This article will enable you to look closely at accounting as a prospective career. It includes such information as
- what services accountants provide
- who employs them
- salaries and career paths
- latest trends
- job opportunities
- education and skills needed to pursue a career in accounting
- sources of additional information on accounting careers
An accountant may work in a number of different areas throughout the course of a career. As an accountant's career progresses, there is a tendency to specialize in one area. Some areas in which accountants work are discussed in the following sections.
Auditing
Auditors test the accuracy of accounts and determine whether established procedures and systems were followed. They may detect waste and fraud. An auditor is responsible for checking the accounts periodically and for giving a professional opinion as to whether they accurately reflect the company's financial position. Audits may be conducted by internal auditing personnel or by external auditors, that is, certified public accountants (CPAS) from public accounting firms who report their findings to top-level company executives and outside groups such as the Internal Revenue Service (IRS) and the Securities and Exchange Commission (SLC). Audits are required by the SEC for all companies offering their stock for sale to the public.
Internal auditors review company operations in terms of their compliance with corporate policies and government regulations. This area of accounting is becoming more valuable to management. Computer systems enable internal auditors to provide top management with up-to-date information on which to base their decisions. Auditors sometimes specialize in such areas as environ-mental auditing, investigative auditing, legal auditing, bank auditing, and others. Today auditors must be highly proficient with computers and familiar with a variety of software.
Tax Accounting
Tax accountants plan tax strategies based on company operations, prepare tax returns, research tax problems to identify maximum tax advantages, and confer with Internal Revenue Service examiners on behalf of employers and individuals. They may be internal accountants or Certified Public Accountants (CPAS) employed outside the company. Most CPAS in public accounting firms are involved in tax accounting. Tax accountants must keep current, since the tax laws change annually, and help clients make wise and timely decisions with respect to these changes. Estate and retirement planning to minimize or delay taxes offers many new opportunities for tax accountants, particularly as the population ages.
Systems and Procedures Accounting
The responsibility of a systems and procedures accountant is to design and install accounting systems, usually computerized, that enable the firm to keep good financial records. As the business grows or the laws change, systems and procedures accountants review and expand the accounting systems and procedures. They are involved in the purchase, installation, and use of computers and information systems.
Cost Accounting
Cost accountants work primarily with production records and inventory accounts. They are responsible for measuring, allocating, and assigning production and over-head costs to units of inventory to enable management to make decisions concerning whether new products should be produced or existing products should continue to be produced and for how much they should be sold. Cost-benefit analyses are frequently conducted in business to get to the proverbial bottom line.
Budget and Forecast Accounting
A budget and forecast accountant plans for the future, prepares both short and long-term budgets, provides for the organization's cash requirements, projects market forecasts, and accumulates a variety of other analytical information needed by management to make sound financial decisions. Budget and forecast accountants are widely employed in both private and government sectors.
General Accounting
General accountants perform some or all of the activities described for other specialties, including keeping records on a daily basis, developing and supervising accounting practices, and preparing financial statements and special reports such as balance sheets and income statements, profit and loss statements, cash flow statements, cost-benefit analyses, and others.
Management Accounting
A management accountant provides operational advice to management on a variety of matters over the range of an organization's complete operation and is considered a member of the management team. Financial decisions involving mergers and acquisitions, long-term financing, capital budgets, and major corporate decisions are analyzed in conjunction with marketing and finance specialists. The top accounting position in an organization is the controller. The controller directs the total accounting program, including all of the activities described previously. Computer-oriented management consulting is offered through the consulting divisions of major accounting firms. Many managerial accountants find positions with such firms.
Public Accounting
Certified public accountants (CPAS) are employed by public accounting firms, all types of organizations, the government, or work in independent practice. CPAS perform one or all of the services described for other specialties for clients or employers, usually on a repeat basis. Much of the work performed by certified public accountants is auditing and tax accounting. Today, large public accounting firms are offering more services to more types of organizations than ever before. Specialization by industry or accounting function is common. International specialization offers those who have a CPA and expertise in a language many opportunities. For diversity of experience, public accounting offers the most opportunity since CPAS work with a variety of people and companies. Pressure, travel, and seven-day workweeks often go with the job.
Current Trends
The role of the accountant is changing in a number of ways. In a recent survey by Robert Half International, 71 percent of executives of the largest U.S. companies report that in the past few years the role of accounting professionals has become more strategic and critical to overall operations. The trend toward downsizing and restructuring in corporations places the accountant in the critical position of determining the most cost-effective way to organize the company's operations. Determining which operations need overhauling, which should be eliminated, which should be outsourced and explaining in financial terms the rationale for these decisions to management is up to the accountant. The accountant's new role as full member of the management team increases the need for communications skills. The increased involvement of the accountant in organizational change includes planning and controlling, designing information systems, and suggesting responsibility accounting centers for performance evaluation.
With the U.S. national debt and the overwhelming task of streamlining federal government spending, today's CPA is expected to go beyond the financial audit and to tackle measuring the efficiency, economy, and effectiveness of government programs. CPAS have recently been placed in the forefront of this national issue. The accountant must learn new standards and techniques of measurement. While computers have simplified many of the routine tasks, greater communication with employees in the programs is required.
New Technology
The technological and information revolution has changed the nature of the accountant's job and brought about the need for changes in financial statement models. Today's accountants are dealing with volatile prices, currency fluctuations, and changing property values-all of which can be transmitted instantaneously at the computer keyboard and have immediate impact on financial markets. In addition, more complex financial transactions and instruments are changing the requirements for meaningful financial reports. Opportunities will abound for accountants with the ability to use the new accounting systems and information technologies to utmost advantage.
Specialization
As the work of the accountant becomes more complicated, the tendency to specialize becomes greater. In business such specialists as tax accountants, systems and forecast accountants, and internal auditors complement the activities of cost and managerial accountants. In public accounting, specialist areas outside the main function of general auditing include tax accounting, management consulting, systems development, marketing, research and training, and international accounting. There is also a tendency in public accounting to specialize by industry.
The advantages of specialization are high initial salaries and great demand for services. An accountant can spend two or three years in a specialist field without restricting opportunities to get back into the mainstream of auditing or financial management. However, a longer time as a specialist might restrict these opportunities by limiting the range of the accountant's experience too much. It is important to identify both the short-term and the long-term career goals in the field of accounting.
Job Opportunities
Described by Money magazine as one of the fifty hottest jobs of the decade, accounting, especially international tax accounting and estate management, was given an above-average prestige rating. According to U.S. Bureau of Labor statistics, accounting is one of the ten fastest-growing fields during the next ten years, with job openings increasing. Today approximately one-third of practicing accountants are employed by public accounting firms or are self-employed; most of the rest by private industry, not-for-profit organizations, or local, state, and federal government; and a small number by colleges and universities offering educational programs in accounting.
Demand
Much of the demand for accounting services is created by the passage of new laws and regulations. For example, tax laws change so frequently and are so complex that every year fewer and fewer Americans even attempt to do their own tax returns. Also, every year additional requirements by the Securities and Exchange Commission for record keeping and disclosure practices in corporations who sell their stock to the public cause the demand for CPAS to increase. New auditing requirements of pension plans and public campaign fund records further increase the need for CPAS. Inquiries into campaign contributions call the need for this to public attention. The 1986 Tax Reform Act, which purported to simplify the tax laws, and the continued subsequent changes have confused both individuals and companies, thus increasing the need for accountants.
Numerous new financial instruments have created the need for money managers who may have backgrounds in either accounting or finance. Information technology and what it has to offer has motivated many accounting firms to create management information systems departments that offer consulting services to assist companies in the design and implementation of accounting information systems. Demand for accountants holding master's degrees is especially great.
Supply
With continued faster-than-average growth in demand, today's graduates are insufficient in numbers to fill the available positions. In addition, as more states adopt the 150-hour rule, which essentially requires CPA candidates to complete thirty hours of additional coursework beyond the bachelor's degree; it will become more difficult to obtain the designation.
Beware of the job market, as it is constantly fluctuating. Often when demand in a particular area is great, more students major in that area to be assured of a good job after graduation. A pendulum effect occurs. When too many job seekers flock to a hot demand area, the market becomes glutted, the pendulum swings to the other extreme, and demand falls to a low point. This has happened in the past in such fields as engineering. There is then a cooling-off period, fewer students enter academic programs, and fewer new applicants enter the field over a period of years. This causes supply to decrease and the pendulum swings again.
Equal Opportunities
If you are a woman or member of a minority group, you are likely to be actively recruited for an accounting position. Women have done well generally in the accounting profession. Involved in professional organizations, women have begun two societies for women accountants, the American Society of Women Accountants and the American Woman's Society of Certified Public Accountants. Further evidence of the high degree of professionalism among women accountants is the high percentage of women involved in continuing education programs and in such professional activities as writing articles and giving speeches. If you are female, you will be happy to hear that preliminary surveys indicate that a larger percentage of women than men pass the CPA exam the first time around. If you are male, know that you are in for some competition from women. Women in greater numbers are moving into management in organizations and being promoted to partner in large accounting firms. When Deloitte & Touche began losing its high-talent women, the company did a study, made corrections, and by the end of 1995, 23 percent of its senior managers were women and the percentage of women admitted as partners rose from 8 percent in 1991 to 21 percent.
What does all this mean to you? If you opt for a career in accounting today, there is a strong likelihood that a job in accounting will be waiting for you w hen you complete your college program. Another factor that might keep the market from being glutted is the casualty rate among would-be accounting majors. Many students lack the analytical abilities and the persistence for accuracy with numbers required for success in an accounting program, thus the casualty rate is sizable. Don't become a casualty statistic! Be sure you have the necessary aptitudes and characteristics for success before choosing accounting as your major.
Aptitudes and Attributes Needed For Success
To prepare for a career in accounting, you must complete a college program with a major in accounting and obtain a Bachelor of Arts (B.A.) or Bachelor of Science (B.S.) degree. Many professional accounting programs are five-year programs. These longer programs came about for the following reasons:
- the expansion of knowledge required in accounting today
- the complex interrelationships between business, government, and society
- the increased need for communication skills
- the increased need for computer skills
- the 150-hour requirement for CPA candidates
A college program should include a core of liberal arts courses with emphasis on written and oral communications and at least the following accounting and finance courses:
- the two beginning accounting courses
- an intermediate course
- cost accounting
- courses in auditing and tax
- a beginning course in the principles of finance
- computer science or information systems courses
Internships
Internships in accounting are available with accounting firms, corporations, and government agencies. These internships may be found through college and university placement offices, professors, state CPA societies, or direct contact with companies. Large public accounting firms and the U.S. General Accounting Office select college juniors and seniors for internship programs.
Extracurricular activities
Although your grade-point average is important, other qualifications are equally important. Many interviewers, particularly from public accounting firms, regard extracurricular involvement in student organizations in a very favorable light. If you hold office in a student organization, this indicates that you work well with others and are able to gain their confidence and respect. These qualities are essential for success in public accounting since you must be able to sell your professional accounting ability to clients.
Abilities
Skills and attributes necessary for success in a college accounting program as well as success in an accounting position after graduation include:
- analytical ability
- communications ability
- organizational ability
- patience and persistence to work with detail
- natural tendency toward orderliness
- decision-making skills
- computer and information systems skills
A recent survey found that over half the corporations hiring accountants considered the Certified Public Accountant (CPA) and the Certified Management Accountant (CMA) certification important to have. Certainly, the widest range of job opportunities in public accounting are offered to those who pass the Uniform CPA Examination, which is used in all states. This examination provides a challenge for those wanting to enter public accounting. Included in the exam are four sections in the areas of accounting practices, auditing standards, accounting theory, and business law. The failure rate is great on the CPA exam. Those passing two sections with a minimum overall score may retake the other two at a later time. Those who do not achieve this minimum requirement must retake the entire exam. After successfully passing all parts of the exam, accountants may be eligible to receive the CPA certificate, which enables them to gain a permit to practice issued by their resident state board of accountancy. Many states require that individuals have one or two years of experience in accounting before receiving the CPA certificate. To gain additional information, log on to http://www.aicpa.org/edu/candbrom.htm.
The Certified Management Accountant (CMA) certification is issued by the Institute of Management Accountants (IMA) to those who successfully complete a four-part exam, have a minimum of two years experience in management or financial accounting, agree to meet continuing education requirements, and comply with standards of professional conduct.
The Certified Internal Auditor (CIA) certification is conferred by the Institute of Internal Auditors (HA) to candidates who successfully complete a four-part exam and who have a minimum of two years' experience in internal auditing. To gain additional information, call IIA at 407-830-7600, ext. 1 or see the Internet address: http://www.rutgers.edu/accounting/raw/iia/cia/certinto.htm.
The Certified Information Systems Auditor (CISA) designation is conferred by the Information Systems Audit and Control Association (IASCA) upon candidates who pass an examination and have five years experience in auditing electronic data processing systems. Write for information to the address in the resource list that follows.
Career Development and Compensation
Because the same functions are performed by accountants employed by public accounting firms, organizations, and government, there is considerable lateral mobility as well as upward mobility for accountants with the training, talent, and drive to strive for the highest positions.
Typically, but not always, accountants who work for the federal government, major corporations, and multinational public accounting firms earn higher salaries than do accountants in local public accounting firms, small companies, and state and local governments. Average starting salaries for new bachelor's degree graduates in accounting based on recent job offers compiled by the National Association of Colleges and Employers (NACE) in April 1997 are as follows:
Accounting (public) $30,693
Accounting (private) $29,503
Auditing (public) $31,444
Auditing (private) $29,619
Mobility and salary are only two factors to consider in comparing job offers, however. Government work, though lower in salary, offers numerous fringe benefits and is usually more stable. Likewise, though accountants who are self-employed may not always earn as much as those employed by large companies, they have a great deal of freedom.
The Big Six
The largest and most prestigious multinational public accounting firms are known as the "Big Six." Listed by size from largest to smallest number of CPA employees, they are
- Ernst & Young
- Deloitte & Touche
- KPMG
- Arthur Andersen
- Coopers & Lybrand
- Price Waterhouse
There is a great deal of prestige attached to working with a big public accounting firm or working at an executive level in an organization. There is also a great deal of pressure. Recall that accountants do very well in private industry in moving up the corporate ladder. Some of those who leave a big public accounting firm end up on the staff of one of the firm's clients, so they begin in many cases with the advantage of knowing the accounting system and a good bit about their new employer.
One strategy of college graduates is to try to find a job with one of the large public accounting firms for the education and experience, then go into private practice or to work in corporate America. A big plus for beginning accountants is successful completion of an internship program in the accounting field in one of three broad areas-auditing, tax/financial accounting, or management accounting. Because much of accounting involves working as part of a team, communication skills are important. Computer and analytical skills are vital.
