Are you wondering whether financial account- ing would be a good fit for you? Good accoun- tants tend to have the following characteristics and personality traits, which are vital to enjoy- ing the job:
✓ The desire to work independently: You must be able to work independently to suc- ceed as a financial accountant. Even audi- tors who work in teams divide the tasks up and work independently on different pieces of the accounting puzzle, bringing every- thing together at the end.
✓ A love for research, detail, and logic:
Accountants do a tremendous amount of research and use this research to make decisions. Attention to detail is very impor- tant. There is also a lot of what I refer to as circular logic in accounting: “If this is true, then do that,” but “If that is true, do this.” Accountants need to be logical think- ers to work their way through tax code and accounting pronouncements.
✓ Great communication skills: As a financial accountant, you must explain your deci- sions and results with other employees, clients, and outside users. Communication skills, both oral and written, are very impor- tant. The people with whom you communi- cate will have different backgrounds, and many of them may have zero knowledge
of accounting, so you need to be able to explain your work clearly.
✓ Decent computer skills: Reasonable com- puter software skills and the ability to learn software programs are also a must.
The good news is that after you under- stand one accounting software package, you should have any easy time picking up other accounting software packages.
Some employers use proprietary software (which is written for their own exclusive use), so specific training is required. Even if they don’t use proprietary software, most employers realize that new employees need to be trained to use the company’s preferred boxed software: the kind pur- chased off the shelf at a store.
✓ The willingness to listen and learn: The ability to surface learn is crucial. Here’s what I mean: If you are doing the accounting for a surf shop, you do not need to be up to speed on every nuance of running the business — you don’t even need to be able to swim! But to do a professional, competent job, you must know basic industry facts. (The average markup on a bikini is 500 percent, while surfboards are marked up only minimally.) Without the basic knowledge of the way a company does its business, you will not know if your facts and figures make sense.
court. I’ve worked full-time, part-time, out of my house, in an office, and on the road. One thing I can say about being a financial accountant is that it’s never boring!
Public accounting: Working for yourself or a CPA firm
I’ve been self-employed for the bulk of my financial accounting career. I started by taking a part-time bookkeeping gig after the birth of my son.
Then, after my husband died, I had a small child to support and needed an extremely flexible schedule. That circumstance led me to build an account- ing practice of my own. I know from experience that self-employed financial accountants have many career options available to them.
But not everyone seeks the flexibility of self-employment. If you want the challenge of working for many clients (which is the nature of public account- ing) but desire the stability of working for an employer, you may prefer to focus on jobs at CPA firms. These firms range in size from the Big Four (KPMG, Ernst & Young, PricewaterhouseCoopers, and Deloitte) to regional CPA firms, such as Grant Thornton and a plethora of others.
Here are a few examples of the work you can do as a public accountant:
✓ Financial statement preparation: Many small and mid-sized businesses require help preparing their financial statements. An accountant is con- tracted to do a compilation, which consists of using client source docu- ments (such as bank statements, cleared checks, and invoices) to show revenue, expenses, costs, gains, and losses on the income statement, balance sheet, and statement of cash flows.
Most financial accountants who prepare financial statements also do the year-end tax returns for the same companies, which can be very lucrative. Being a CPA is not a requirement to prepare compilations.
However, good people skills and patience are required. (In my experi- ence, compilation work requires quite a bit of client handholding.) ✓ Forensic accounting: The word forensic means that this type of account-
ing relates to legal proceedings or testimony. The forensic accountant may be hired by a company that plans to pursue fraud charges against an employee, a lawyer in a divorce case who suspects a spouse is hiding assets, or anyone else involved in litigation. The accountant gathers facts, considers the circumstances, and applies relevant local, state, or federal law to come to an opinion about what a business or individual has done. Then, he may be asked to offer court testimony in the legal proceedings.
In my experience, the forensic accountant follows one simple rule to per- form this job: follow the money. From the most complicated engagement (murder for profit) to the most simple (a spouse has a separate bank account with the bank statements going to a personal post office box), if you follow the money you eventually arrive at the truth.
In most states, you don’t have to be a CPA to hang out your shingle as a forensic accountant. However, in order to establish your authority, I highly recommend pursuing that certification.
✓ Assurance services: You must be a licensed CPA to work in this field, which includes all types of auditing services. For example, all business owners and managers want to know how well their businesses are doing.
That’s where you come in. Because you’re an outsider, you can take a step back and cast a fresh, independent eye on the way a company is doing business. You can give company management a firm foundation upon which to base any needed changes.
A subset of assurance is attestation services, meaning the CPA issues written documents expressing her conclusion about the reliability of a written assertion that is the responsibility of another party. The number of topics you may focus on during an attestation engagement is pretty much limitless. For example, you may conduct a breakeven point analy- sis, which requires figuring out how much revenue the client has to bring in to cover expenses.
Public accountants also conduct audits, which means they gather and judge evidence to issue an opinion on the effectiveness of a com- pany’s internal controls: policies and procedures set in place to provide guidelines on how employees should do their jobs. CPAs also conduct financial statement audits, issuing opinions on whether the financial statements under audit are materially correct.
Private accounting
Not every accountant has multiple business clients. Someone who does accounting work for a single company is called a private or industry accoun- tant. Quite a few private/industry accounting jobs are available. Depending on the size of the business, the job can be tailored to a specific task or cover the whole extravaganza from start to finish — from recording accounting trans- actions to preparing financial statements.
Here are a few examples of the types of private accounting jobs available to financial accountants. Being a CPA may not be a requirement but can cer- tainly be helpful — ditto earning an MBA:
✓ Controller: A controller is the chief accounting officer of a business entity and is responsible for both financial and managerial accounting functions. In a small business, a controller is often just a bookkeeper with a better title.
In a larger corporation, the controller oversees all other accounting departments and is responsible for reporting the results of financial operations to the officers of the corporation and to the board of direc- tors. A CPA license is not necessary for this position, nor is an upper- level degree in accounting, but both are certainly assets for people in this position.
✓ Departmental accountant: In this position, you cover the gamut of finan- cial accounting tasks; you could handle accounts payable or receivables, account for company assets, or handle U.S. Securities and Exchange Commission (SEC) reporting. Departmental accountants also take care of cash disbursements and receipts.
This position can be managerial because this person is responsible for such tasks as the monthly closing of the financial statements and con- solidation of domestic and international subsidiaries, coordination and support of annual and interim audits, and tax compliance. Departmental accountants interact frequently with senior management and play a critical supporting role in business processes, customer quotes and proposals, and management analyses pertaining to the effectiveness and efficiency of business operations.
✓ Bookkeeper: A bookkeeper is a para-professional who works in account- ing. No specific education, experience, or licensing is required for this designation. Many bookkeepers learn accounting by doing; they start at a business in the accounts payable or accounts receivable department and then fill the gaps in their accounting knowledge by taking account- ing classes after the fact.
Bookkeepers record the daily transactions in the accounting cycle, and they carry out routine tasks and calculations such as bill paying and bank statement reconciliation. In small businesses, the bookkeeper also may double as the receptionist and runner. Depending on their knowl- edge base, bookkeepers sometimes also prepare the initial financial statements, which are then reviewed and adjusted by an independent CPA hired by the business.
Nonprofit and governmental accounting
Nonbusiness organizations are those lacking a profit motive. Your two biggies are not-for-profit agencies and governmental agencies. Here is a quick look at the accounting work in each:
✓ Not-for-profit accountants work for organizations that are run for the public good — not because of any profit motive. In fact, not-for-profits render goods and services to the community regardless of whether the costs they incur to provide the goods or services will ever be recouped from the recipients. For example, patients of a not-for-profit medical office pay only a fraction of the real cost of providing the medical care.
These types of organizations include hospitals, schools, religious organi- zations, and charitable agencies.
✓ Governmental accountants work for city, county, state, and federal government agencies. Their job is similar to that of the not-for-profit accountant in that there is no profit motive. The motive comes from providing services to a community, city, state, or nation. Governmental accountants prepare financial statements that are open to the general public. The financial statements must show accountability to citizens while pursuing the goals of efficiency and effectiveness. Some financial statements are also used by external users (see Chapter 1) to decide whether to invest in a municipality’s bond issuances (see Chapter 8).
Another good financial accounting gig is working on government audits for your local, state, or federal government. Two big federal employ- ers are the Government Accountability Office (GAO) and the Internal Revenue Service (IRS). Although governmental auditing jobs require that you’ve completed a minimum number of accounting and auditing classes, a CPA license is not a requirement for any entry-level jobs or most upper-level ones.
GAO auditors generally conduct compliance and operational audits.
However, if you want a little more action, the GAO also hires criminal auditors who conduct investigations of alleged or suspected violations of criminal laws, particularly white-collar crimes that involve fraud, waste, abuse, and government corruption.