Accounting

Career Overview

Accounting concerns itself with the day-to-day operations of bookkeeping. Accountants balance the books, track expenses and revenue, execute payroll, and pay the bills. They also compile all of the financial data needed to issue a company’s financial statements in accordance with government regulations.

These days, accountants are taking a step away from the ledger sheets and are becoming essential to every successful business team. They’re the ones who understand the language of money and a company’s complex financial situation. Consequently accountants are increasingly being called on to offer advice and even make business decisions based on hard facts rather than speculation or gut instinct.

To be sure, an accountant’s day-to-day work is still very different from that of a lion tamer, especially for those who are just entering the field. Most public accountants, for example, still need to know the specifics of tax law and must file audits that meet the Generally Accepted Accounting Principles (GAAP). There’s little room for people who want to think outside of the box; and it’s the accountant’s job to make sure a company’s records fit inside that box and are in lockstep with the law.

Many jobs exist for accountants in accounting firms, corporate in-house accounting departments, and local, state, and federal government entities. Far and away, the most positions available in public accounting are in audit, with new government regulations fueling an explosion in audit-related positions. Areas such as forensic accounting are also growing due to increased pressure by the government to stop financial fraud. And the greatest number of opportunities lies in the tax area.

When you enter the industry, don’t expect to be handed big decisions and cutting-edge projects right off the bat. The accounting profession will always contain a certain dose of tedium. There’s simply no way around that in the practice of auditing and many other standard accounting procedures. But put your nose to the grindstone early and keep an eye out for opportunity, and you should begin climbing the ladder in no time. The U.S. Bureau of Labor Statistics projects that the job market for accountants and auditors will grow 18 percent to 26 percent through 2014; accounting made Money’s 2006 list of the “Top 50 Best Jobs.”

What You'll Do
The responsibilities of accountants are more wide-reaching than just balancing the books, although that is an important part of the job. The cornerstone of an accountant’s work is making sure money is coming in and going out in an appropriate manner, taxes are paid on time, and public filings are done properly. In addition to this, however, accountants who deal with businesses, either as part of a CPA firm or in-house accounting department, are also an important part of the management team. In order to help the company make key decisions about growth, accountants are often expected to be able to analyze budgets to determine whether they’re reasonable; provide investment and financial planning to help fatten the company’s bottom line; advise about financial information technology options, such as accounting and inventory tracking software; and provide limited legal services, on such topics as stock filings, business registrations and the like.

Of course, accountants balance the books, track expenses and revenue, execute payroll, and pay the bills. They also compile all of the financial data needed to issue a company's financial statements in accordance with government regulations. When dealing with individuals, accountants help with planning to reduce the chunk of income that Uncle Sam takes in taxes.

To be sure, an accountant's day-to-day work is still very different from that of a lion tamer, especially for those who are just entering the field. Most public accountants, for example, still need to know the specifics of tax law and must file audits that meet the generally accepted principles of accounting (GAAP). Here, there's little room for people who want to think outside of the box. The box has been well thought out, and it's the accountant's job to make sure a company's records fit inside it and are in lockstep with the law.

Who Does Well

Finance and accounting jobs require critical, detail-oriented thinking. If you have a knack for using numbers to understand patterns that influence business, you’re going to be valuable to a company. If you can’t crunch and analyze them, this isn’t going to be the right job for you. You should also like and be good at solving problems and be able to think critically about the numbers you’re working with.

Although accountants need to be good at math and have strong analytical-thinking and research skills, attention to detail is usually considered more important. To develop business relationships and close new business, accounting professionals also find it necessary to develop strong written and verbal communication skills. Additional credentials such as a CMA (Certified Management Accountant) or CIA (Certified Internal Auditor) also distinguish you from other applicants.

Any extra certification or training you can obtain from reputable organizations is a plus. Specialized expertise in areas such as tax strategy, technology, or forensics, along with real-life experience, are strong selling points on a resume.

The American Institute of Certified Public Accountants (AICPA) strongly recommends that all accountants balance their technical business training with a classic liberal education. Course work in areas such as psychology could prove very beneficial, especially for accountants working in the public sector. Furthermore, as business is increasingly being performed electronically, accountants need to pick up as much knowledge as possible about computers and information systems, not only to understand their utility but also to assess their value to clients.

Requirements

The vast majority of accounting jobs require at least a bachelor’s degree from a four-year university. In fact, according to the AICPA, within the next few years most states will require 150 hours of university education—30 hours more than for a regular four-year degree—before you can even take the test to become a CPA. Currently 47 states have adopted the 150-hour requirement, while the remaining states/jurisdictions continue to work toward adoption. Some universities have even created specific programs designed to meet the 150-hour coursework requirement while working toward an advanced degree.

While college is almost always a requirement, your study field choices are beginning to broaden to cover current industry trends. With the popularity of using accounting software to balance the books increasing, firms are looking to business and finance majors to work in accounting departments. These degrees—and even a management of information systems degree—will also be helpful in landing a job as a management accountant or internal auditor. One insider even said, “If I could go back I would take more psychology courses. There’s a lot of emotion involved when dealing with clients at higher levels.”

And once that bachelor’s degree is out of the way, most accountants who go on to get a master’s degree don’t get a master’s of accounting (MA). These days a master’s of business administration (MBA) with a specialization in either finance or accounting is much more popular. And again, any education you pick up relating to technology and information systems is going to be a big ace to carry around in your pocket. Once you have school out of the way, the next step for many accountants is to get licensed. But in many states you need to work for about a year before you can take the CPA exam, even after 150 hours of undergraduate courses.

Even for accounting jobs that don’t require a CPA—such as internal auditing and management accounting—there are organizations that provide certification, such as the Institute of Internal Auditors or the Institute of Management Accountants.

Although the government does not regulate certification by these groups, many employers are starting to require such certification anyway, and having it can open many doors for you. Perhaps the only exception to the need for a formal education and a license are the accounting positions that fall under the category of bookkeeping. Here, there are many openings for people straight out of high school, or who have two-year degrees from community colleges or technical schools or four-year degrees in unrelated areas. As always, there’s a tradeoff: With less schooling, expect less pay and much less stimulating work.

Job Outlook

While accounting has never been considered a glamorous industry, it’s still one of the most popular undergraduate degrees. According to the National Association of Colleges and Employers’ 2007 Job Outlook Survey, accounting made the list of “top ten degrees in demand” at both the bachelor’s and master’s levels. Sarbox has created not only the need for more manpower on a given account, but large companies are often hiring multiple firms to perform audits to ensure everything is on the up-and-up. Likewise, internal audit departments are working overtime to comply with regulations. Then you have the inevitable circumstance of retiring baby boomers, which will mean the loss of many accountants working in senior positions within the industry. As a result, many firms can barely fill the need for talent, especially at the more senior levels. Reform measures and deregulation have increased demand for specialized accounting careers, and the number of professionals nearing retirement age guarantees that demand for new workers will only increase—starting now.

Firms have been hiring, for sure. According to a report from Ambition Finance entitled “Accounting and Finance Recruitment Market Trends and Salaries Report,” the Big Four accounting firms have had a larger graduate intake during the past 12 months than at any point during the past decade.

Far and away, the most public accounting positions available are in audit, with tax coming in second. The need for forensic accountants—specialized accountants who focus on digging into clients’ balance sheets to look for red flags—is growing as more business is conducted virtually and internationally. Demand for in-house corporate accounting and finance employees is expected to grow, along with jobs at government agencies.

Career Tracks

When most people think of accounting, they imagine a public accountant who has passed an exam to become a state-licensed certified public accountant, or CPA. Public accountants may work at independent public accounting firms, within government, or as part of a corporate financial team. CPAs at firms may file a client's taxes, or audit the client's financial information to ensure that it’s accurate. In-house accountants may oversee the company’s overall profit-and-loss (P&L) statement and look for ways to increase profitability, or they may work on ways to reduce the amount of taxes the company pays. Companies large and small generally have their own staff accountants to advise management and to perform internal audits and day-to-day bookkeeping. In addition to the private sector, city, county, state, and federal bureaucracies also employ a large number of accountants.

Public Accounting
By law, every business has to file paperwork with the government. The IRS, for example, requires year-end tax statements, and may require quarterly or monthly filing of taxes withheld from employee paychecks. The Securities and Exchange Commission, which regulates publicly traded companies, requires regular filings to monitor the finances of companies traded on the stock exchanges. Public accountants create and file such reports. While you can work at a public accounting firm without a license, at least one person on a given team of accountants needs to have a license and sign off on the final documents. Public accountants can have many responsibilities, but the field generally breaks down into two main functions: preparing a company's year-end tax statements, and external auditing. Public accountants can work at firms of varying size, from independent shops to the Big Four public accounting firms: PricewaterhouseCoopers, Deloitte, Ernst & Young, and KPMG.

In-House Accounting
Every company has internal accountants to set budgets, manage assets, and keep accurate track of payroll, accounts payable and receivable, and other financial matters. For medium-sized and large firms, the internal staff works closely with the public auditors at the fiscal year-end and with senior management and IT staff year round. Controllers and CFOs at smaller firms often enjoy even more influential roles in running the business. These jobs are just as demanding as those in public accounting. Most accountants in the private sector stay in one place, in one job, for extended periods. However, should you choose to move around, accounting skills are very portable.

Internal Auditors
When most people think of an audit, they think of an outside audit—a large accounting firm checking the corporate books on behalf of the shareholders. However, most large companies have an internal-audit group that regularly checks the company's accounting systems. Internal auditors perform the investigative and corrective work that ensures the external auditors don't find anything. The internal-audit group verifies that the data is both accurate and complete. Internal auditors also evaluate whether the corporate-accounting procedures are effective and universally followed. Finally, internal auditors introduce or revise procedures to improve efficiency and reduce costs.

Management Accountants
Management accountants mine information from a company's financial records. Instead of simply preparing tax statements or making sure a company's books are accurate, they advise management on critical business decisions and long-term strategic planning. Generally, such accountants have some prior experience in the business world or have worked as an accountant in a public accounting firm.

Government Accountants
Since government agencies receive their funding directly from taxes, there are always laws regulating how such money can be spent. Accountants working for the government make sure revenue is collected and expenditures are made in accordance with the law. The biggest federal employers are traditionally the Department of Defense, the General Accounting Office, the Securities and Exchange Commission, and the Internal Revenue Service. In addition to monitoring individual and corporate tax returns, government accountants at the state and federal levels formulate and administer budgets, track costs, and analyze publicly funded programs.

Bookkeepers and Auditing Clerks
Bookkeepers and auditing clerks keep track of a company's books. Using accounting software, they record, maintain, and verify the numerical data in a company's financial records. Unlike as in other branches of accounting, bookkeepers and auditing clerks do not analyze the financial information or offer financial advice to management. Since this line of work requires the least experience and no formal license or certification, it usually pays the least and can be the most tedious.

Independent
You can always hang out your own shingle, individually or in partnership with other accountants, especially once you have your CPA. There is plenty of business available preparing tax returns and advising small businesses. You also will need to be able to market your services and manage your business—time-consuming activities not everyone enjoys.

Compensation

According to the U.S. Bureau of Labor Statistics, the median compensation for accountants of all kinds is about $50,770, and 80 percent of accountants earn between $30,320 and $82,730.

According to the 2007 Guide to Accounting and Finance Salaries by financial recruitment firm Robert Half Finance & Accounting, entry-level professionals at small firms (those with up to $25 million in revenue) can anticipate earning about $38,000 to $44,000 per year. As you move up the seniority ladder, so will your compensation. As a senior manager or director, you’ll make between $82,000 and $120,000. Accountants at smaller firms may make a little less than their Big Four colleagues, depending on the firm and the clients. In general, those with advanced degrees earn around 10 percent more than others. Bookkeepers can expect to earn between $30,250 to $37,000 annually.

Accountants in industry are typically paid more than those at accounting firms, while those working in government typically earn a bit less. In the federal government, for instance, junior accountants and auditors start at between $24,000 and $31,000, and those in non-supervisory, supervisory, and managerial positions averaged about $75,000 in 2005, when figures were last released.

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