountants may be able to do part of their work at home. Accountants and auditors employed by large firms and government agencies may travel frequently to perform audits at clients' places of business, branches of their firm, or government facilities.
Many accountants and auditors generally work a standard 40-hour week, but many work longer, particularly if they are self-employed and free to take on the work of as many clients as they choose. For example, about 4 out of 10 self-employed accountants and auditors work more than 50 hours per week, compared to 1 out of 4 wage and salary accountants and auditors. Tax specialists often work long hours during the tax season.
Employment
Accountants and auditors account for tens of thousands job s in the USA as they are needed throughout the private industry and government, for accounting, auditing, and bookkeeping firms. Quite a large proportion of accountants and auditors are self-employed. Most accountants and auditors work in urban areas where public accounting firms and central or regional offices of businesses are concentrated.
Some accountants and auditors teach full-time in junior colleges and colleges and universities; others teach part-time while working for private industry or government or as self-employed accountants.
Training, Other Qualifications, and Advancement
Most public accounting and business firms require applicants for accountant and internal auditor positions to have at least a bachelor's degree in accounting or a related field. Those wishing to pursue a bachelor's degree in accounting should carefully research accounting curricula before enrolling. Many states will soon require CPA candidates to complete 150 semester hours of coursework prior to taking the CPA exam and many schools have altered their curricula accordingly.
Some employers prefer those with a master's degree in accounting or a master's degree in business administration with a concentration in accounting. Most employers also prefer applicants who are familiar with computers and their applications in accounting and internal auditing.
For beginning accounting and auditing positions in the federal government, four years of college (including 24 semester hours in accounting or auditing) or an equivalent combination of education and experience is required.
Previous experience in accounting or auditing can help an applicant get a job. Many colleges offer students an opportunity to gain experience through summer or part-time internship programs conducted by public accounting or business firms. Such training is advantageous in gaining permanent employment in the field.
Professional recognition through certification or licensure also is helpful. In most states, CPAs are the only accountants who are licensed and regulated. Anyone working as a CPA must have a certificate and a license issued by a state board of accountancy.
The vast majority of states require CPA candidates to be college graduates, but a few states substitute a certain number of years of public accounting experience for the educational requirement. Based on recommendations made by the American Institute of Certified Public Accountants, a number of states currently require that CPA candidates complete 150 semester hours of college coursework. The 150-hour rule requires an additional 30 hours of coursework beyond the usual four-year bachelor's degree in accounting. The composition of the additional 30 hours of coursework is unspecified by most states.
All states use the four-part Uniform CPA Examination prepared by the American Institute of Certified Public Accountants. The two-day CPA examination is rigorous, and very few who take it each year pass each part they attempt. Candidates are not required to pass all four parts at once, although most states require candidates to pass at least two parts for partial credit. Many states require all sections of the test to be passed within a certain period of time. Most states also require applicants for a CPA certificate to have some accounting experience.
Professional societies bestow other forms of credentials on a voluntary basis. Voluntary certification can attest to professional competence in a specialized field of accounting and auditing. It also can certify that a recognized level of professional competence has been achieved by accountants and auditors who acquired some skills on the job, without the amount of formal education or public accounting work experience needed to meet the rigorous standards required to take the CPA examination. Employers increasingly seek applicants with these credentials.
The Institute of Management Accountants (IMA) confers the Certified Management Accountant (CM A) designation upon college graduates who pass a four-part examination, agree to meet continuing education requirements, comply with standards of professional conduct, and have at least two years of work in management accounting. The CMA program is administered through the Institute of Certified Management Accountants, an affiliate of the IMA.
The Institute of Internal Auditors confers the designation Certified Internal Auditor (CIA) to graduates from accredited colleges and universities who have completed two years' work in internal auditing and who have passed a four-part examination. The Information Systems Audit and Control Association confers the designation Certified Information Systems Auditor (CISA) upon candidates who pass an examination and who have five years of experience in auditing electronic data processing systems.
However, auditing or data processing experience and college education may be substituted for up to three years. The Accreditation Council for Accountancy and Taxation, a satellite organization of the National Society of Public Accountants, awards a Certificate of Accreditation in Accountancy to those who pass a comprehensive examination, and a Certificate of Accreditation in Taxation to those with appropriate experience and education. Other organizations, such as the National Association of Certified Fraud Examiners and the Bank Administration Institute, confer specialized auditing designations. It is not uncommon for a practitioner to hold multiple licenses and designations. For instance, an internal auditor might be a CPA, Certified Internal Auditor, and Certified Information Systems Auditor.
Persons planning a career in accounting should have an aptitude for mathematics, be able to analyze, compare, and interpret facts and figures quickly, and make sound judgments based on this knowledge. They must be able to clearly communicate the results of their work, orally and in writing, to clients and management.
Accountants and auditors must be good at working with people as well as with business systems and computers. Accuracy and the ability to handle responsibility with limited supervision are important. Perhaps most important, because millions of financial statement users rely on their services, accountants and auditors should have high standards of integrity.
Capable accountants and auditors should advance rapidly; those having inadequate academic preparation may be assigned routine jobs and find promotion difficult. Many graduates of junior colleges and business and correspondence schools, as well as bookkeepers and accounting clerks who meet the education and experience requirements set by their employers, can obtain junior accounting positions and advance to more responsible positions by demonstrating their accounting skills on the job.
Beginning public accountants usually start by assisting with work for several clients. They may advance to positions with more responsibility in one or two years and to senior positions within another few years. Those who excel may become supervisors, managers, partners, open their own public accounting firms, or transfer to executive positions in management accounting or internal auditing in private firms.
Beginning management accountants often start as cost accountants, junior internal auditors, or as trainees for other accounting positions. As they rise through the organization, they may advance to accounting manager, chief cost accountant, budget director, or manager of internal auditing. Some become controllers, treasurers, financial vice presidents, chief financial officers, or corporation presidents. Many senior corporation executives have a background in accounting, internal auditing, or finance.
There is a large degree of mobility among public accountants, management accountants, and internal auditors. Practitioners often shift into management accounting or internal auditing from public accounting, or between internal auditing and management accounting. However, it is less common for accountants and auditors to move from either management accounting or internal auditing into public accounting.
Job Outlook
Qualified accountants and auditors are expected to have fairly good job prospects. CPAs should continue to enjoy the widest range of job opportunities, especially as more states enact the 150-hour requirement, making it more difficult to become a CPA. Competition for the most prestigious jobs-such as those with major accounting and business firms-will remain keen. Applicants with a master's degree in accounting or a master's degree in business administration with a concentration in accounting are increasingly valued, particularly among large firms. Expertise in specialized areas such as international business, specific industries, or current legislation may also be helpful in landing certain accounting and auditing jobs.
Employment of accountants and auditors is expected to grow about as fast as the average for all occupations through the year 2013. Although the profession is characterized by a relatively low rate of turnover, because the occupation is so large the need to replace accountants and auditors who retire or move into other occupations will produce thousands of additional job openings annually.
As the economy improves, the number of business establishments increases, requiring more accountants and auditors to set up their books, prepare their taxes, and provide management advice. As these businesses grow, the volume and complexity of information developed by accountants and auditors on costs, expenditures, and taxes will increase as well. More complex requirements for accountants and auditors also arise from changes in legislation related to taxes, financial reporting standards, business investments, mergers, and other financial matters. In addition, businesses will increasingly need quick, accurate, and individually tailored financial information due to the demands of growing international competition.
The changing role of public accountants, management accountants, and internal auditors also will spur job growth. Public accountants will perform less auditing work due to potential liability, and less tax work due to growing competition from tax preparation firms, but they will assume an even greater management advisory role and expand their consulting services. These rapidly growing services will lead to increased demand for public accountants in the coming years.
Management accountants also will take on a greater advisory role as they develop more sophisticated and flexible accounting systems, and focus more on analyzing operations rather than just providing financial data. Similarly, management will increasingly need internal auditors to develop new ways to discover and eliminate waste and fraud.
Earnings
Accounting and auditing salaries are among the fastest rising compared with the national average of standard occupations. Annual salaries for trained accountants can extend well above $100,000 per year with Accountant, CPA, Tax Preparation & Representation taking home $61,480, an Accounting Clerk, Bookkeeper, Auditing Clerk, Payroll Coordinator: $34,100, whilst State Government Accountant or Auditor and Local Government Accountant or Auditor can expect annual salaries in the realm of around $53,000.
According to the National Association of Colleges and Employers, those just entering the profession, armed with a 4-year degree had median starting salaries of $48,993. In addition to the money they could also receive, additional compensation, perks and benefits.
Related Occupations
Accountants and auditors design internal control systems and analyze financial data. Others for whom training in accounting is invaluable include appraisers, budget officers, loan officers, financial analysts and managers, bank officers, actuaries, underwriters, tax collectors and revenue agents, FBI special agents, securities sales representatives, and purchasing agents.
