Whether you are building a new career path or looking to make a change, accounting is a field that is always in need of professionals. According to the U.S. Bureau of Labor Statistics, job rates for accountants and auditors are increasing at a faster than normal rate. By 2030, there should be almost 100,000 more jobs available in this vital field. If you are considering entering this industry, it’s essential to understand the differences between public vs. private accounting. Where you work in the public or private sector is one of the most critical choices anyone planning an accounting career will make. There are aspects of each that vary, including where you can work, the certifications necessary to practice, and the overall work environment. Before you apply to get your degree, take a moment to learn more about both of these critical financial roles. Those who work in public accounting run a business that offers accounting services to other companies. There are routine tasks that public accountants typically perform for their clients: Many accountants prepare financial statements for companies to use for stockholders, the IRS, creditors, and other stakeholders. Financial statements are a set of high-level reports that summarize an organization's financial status, income statements, balance sheets, and cash flow statements. Businesses hire a public accounting firm to audit financial statements produced by another accountant. The goal is to check the information on the statement for completeness and accuracy. A public accountant may also prepare all tax documents on behalf of a business. By having an accountant do the tax return forms, the business gets some protection in an audit.What is Public Accounting?
Preparation Of Financial Statements
Financial Statement Audit
Tax Return Preparation
Financial Consulting
The work of a financial consultant isn’t explicitly related to preparing financial records. A financial consultant working in public accounting offers advice on a variety of topics, including:
- Capital investments
- Large equipment purchases such as computer systems
- Auditing controls
- Litigation supports
- Financial autopsies and reconstruction
Public Company Auditing
Those who do auditing for public companies must first meet specific requirements and register with the Public Company Accounting Oversight Board. Larger accounting firms typically do public company auditing.
What is Private Accounting?
Private accountants or industry accountants work internally. Companies hire them to work exclusively for their interests. They may hold high-level jobs such as CEO or entry-level positions as a member of the accounting department.
Private accountants may perform internal audits, verify billing, and set up internal accounting systems. They run accounts payable (AP), accounts receivable (AR), and general ledger (GL). They may work independently or oversee other employees, such as coworkers, bookkeepers, and accounting clerks.
Five Key Differences Between Public and Private Accounting
Both of these financial roles involve working with financial statements and doing audits. They work on different sides of the fence, though. If you are considering entering this field, then it’s essential to understand the difference.
1. Job Duties
Public accountants focus primarily on financial documents like statements and tax returns. They review these critical documents prior to their release to the public.
A private accountant works internally to prepare the information that goes into these documents and also does the following:
- Creates budgets
- Develops and manages audit trails
- Evaluates revenue and fiscal performance
- Manages accounting personnel
- Reviews journal entries
- Does account reconciliations
These are all tasks a public accountant would not do. They might review them during an external audit, but they are not directly involved in the company's day-to-day functioning.
2. Education/Training
For both public and private accountant roles, the main requirement is a bachelor’s degree in accounting. With additional education, public and private accountants can pursue a CPA license, which allows them to file reports with the Securities and Exchange Commission (SEC). Continuing education throughout your career is required to maintain a CPA license.
There are also certifications available that might open up private accounting job opportunities, such as Certified Internal Auditor (CIA) and Certified Management Accountant (CMA).
3. Career Paths
The most significant difference in public vs. private accounting is that a private accountant works for another company. A public accountant might work for a firm but could also work freelance or own their own business.
Both public and private accountants start in entry-level positions. For those in public accounting, the senior position would be as a business owner or firm executive. For a private accountant, that top role would be Chief Financial Officer (CFO).
4. Work Environment
The work environment is another significant difference between public and private accounting. The busy time of year for public accountants is when taxes are due.
For private accountants, on the other hand, the busiest times are likely at the end of each month and when the fiscal year ends. Both could potentially be busy during audits by a government agency or public accountant.
5. Character and Personality Traits
Public accountants work face-to-face with a wide variety of clients, so they need to have good communication skills. A meticulous attention to detail and respect for the privacy of their clients is vital for both public and private accountants. Even small mistakes can have big consequences for clients and the accountant could face sanctions.
Private accountants must also have strong leadership abilities and be able to hire and fire others. If a public accountant owns their own business, these would be equally valuable characteristics.
The Pros and Cons of Public and Private Accounting Jobs
As with any profession, there is plenty to love about both roles, but there are some downsides, too.
Pros of Public Accounting
Public accountants may have greater opportunities for advancement, and they may arise sooner. That would include, of course, the chance to run their own firm. They may also have more opportunities for diversity in their work, including meeting new people and the chance to work in a variety of industries. For instance, you might focus on an industry of particular interest, such as fashion or shopping. You could be a tax accountant or focus on real estate.
Cons of Public Accounting
The downside to public accounting can be the long hours sometimes required to do the work, especially during tax season. They often must market their firm to new clients and may have to travel extensively. As business owners, they must deal with unexpected issues that come up, such as looking for an office or replacing equipment. They may also be held responsible for problems with their clients’ books, such as tax audits.
Pros of Private Accounting
In general, the work environment of a private accountant should be less stressful than that of a public one since they work for single companies. Private accountants are not running their own businesses. They do not have to worry about maintaining a business address or purchasing their equipment. They have a steady job with plenty of benefits.
Cons of Private Accounting
The work-life of a private accountant may be somewhat mundane. They spend most of their time crunching numbers for their employer. They may have to wait longer for advancement opportunities, too.
If you are considering a career in either form of accounting, an excellent place to start is by earning your accounting bachelor’s degree at Bryant & Stratton College.
