Accountants and auditors ensure that financial records are accurate and taxes are paid properly and on time. This is a great role for someone who is not only good at math equations but also seeing trends in the numbers. This is a good career move for an ENTJ personality type.
Accounting Career Basics
Accounting or accountancy is universally defined as “the measurement, processing, and communication of financial and non-financial information about economic entities such as businesses and corporations.”
Accounting, has also been dubbed the “language of business.” The discipline measures the results of an entity’s economic activities and conveys this information to a variety of users, including creditors, regulators, investors, and management. Accountants and financial management are the same thing.
Accounting can be divided into fields including
- financial accounting
- management accounting
- external auditing
- tax accounting
- cost accounting
Generally accepted accounting principles (GAAP) is set by various standard-setting organizations such as the Financial Accounting Standards Board (FASB) in the U.S.
A Short History of Accounting
Historians believe that the act of accounting is thousands of years old and can be traced to ancient civilizations such as Mesopotamia. It is a byproduct of innovations in writing, counting and money.
Double-entry bookkeeping was pioneered in the Jewish community of the early-medieval Middle East and was further refined in medieval Europe.
Accountants and Auditors have the following duties:
- Examine financial statements to ensure that they are accurate and comply with laws and regulations
- Compute taxes owed, prepare tax returns, and ensure that taxes are paid properly and on time
- Inspect account books and accounting systems for efficiency and use of accepted accounting procedures
- Organize and maintain financial records
- Assess financial operations and make best-practices recommendations to management
- Suggest ways to reduce costs, enhance revenues, and improve profits
1. They Have to Explain the Numbers to Non-math People
In addition to examining and preparing financial documentation, accountants and auditors must explain their findings. This includes preparing written reports and meeting face-to-face with organization managers and individual clients.
Many accountants and auditors specialize, depending on the particular organization that they work for. Some work for organizations that specialize in assurance services (improving the quality or context of information for decisionmakers) or risk management (determining the probability of a misstatement on financial documentation).
Other organizations specialize in specific industries, such as healthcare.
2. There is More Than One Type of Auditors and Accountants
Public accountants perform a broad range of accounting, auditing, tax, and consulting tasks. Their clients include corporations, governments, and individuals.
Public accountants work with financial documents that clients are required by law to disclose. These include tax forms and balance sheet statements that corporations must provide to potential investors.
For example, some public accountants concentrate on tax matters, advising corporations about the tax advantages of certain business decisions or preparing individual income tax returns.
Public accountants, many of whom are Certified Public Accountants (CPAs), generally have their own businesses or work for public accounting firms. Publicly traded companies are required to have CPAs sign documents they submit to the Securities and Exchange Commission (SEC), including annual and quarterly reports.
Some public accountants specialize in forensic accounting, investigating financial crimes such as securities fraud and embezzlement, bankruptcies and contract disputes, and other complex and potentially criminal financial transactions. Forensic accountants combine their knowledge of accounting and finance with law and investigative techniques to determine if an activity is illegal. Many forensic accountants work closely with law enforcement personnel and lawyers during investigations and often appear as expert witnesses during trials.
Management accountants, also called cost, managerial, industrial, corporate, or private accountants, record and analyze the financial information of the organizations for which they work. The information that management accountants prepare is intended for internal use by business managers, not by the general public.
Management accountants often work on budgeting and performance evaluation. They also may help organizations plan the cost of doing business. Some may work with financial managers on asset management, which involves planning and selecting financial investments such as stocks, bonds, and real estate.
Government accountants maintain and examine the records of government agencies and audit private businesses and individuals whose activities are subject to government regulations or taxation. Accountants employed by federal, state, and local governments ensure that revenues are received and spent in accordance with laws and regulations.
Internal auditors check for mismanagement of an organization’s funds. They identify ways to improve the processes for finding and eliminating waste and fraud. The practice of internal auditing is not regulated, but The Institute of Internal Auditors (IIA) provides generally accepted standards.
External auditors perform similar duties to internal auditors, but are employed by an outside organization, rather than the one they are auditing. They review clients’ financial statements and inform investors and authorities that the statements have been correctly prepared and reported.
Information technology auditors are internal auditors who review controls for their organization’s computer systems to ensure that the financial data comes from a reliable source.
3. Most Accountants and Auditors Work Full-time
Accountants and auditors held about 1.4 million jobs in 2018. The largest employers of accountants and auditors were as follows:
|Accounting, tax preparation, bookkeeping, and payroll services||24%|
|Finance and insurance||8%|
|Management of companies and enterprises||7%|
Most accountants and auditors work in offices, but some work from home. Although they complete much of their work alone, they sometimes work in teams with other accountants and auditors. Accountants and auditors may travel to their clients’ places of business.
Most accountants and auditors work full time. Some work more than 40 hours per week.
Longer periods of work are typical at certain times of the year, such as at the end of the budget year or during tax season
4. A Bachelor’s Degree is a Must, But a Master’s is Better
Most accountant and auditor positions require at least a bachelor’s degree in accounting or a related field. Some employers prefer to hire applicants who have a master’s degree, either in accounting or in business administration with a concentration in accounting.
A few universities and colleges offer specialized programs, such as a bachelor’s degree in internal auditing. In some cases, those with associate’s degrees, as well as bookkeepers and accounting clerks who meet the education and experience requirements set by their employers, get junior accounting positions and advance to accountant positions by showing their accounting skills on the job.
Many colleges help students gain practical experience through summer or part-time internships with public accounting or business firms.
5. CPAs Take More Classes and Have to Pass a 4-part Exam
Every accountant filing a report with the Securities and Exchange Commission (SEC) is required by law to be a Certified Public Accountant (CPA). Many other accountants choose to become a CPA to enhance their job prospects or to gain clients. Many employers will pay the costs associated with the CPA exam.
CPAs are licensed by their state’s Board of Accountancy. Becoming a CPA requires passing a national exam and meeting other state requirements. Almost all states require CPA candidates to complete 150 semester hours of college coursework to be licensed, which is 30 hours more than the usual 4-year bachelor’s degree. Many schools offer a 5-year combined bachelor’s and master’s degree to meet the 150-hour requirement, but a master’s degree is not required.
A few states allow a number of years of public accounting experience to substitute for a college degree.
All states use the four-part Uniform CPA Examination from the American Institute of Certified Public Accountants (AICPA). Candidates do not have to pass all four parts at once, but most states require that candidates pass all four parts within 18 months of passing their first part.
Almost all states require CPAs to take continuing education to keep their license.
Certification provides an advantage in the job market because it shows professional competence in a specialized field of accounting and auditing. Accountants and auditors seek certifications from a variety of professional societies. Some of the most common certifications are listed below:
The Institute of Management Accountants offers the Certified Management Accountant (CMA) to applicants who complete a bachelor’s degree. Applicants must have worked at least 2 years in management accounting, pass a two-part exam, agree to meet continuing education requirements, and comply with standards of professional conduct.
The exam covers areas such as financial statement analysis, working-capital policy, capital structure, valuation issues, and risk management.
6. Auditors Can Get Certified Too
The Institute of Internal Auditors (IIA) offers the Certified Internal Auditor (CIA) to graduates from accredited colleges and universities who have worked for 2 years as internal auditors and have passed a four-part exam.
The IIA also offers the Certified in Control Self-Assessment (CCSA), Certified Government Auditing Professional (CGAP), Certified Financial Services Auditor (CFSA), and Certification in Risk Management Assurance (CRMA) to those who pass the exams and meet educational and experience requirements.
ISACA offers the Certified Information Systems Auditor (CISA) to candidates who pass an exam and have 5 years of experience auditing information systems. Information systems experience, financial or operational auditing experience, or related college credit hours can be substituted for up to 3 years of experience in information systems auditing, control, or security.
For accountants with a CPA, the AICPA offers the option to receive any or all of the Accredited in Business Valuation (ABV), Certified Information Technology Professional (CITP), or Personal Financial Specialist (PFS) certifications.
The ABV requires passing a written exam, completion of at least six business valuation projects, and 75 hours of continuing education. The CITP requires 1,000 hours of business technology experience and 75 hours of continuing education.
Candidates for the PFS also must complete a certain amount of work experience and continuing education, and pass a written exam.
7. There are Many Career Paths for Those With Accounting or Auditing Skills
Entry-level public accountants can advance to senior positions with more responsibility. Those who excel may become supervisors, managers, or partners; open their own public accounting firm; or transfer to executive positions in management accounting or internal auditing in private firms.
Management accountants often start as cost accountants, junior internal auditors, or trainees for other accounting positions.
As they rise through the organization, they may advance to accounting manager, chief cost accountant, budget director, or manager of internal auditing. Some become controllers, treasurers, financial vice presidents, chief financial officers, or corporation presidents.
Public accountants, management accountants, and internal auditors can move from one aspect of accounting and auditing to another. Public accountants often move into management accounting or internal auditing.
Management accountants may become internal auditors, and internal auditors may become management accountants. However, it is less common for management accountants or internal auditors to move into public accounting.
8. Superpowers are Finding Solutions and Math
Analytical skills. Accountants and auditors must be able to identify issues in documentation and suggest solutions.
For example, public accountants use analytical skills in their work to minimize tax liability, and internal auditors use these skills to detect fraudulent use of funds.
Communication skills. Accountants and auditors must be able to listen carefully to facts and concerns from clients, managers, and others.
They must also be able to discuss the results of their work in both meetings and written reports.
Detail-oriented. Accountants and auditors must pay attention to detail when compiling and examining documentation.
Math skills. Accountants and auditors must be able to analyze, compare, and interpret facts and figures, although complex math skills are not necessary.
Organizational skills. Strong organizational skills are important for accountants and auditors, who often work with a range of financial documents for a variety of clients.
9. Those Who Track the Money, Make Good Money
The median annual wage for accountants and auditors was $70,500 in May 2018. The lowest 10 percent earned less than $43,650, and the highest earned more than $122,840.
In May 2018, the median annual wages for accountants and auditors in the top industries in which they worked were as follows:
|Finance and insurance||$74,690|
|Management of companies and enterprises||73,180|
|Accounting, tax preparation, bookkeeping, and payroll services||70,640|
10. Jobs Are Increasing, But Tied to the Economy
Employment of accountants and auditors is projected to grow 6 percent from 2018 to 2028, about as fast as the average for all occupations. Globalization, a growing economy, and a complex tax and regulatory environment are expected to continue to lead to strong demand for accountants and auditors.
In general, employment growth of accountants and auditors is expected to be closely tied to the health of the overall economy.
The continued globalization of business may lead to increased demand for accounting expertise and services related to international trade and international mergers and acquisitions.
Technological change is expected to affect the role of accountants over the next 10 years. As platforms such as cloud computing become more widespread, some routine accounting tasks may become automated.
10. These Orgs Have More Info on Accountants and Auditors
Global Academy of Finance and Management