Clearly, one of the fundamental decisions an accountant who intends to stay in accounting and does not want to start a private practice must make is whether to establish a career path in public or management (private) accounting.
Neither public accounting nor management accounting has a monopoly on opportunity or job satisfaction. In the end, it is your decision as to which you are better suited for.
The Nature of the Work
The question of which branch of accounting, public or private, is more interesting, enjoyable, and lucrative is an ongoing debate. In the end, it's all a matter of personality, however it is possible to make a few generalizations.
Public accounting is better suited to people who enjoy pure accounting per se, whereas management accounting is better suited for people who are interested more in business than they are in accounting. Private accountants, as a group, seem to prefer concentrating on one set of problems—those of the company they work for—and like to deal with the same people every day rather than service a number of different clients.
There are other differences. Public accountants are a little more analytical as a rule than management accountants. A lot of it has to do, too, with how much you relish the pressure of the profession. There is pressure, of course, in both public and private accounting, but most people would agree that the pressure is greater in public accounting. The pressure has to do not only with the job itself—the deadlines come more frequency and you are under the gun from more sources—but also with the pressures that public accounting puts on your home life because of the travel and the long hours.
On the other hand, the pressures in management accounting are more a reflection of the company and the person you work for than the job. At their worst, the pressures you are up against in private accounting are not nearly as great as those in most public firms.
Where the Money Is
It used to be said that you could earn more money in private accounting than you could in public accounting. This may still be true at the middle levels of each, but at the entry levels, according to the Prevailing Financial and Data Processing Starting Salaries guide published each year by Robert Half International, Inc., accountants in large and medium-sized public firms earn, on the average, more than internal accountants working in private industry. At the upper levels, it is safe to assume, there really is not much difference at all. The earnings of the managing partners of the largest public accounting firms are on a par with those of Fortune 500 CEO salaries. There are also partners in medium-sized CPA firms who, because of the deals they have had access to, have made far more money than they could have hoped to have earned in private industry; by most standards, these partners are considered quite wealthy.
If there are differences in the earning capacities of accounting positions, the factor appears to be the size of the company or firm, rather than whether you are in public or private accounting.
There is definitely a difference between public and private accounting in regards to job security, for there is no question that public accounting offers more security than private accounting. Public accountants who are good technicians have what amounts to almost guaranteed employment. Public accountants can change jobs at any time because they have a trade, and there's a market out there for them as long as they can function.
The same is not true in private accounting. It is much easier for a public accountant to move into private accounting than it is for a private accountant to move into public accounting. Public firms, except in rare situations, would almost always prefer to hire someone with a career background in public accounting. Also, experience in private accounting is not as easily transferable from one job to another. If you are a management accountant with many years of experience in, say, food service companies, you are going to have trouble convincing an oil company that you are qualified for a job in that company. Third, because private accountants do not have the contacts public accountants develop, their job possibilities are more limited than those of public accountants.
Making the Move from Public to Private Accounting
Most successful accountants advise young accountants who want to move into corporate finance at the Fortune 500 level to spend at least 3-4 years with a good CPA firm. By "good" they are not necessarily talking about a large firm, but about a firm that has more than a few major clients. If you are contemplating a career in private accounting, you should not stay in public accounting for more than 6-7 years.
Another point worth stressing here is that, when you do make the move, choose the company with care. It is understandable, once you have been with a good public accounting firm for 4-5 years, to want a position with stature and responsibility, such as a controllership, and frequently there may be a controllership available, albeit in a very small firm with no great future.
Keep in mind that successful companies will rarely put you into a controllership position directly from public accounting, unless you have already been involved with that company for many years. When you make your move, you have to think three or four years down the road, rather than dead-end yourself in a position that has no future. Do not hesitate to start with a good corporation as an internal auditor if the advancement opportunities are reasonably clear. You will be able to get a good perspective of the entire operation, meet the right executives throughout the company, and subtly influence getting an attractive job transfer.
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