Have you ever wondered what goes on behind the scenes in the finance world? Public accounting is where it all begins. This field provides critical services that keep companies running smoothly and transparently. Whether you’re considering a career in public accounting, are already on your way to becoming a Certified Public Accountant (CPA), or are simply curious about the role accountants play in our economy, this guide is for you.
Public accounting is not just about crunching numbers but ensuring the integrity and accuracy of financial information. Accountants in this field perform various services, including auditing, tax preparation, and consulting. They work with clients, from small businesses to large corporations, helping them comply with regulations, manage their finances effectively, and make informed decisions.
In this comprehensive guide, we’ll cover public accounting in detail, including the qualifications and skills needed to excel, and the career opportunities available.
What is Public Accounting?
Public accounting is a branch of accounting where professionals provide services to individuals, businesses, and government entities. Unlike private accountants, who work within a single organization, public accountants serve multiple clients, offering their expertise across different industries and sectors. The core services provided by public accountants typically include:
- Auditing
This involves examining financial statements to ensure they are accurate and comply with relevant laws and regulations. Auditors provide an independent assessment, which enhances the credibility of financial information.
- Tax Preparation and Planning
Public accountants help individuals and businesses prepare and file their tax returns. They also offer strategic tax planning advice to minimize tax liabilities and ensure compliance with tax laws.
Also Read: All About Becoming a Tax Preparer
- Consulting
Public accountants provide expert advice on various financial matters, from improving operational efficiency to strategic planning and risk management. Their insights help clients make informed business decisions.
- Advisory Services
These services can include financial planning, investment advice, and other specialized services tailored to meet the unique needs of clients.
Private Vs. Public Accounting: Comparison
| Parameter | Public Accounting | Private Accounting |
| Nature of Work | – Works for accounting firms – Provides services to multiple clients – Involves auditing, tax preparation, consulting, and advisory services – Broad exposure to various industries |
– Works within a single organization – Manages internal financial processes (budgeting, financial reporting, internal auditing) – Focuses on the financial health of the employer – Detailed insights for business improvement |
| Career Path and Growth | – Starts at entry level in public accounting firms – Advances to senior roles (senior accountant, manager, partner) – Often requires CPA certification – Diverse experience beneficial for career growth |
– Starts as staff or junior accountant within a corporation – Advances to higher positions (senior accountant, accounting manager, controller, CFO)– More linear career path – Opportunities for specialization within the finance department |
| Work Environment and Schedule | – Fast-paced and varied – Long hours, especially during tax season or audits– May involve travel to client sites |
– Stable and predictable – Regular office hours– Fewer seasonal workload fluctuations |
| Compensation and Benefits | – Competitive salaries – Benefits include bonuses, professional development, rapid advancement potential |
– Consistent and competitive salaries – Benefits include health insurance, retirement plans, performance bonuses – More stability and work-life balance |
| Skill Development | – Broad range of skills – Exposure to various clients and industries – Expertise in different accounting practices and regulatory requirements |
– In-depth knowledge of the company’s financial operations – Expertise in specific financial processes and systems – Leads to specialized roles within the organization |
Skills Required in the Public Accounting Field
- A deep understanding of accounting principles and practices, including familiarity with Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS)
- Proficiency in auditing techniques and standards, including planning and conducting audits, evaluating financial statements, and ensuring compliance with regulations
- Knowledge of federal, state, and local tax laws
- Strong analytical skills to interpret financial data, identify trends, and make informed recommendations
- Excellent verbal and written communication skills to effectively convey complex financial information to clients and stakeholders
- Ability to maintain strong relationships with clients
- Proficiency in accounting software like QuickBooks, Sage, etc. for managing financial data and processes
- Familiarity with data analysis tools such as Excel, SQL, and various data visualization software to analyze and present financial data
Career Paths in the Public Accounting Field
Entry-Level Positions
- Staff accountants who perform basic accounting tasks, such as preparing financial statements, reconciling accounts, and assisting with audits and tax returns
- Audit associates who assist in examining financial records and ensuring compliance with accounting standards and regulations
- Tax associate who prepares and files tax returns for individuals and businesses
Mid-Level Positions
- Senior accountants who take on more complex accounting tasks for financial reporting, analysis, and ensuring the accuracy of financial data
- Senior auditors who lead audit engagements, manage audit teams, and communicate findings to clients
- Consulting associates who provide advisory services to clients
Leadership Positions
- Partners who own a portion of the firm and share in its profits; responsible for overall firm management, business development, client retention, and ensuring the quality and integrity of services provided
- Chief Financial Officers (CFOs) who oversee all financial activities of the organization, including financial planning, risk management, and investor relations.
Specialization Paths
- Forensic accountants who specialize in investigating financial fraud, conducting audits, and providing litigation support
- Financial analysts focusing on analyzing financial data, creating financial models, and providing investment advice
How to Become a CPA?
Here’s a step-by-step guide to becoming a CPA:
1. Meet Educational Requirements
To qualify for the CPA exam, you must meet specific educational criteria, which typically include the following:
- Obtain a bachelor’s degree in accounting or a related field from an accredited institution. Some states may require a degree in business administration with a concentration in accounting.
- Most states require at least 150 semester hours of college coursework. This often means completing additional credits beyond a standard bachelor’s degree, which can be achieved through a master’s program or additional undergraduate courses.
2. Gain Relevant Work Experience
Practical experience is required for CPA certification. Requirements vary by state but generally include:
- Obtain 1-2 years of accounting experience under the supervision of a licensed CPA. The experience should cover a range of accounting functions, such as auditing, tax preparation, and financial analysis.
- Maintain detailed records of your work experience, as you will need to provide this information when applying for the CPA license.
3. Pass the Uniform CPA Examination
The CPA exam is a comprehensive test that assesses your knowledge and skills in accounting. The exam consists of four sections:
- Auditing and Attestation (AUD): Covers auditing procedures, standards, and ethics.
- Business Environment and Concepts (BEC): Includes business concepts, corporate governance, and economic principles.
- Financial Accounting and Reporting (FAR): Focuses on financial accounting and reporting standards for various entities.
- Regulation (REG): Encompasses taxation, ethics, and business law.
To prepare for the exam:
- Study Materials: Utilize CPA review courses, textbooks, and practice exams. Many candidates enroll in professional review programs to help them study effectively.
- Scheduling: The CPA exam is administered throughout the year at designated testing centers. Schedule your exam sections strategically to allow adequate preparation time for each.
4. Apply for a CPA License
After passing the CPA exam and meeting the work experience requirements, you can apply for your CPA license. The application process involves:
- Submitting your application to the state board of accountancy where you intend to be licensed
- Passing ethics exam, which tests your understanding of ethical standards and practices in the accounting profession
Recommended Read: How to Get CPA License?
5. Maintain Your CPA License
Once you have obtained your CPA license, maintaining it involves ongoing professional development and adherence to ethical standards:
- Complete a certain number of CPE hours each year to stay current with industry developments and maintain your knowledge and skills.
- Renew your CPA license periodically, as required by your state board of accountancy. Renewal typically involves submitting proof of CPE hours and paying a renewal fee.
Conclusion
A career in public accounting can open up a world of opportunities, from diverse career paths and specializations to the prestigious CPA designation. You can set yourself up for success by understanding the distinct aspects of public accounting, honing the necessary skills, and following the steps to become a CPA. Whether you choose to work in auditing, tax, consulting, or another area, public accounting offers a rewarding and challenging professional journey.
