Scott Johnson
Dr. Kerr
EN101-12
16 February 2013
Private
vs. Public
When it comes to
the field of accounting, most people would just summarize it as one word,
boring. The common misconception is that accountants sit at a desk and crunch
numbers all day. However, this idea is far from the truth. The reality is that
this is only a small part of an accountants job, depending on which type of
accounting they are in. “You can think of public accountants as “external”
accountants who provides services to clients such as audit, consulting and tax
planning services.” (“Public Accounting vs. Private”). “Private, or non-public
accountants are “internal” accountants who work in a company, non-profit
organization or a government agency. You can work in the financial accounting,
management (cost) accounting, budgeting, corporate planning, treasury or in the
internal audit department within the corporation.” (“Public Accounting vs.
Private”). The major differences between public and private accounting are the
tasks and responsibilities, work environment, and career opportunities.
While both
private and public accounting involves analyzing financial information, the
exact duties and tasks each type do are different. “Breadth vs. Depth: Because
corporate accountants spend all of their time working for one company, they are
extremely knowledgable about the accounting for the company they work for. This
makes an accomplished corporate accountant valuable to her company and
companies that sell similar products and services. However, public accountants
frequently serve many clients, sometimes in different industries. This gives
them a breadth of knowledge about accounting issues at a variety of companies.
This makes public accountants valuable to companies that are looking for
employees with a large base of knowledge.” (Freedman). “Public Accountant Job
Duties: General responsibilities shared by all public accountants include
preparing and verifying vital financial documents, analyzing budgets and planning
finances. Public accountants give advice and provide basic financial
information to a range of clients, from individuals to corporations. They also
perform bookkeeping, consulting and auditing tasks. However, the duties of a
public accountant vary by individual concentration; for example, some public
accountants specialize in tax issues. Their responsibilities involve working
with income tax returns and filing taxes in accordance with rules and
regulations. Another specialty is forensic accounting, a branch that involves
investigating financial fraud.” (“What does a Public Accountant do?”). “Duties
and Responsibilities: The private accountant performs a variety of tasks
depending upon the size of the organization for which she works. In larger
structures, private accountants are usually assigned to specific areas, such as
general ledger -- the master record of all accounts and transactions --
accounts payable, accounts receivable, payroll or taxes. Accounts payable
involves bills that need to be paid, while accounts receivable deals with
income and invoice creation for clients. The private accountant's job in her
area of specialty is to ensure that financial transactions are accurate and
current. She might review financial statements, provide analysis of data and
create reports.” (Brenner). “Many of the private companies in the U.S. are very
small businesses and thus have no reporting requirements other than filing
income tax returns. There are, however, significant number of private companies
that prepare financial statements in accordance with U.S. GAAP because such
financial statements are required by lenders,
other creditors, bonding and
credit-rating agencies, regulators, business owners, and
others. Many private companies
preparing U.S. GAAP financial statements must issue audited, reviewed, or
compiled financial statements.” (Hilmi). “Most individuals who understand the
basics of financial reporting are familiar with the phrase generally accepted
accounting principles (GAAP) and will readily identify the Financial Accounting
Standards Board (FASB) as the standard-setting body in the United States
responsible for establishing accounting principles for nongovernmental
entities. However, some may not be aware that there is no single reference
source for GAAP because these principles are derived from a variety of sources.”
(Jenkins).
Despite
the fact that they are in the same career field, the schedule and work
environment of public and private accountants is different. “Good People
Skills. Public accounting is a client oriented business which means that you
need good people skill. For example, you’ll need to communicate effectively
with your clients when trying to understand the client’s business and to
request information for your analysis. As you move towards partnership, you’ll
acquire important skill in how to deal with difficult clients and getting the
information you need at the same time.” (“Public Accounting vs. Private”). “Good
Sales Skills. This is people skill in the next level, and is required if you
aspire to become a partner or own your CPA firm. In short, you need to solicit
business for your firm and good sales and marketing skill (and keeping your
professionalism at the same time) is a critical skill.” (“Public Accounting vs.
Private”). “More Stressful Environment because you are dealing with a wide
variety of people and demands, public accountant’s work is inevitably more
stressful. On the other hand, private accountants work with the same group of
colleagues and tend to have a more relaxed lifestyle.” (“Public Accounting vs.
Private”). “Longer Hours. Similarly, because you are working with clients vs
colleagues, the deadlines are hard deadlines and over-time / late nights are
common especially for junior accountants (associates and senior
associates). Other than the
account-closing month, private accountants have more or less a 9-5 job.” (“Public
Accounting vs. Private”). “Corporate accountants typically work long hours
around the monthly close period, when the company completes the accounting
records each month. In addition, corporate accountants work longer hours around
the annual audit and quarterly reporting dates. Public accountants tend to work
longer hours during the "busy season" of their clients. Usually, this
is from January to April. However, as public accountants move up through the
organization, this busy season can sometimes extend into a greater part of the
year.” (Freedman).
An
accountant’s different career opportunities and choices are largely affected
depending on whether they choose to work for a public firm or a private
corporation. “Less Stability. While accounting job is considered one of the
safest jobs, the boom and bust of economic cycle does affect CPA firms as
clients cut budget and corporate finance activities. Within public accounting,
audit and tax teams are more secure than advisory teams for this reason.” (“Public
Accounting vs. Private”). “Better Exposure. Having said that, working in a
public accounting firm expose you to a wide variety of projects in different
industries and this is an unrivalled experience when compared to an accounting
role in the corporate world.” (“Public Accounting vs. Private”). More Doors
Opened. Because of this, an experience in CPA firm (especially Big 4) is
excellent for your resume, and you can always go from public accounting to
private accounting but not vice versa.” (“Public Accounting vs. Private”). “Earnings
and Benefits: Private accountants typically work a 40-hour week as exempt
employees with a salary. The U.S. Bureau of Labor Statistics lists the median
annual wage for all accountants in 2010 at $61,690 in May. The top 10 percent
can earn more than $106,880 per year. Most private accountants receive vacation
pay, sick leave, and health and dental benefits. Some organizations offer 401k
benefit plan or retirement plans for accountants after the accountant meets
internal vesting requirements.” (Brenner). “Career Opportunities and Outlook. The
bureau reports that accountant jobs are expected to grow as fast as most
occupations, at 16 percent from 2010 to 2020. Private accountants can work as
cost accountants in manufacturing or companies with product lines, as
accounting supervisors, payroll accountants or accounting analysts. After
gaining on-the-job experience, private accountants are often promoted to
positions of management. Accountants with graduate degrees can be promoted to
controller or executive-level management positions.” (Brenner).
Conclusion.
“The U.S. Bureau of Labor Statistics has projected employment growth for all
types of accountants, including public accountants, to rise at a rate of 22%
between 2008 and 2018 (www.bls.gov). Job prospects should be good for
accountants; however, CPAs should have better job prospects than their
non-certified counterparts, due to their additional training and experience.” (“What
does a Public Accountant do?”).
Works
Cited
Hilmi Elifoglu I., Fitzsimons Adrian P., and
Silliman Benjamin R. "Separate Financial Reporting Standards and Standard
Setting for Private Companies." Review
of Business 32.2 (2012): 23-32. Business Source Premier. Web. 23 Feb 2013.
Jenkins, Edmund L., and Cheri Reither Mazza.
"Generally Accepted Accounting Principles." Encyclopedia of
Business and Finance. Ed. Burton S. Kaliski. 2nd ed. Vol. 1. Detroit:
Macmillan Reference USA, 2007. 339-341.Gale Virtual Reference Library.
Web. 23 Feb. 2013.
"Public Accounting vs. Private
Accounting."ipassthecpaexam.com. IPasstheCPAExam.com, n.d. Web. 28
Feb 2013. <http://ipassthecpaexam.com/public-accounting-vs-private/ >.
Freedman, John. "Public Accountants Vs.
Corporate Accountants." Chron.com. Hearst Communications inc.,
n.d. Web. 28 Feb 2013.
<http://work.chron.com/public-accountants-vs-corporate-accountants-9502.html>.
"What Does a Public Accountant
Do?." education-portal.com. Education-Portal.com, n.d. Web. 28
Feb 2013.
<http://education-portal.com/articles/What_Does_a_Public_Accountant_Do.html>.
Brenner, Laurie. "What is a Private
Accountant?."Chron.com. Hearst Communications inc., n.d. Web. 28
Feb 2013. <http://work.chron.com/private-accountant-16137.html>.
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