✓ 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.
IRS agents examine business and individual tax returns to assure com- pliance with Internal Revenue Tax Code. One fantastic advantage to working for the IRS is its flexible work options, which include working full-time out of your home.
Crystal Ball Time: Looking into the Future of Financial Accounting
Financial accountant positions are hot and should remain so for quite a while. The U.S. government Bureau of Labor Statistics 2010–2011 Occupational Outlook Handbook rates accounting and auditing as a high growth field, with growth increasing at a greater rate than the U.S. popula- tion. (That’s definitely a positive!) Financial accountants and auditors, espe- cially those with CPA certification or MBA degrees, should have the best prospects for the anticipated 22 percent increase in projected accounting employment from 2008 to 2018.
One of the big reasons that financial accountants are now — and are pro- jected to be — in such high demand is that business school enrollments in accounting dropped in prior years. (More people have opted to major in com- puter and information technology instead.) The supply of newly graduated accountants has not been great enough to meet the demand.
Wondering about the money? As of this writing, the most current year for which there is data (2008) shows the median annual earnings of accountants and auditors to be $59,430. (Keep in mind that this figure includes book - keepers, who tend to earn less. The top 10 percent of accountants and auditors earned more than $100,000.) As of July 2009, job seekers who were straight out of school with bachelor’s degrees were entertaining starting offers at an aver- age of $48,993, and MBA candidates were coming in slightly higher at $49,786.
If the pay sounds good to you, keep reading. Next I explain how changes in the accounting profession and the business world in general will affect the work you do in the future.
Examining the evolution of financial accounting
In addition to the shift in student educational career paths, new business startups are on the rise due to layoffs in the corporate world. Gone are the days when you would be assured of a job with a major corporation from
graduation to retirement. The small business has now become the backbone of our economy. Small businesses need financial accountants to help with business startup, financial statement preparation, budgeting, and tax return preparation.
Additionally, accounting scandals in the past decade have brought a change in financial laws and regulations. Enhanced regulation has increased the demand for financial accountants and auditors. For more information about this topic, see Chapter 4 — particularly the sections on the Securities and Exchange Commission (SEC) and the Sarbanes-Oxley Act of 2002 (SOX). And as I discuss earlier in this chapter, financial shenanigans have also opened up new, interesting accounting specialties such as forensic accounting and fraud accounting. (See Chapter 21 for a quick rundown of ten common financial shenanigans.)
Factoring in the changing nature of business
The circumstances under which businesses operate have changed dramati- cally in the last couple decades. The combination of the introduction of e-commerce in the late 1990s and technological advances that ushered in business-to-business (B2B) and business-to-consumer (B2C) commerce allow businesses to connect electronically with one another and with their custom- ers. The increasing number of e-commerce business startups has boosted the need for financial accountants who can audit through the computer (tracing transactions from their original input into a computer system to their even- tual resolution). Associated with this need is the demand for accountants who understand how to account for e-business income and expenses.
I have good news for computer geeks who are also interested in accounting! In the past, businesses produced paper trails that auditors, investors, and other interested parties could follow to find clues when examining the financial statements. But these days, those trails are increasingly electronic. Electronic data can be manipulated when a company’s internal controls are lacking, and the data is more difficult to track down than a piece of paper in a file cabinet.
So financial accountants who are savvy in computer forensics are — and will continue to be — in high demand. An example of computer forensics is know- ing how to retrieve password-protected data from a CD or DVD.
Thanks to technological advances, more small businesses are doing business globally. Thus, financial accountants and auditors with knowledge of inter- national accounting and of standards on ethics and auditing used by other countries are in great demand. Since the early 1990s, there has been serious
talk about harmonizing U.S. accounting and auditing standards with other countries’ standards. That change is inevitable, and all financial accountants should have at least a basic understanding of the subject. For information about international standards, visit the International Auditing and Assurance Standards Board (IAASB) Web site at www.ifac.org/iaasb.
As the number of multinational corporations climbs, there is also growing interest in International Financial Reporting Standards (IFRS), which use judgment-based accounting for transactions such as figuring the fair market value of assets and liabilities.
Of course, no one has a crystal ball. But the data indicate that if you’re inter- ested in making a career in financial accounting, you should have great employ- ment prospects — especially if you keep your technology skills up to date.