However, while accountants do need to have solid math skills, the job is much more. Accounting today is a blend of analysis, problem solving and detective work; to do the job right you must be able to communicate effectively and deal with people, not just numbers. As such, the job's tasks are much more diverse than many people assume. Plus, demand for accountants and auditors is expected to grow by 18% between 2006 and 2016, which is considerably faster than the average for all occupations according to the U.S. Bureau of Labor Statistics (BLS).
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Think a career in accounting or auditing is something you'd like to consider? Read on to find out more about what the job entails and how you can get into it. (To learn the history of the accounting profession, check out The Rise Of The Modern-Day Bean Counter.)
The Daily Grind
Accountants and auditors work for companies, individual clients and governments to ensure that firms run efficiently, records are kept accurately and taxes are paid. Accountants can also analyze budgets and provide some financial planning services as well as information technology consulting and limited legal services.
There are four major fields of accounting and auditing. The kind of work these professionals do is determined, in part, by what field of work they choose:
- Management Accountants - Management accountants tend to work for companies as part of teams. They provide company executives with the information and analysis they need to make decisions. Executives also use this information to prepare the financial reports that are distributed to shareholders, creditors, regulatory agencies and the Internal Revenue Service (IRS).
- Government Accountants/Auditors - Accountants are employed by federal, state and local governments for a variety of reasons. They do the books for government agencies as well as audit businesses and individuals who are required to conform to government regulations or pay tax. Accountants who work for the federal government may be employed by the IRS, and may be responsible for auditing branches of government organizations to ensure financial objectives are being met.
- Public Accountants - This is one of the broadest accounting fields, as public accountants provide accounting, tax, auditing and consulting services for governments, corporations, nonprofits and individuals. Many public accountants are Certified Public Accountants (CPAs), but they may concentrate their efforts on a few services, such as tax preparation for businesses and individuals or auditing financial statements. (For related reading on this career, see CPA, CFA Or CFP - Pick Your Abbreviation Carefully.)
- Internal Auditors - Internal auditors act as detectives. They work to examine the internal controls of an organization and attempt to sniff out and prevent inaccuracy, mismanagement and fraud.
Accounting tends to be a typical nine-to-five office job, although longer hours are common during busy periods, such as tax time. According to the 2006 statistics from the BLS, about 21% of accountants worked for accounting, tax preparation, bookkeeping and payroll service firms; 10% were self-employed; and the rest worked for private industry and government.
Unique Career Paths
If you're looking for a more unique career path, the American Institute of Certified Public Accountants provides some exciting suggestions:
- Forensic Accounting - Uncovering financial fraud and putting the perpetrators in prison is all in a day's work for a forensic accountant. Companies lose billions each year to fraud, making this sector one of the fastest growing. (To read about high-profile cases of financial fraud, see The Ghouls And Monsters On Wall Street.)
- Environmental Accounting - As the green movement grows in business, environmental accountants are sought to analyze the costs of pollution prevention for manufacturing and compare it against other alternatives, including missed tax credits, fines and bad relations with neighbors. (For more on this, check out the Green Investing Feature.)
- Showbiz Accounting - If you're lucky, you could end up providing financial services to studios, productions companies, artists and technicians. This job would deal with the traditional areas of tax, audit and financial analysis, but working in Hollywood could add that touch of glamor that some people seek.
- Trustee In Bankruptcy - These accountants are appointed by the U.S. Department of Justice in bankruptcy court proceedings. They are appointed in all Chapter 7, 12 and 13 bankruptcy cases to ensure that unsecured creditors (such as a corporation's shareholders) are represented so that they can receive a portion of the proceeds of corporate liquidation - if there's anything left over. (To learn how they autopsy companies that go belly up, see An Overview Of Corporate Bankruptcy.)
Walking the Walk
If you want to work as an accountant, a bachelor's degree in accounting or a related field is generally a must, although junior colleges and business correspondence schools offer diplomas that may allow graduates to work as junior accountants and eventually advance with experience.
In order to file any report with the Securities and Exchange Commission (SEC), an accountant must become a CPA. This can be accomplished by meeting your state's requirements and passing a difficult national exam. Almost all states require that a CPA candidate have a college degree as well as an additional 30 hours of college coursework. As such, accounting majors should get to know their state's requirements for CPA candidacy and ensure that they complete the correct number of college hours while they can.
The four-part CPA exam, prepared by the American Institute of Certified Public Accountants (AICPA), is very difficult. According to the BLS, less than 50% of those who sit for the exam pass all four sections on their first try.
Accountants can also increase their skills (and perhaps their salaries) by getting other certifications such as the Certified Management Accountant (CMA), Certified Information Systems Auditor (CISA), Accredited Business Accountant (ABA) or Certified Fraud Examiner (CFE) designations, among several others. These more specific certifications can be obtained in addition to or instead of the CPA designation and can provide graduates with an edge in the job market. (To read about these certifications and others, see The Alphabet Soup Of Financial Certifications and Financial Designations Aren't All Created Equal.)
Show Me the Money
According to 2006 statistics by the BLS, the median annual earnings for accountants in 2006 was $54,630; the top 10% earned more than $94,000, while the bottom 10% earned less than $34,000. Where you fall will depend on the state you work in, your experience and certifications and the type of job you choose. (For the most up-to-date wage statistics, see the Occupational and Employment Statistics provided by the Bureau of Labor Statistics.)
Do You Have What It Takes?
There's a lot more to accounting than just crunching numbers, and the geeky accountant who does nothing but hammer away on his adding machine is virtually a thing of the past. These days, accounting is very team-oriented. In your first job, you're likely to start as a junior member of a team responsible for, say, preparing financial statements, or auditing a particular account or a client's financial statements. If you're a public accountant, you may also spend a significant amount of time face-to-face with clients, providing individualized solutions to their unique tax and accounting issues. The ability to communicate and cooperate with other people is a must.
You may not need to be a math whiz, but if you're not extremely skilled with computers, accounting's not for you. Most of your work will be done electronically, and firms are always implementing new electronic systems for submitting and preparing financial statements.
If you have a laid-back personality and tend to let things slide, stay away from this career! Accountants must be conscientious and should tend toward perfectionism. After all, you could be making decisions worth millions of dollars, and if your conclusions aren't 100% accurate, there could be very serious repercussions.
Accounting is a diverse career with virtually unlimited options. If you have the right set of skills for the job, you can find a way to employ them that also suits your tastes, personal strengths and personality.
To read about what clients may be looking for in an accountant, read Crunch Numbers To Find The Ideal Accountant.