Scott
Johnson
Dr. Kerr
EN101-12
6 March 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 accountant’s job, depending on which type of
accounting they are in. Generally speaking, accountants analyze financial
information. What they do with this information depends upon what type of
accountant they are. Public accountants can be thought of as “external”
accountants because they provide accounting services such as auditing,
consulting, and tax planning to corporations, organizations, and individuals (“Public
Accounting vs. Private”). In contrast, private accountants can be thought of as
“internal” accountants because they work within a single corporation or
organization doing tasks such as preparing financial statements, cost
accounting, budgeting, internal auditing, and corporate or treasury planning (“Public
Accounting vs. Private”). Because of the major differences between public and
private accounting in the areas of tasks and responsibilities, work environment,
and career opportunities, Public accounting seems to be the better choice.
While both
private and public accounting involves analyzing financial information, the
exact duties and tasks that each type do are different. (Freedman). Public
accountants cover a broad area of accounting tasks such as analyzing budgets
and financing, tax preparation, providing financial advice, auditing, and even
forensic accounting. Because of this, public accountants usually specialize in
an area of accounting such as tax accounting, where they work with income tax
returns and correctly filing taxes in accordance with regulations. Another
specialty is forensic accounting, which involves analyzing financial
information with the purpose of investigating fraud (“What Does a Public
Accountant Do?”). Generally, a public accountant works for many different
clients, sometimes in different industries. Because of this they, they develop
a breadth of knowledge in different accounting issues (Freedman). While they
still analyze financial information, private accountants usually work for a one
corporation or organization. Private accountants perform many accounting tasks
for the company they work for based on its financial information, which makes
them specifically knowledgeable about that companies finances (Freedman). When
working for a larger, corporate firm, private accountants usually specialize in
different areas of the company’s financial areas. The different accounts they
may monitor include accounts receivable, accounts payable, tax accounts, and
payroll. There also may be accountants assigned to preparing financial statements
for different purposes. Private accountants higher up in the company may review
financial statements, then create reports and provide analysis of data from
them (Brenner). One similarity is how private accountants prepare financial
statements. Many small, private companies in the U.S. have no reporting requirements
besides filing income tax returns. However, many larger, corporate companies
file in accordance with the U.S. GAAP (Hilmi). The U.S. GAAP are generally
accepted accounting principles that have been derived over time from variety of
sources, and they decide what accounting rules and regulations must be followed
in preparing financial statements (Jenkins). Large corporations must file their
financial statements in accordance with the U.S. GAAP because they are required
by lenders, bonding agencies, regulators, business owners and other creditors
(Hilmi). Many times, public accountants from outside firms come in to the
company to investigate and make sure the financial statements are prepared
correctly and present the financial information fairly. In this situation, the
public accountants will be doing accounting tasks similar to the private
accountants.
Despite
the fact that they are in the same career field, the schedule and work
environment of public and private accountants is different. The contrasting
types of work environments are the main difference between public accountants
and private accountants. A public accountant usually deals with many different
clients. Clients can range from a company who is being audited, or, more
commonly, an individual who is filing his or her tax return. Dealing with many different
people tends to make public accounting more stressful because the accountant
must meet a variety of demands. Public accountants also deal with longer hours,
especially during tax season, because they are working with many clients (“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>.
No comments:
Post a Comment