For many people, the distinction between public accountants and accountants in the private sector is unclear. Work environment may be one difference between these two categories of accounting professionals. The intended audience for whom accounting professionals prepare financial information is an even bigger factor. Knowing the differences between public and private accounting is essential for choosing the right career path.
Certified Public Accountants
A public accountant works with clients, either as a self-employed contractor or with an accounting firm. The clients can include public organizations and government agencies, but they may also include private citizens and corporations, both privately owned and publicly traded, according to the United States Bureau of Labor Statistics (BLS). The use of the word public in the job title means that the accountant provides services to, and specifically prepares financial documents for members of the public rather than as an in-house staff member of a single business or organization.
For public accountants, the best career opportunities may be available only to those who obtain a license as a certified public accountant, or CPA. Without this license, accountants are not authorized to sign off on reports to the Securities and Exchange Commission, which can limit their job prospects. Becoming a CPA requires five years of study in a college accounting degree program as well as completion of a four-part accounting exam.
A typical day for a CPA can include various responsibilities from compiling tax documents and completing tax forms to providing consulting services to help businesses boost productivity and efficiency, often with a goal to attract investors. Some public accountants work as external auditors, in which they verify the accuracy of an outside company’s financial records for a government agency or investor information. Professional tax preparers are often CPAs.
Accounting in the Private Sector
A major difference between public accounting and private sector accounting is that private accountants maintain records for internal use within a company rather than for government, investor, citizen or public use. Private accountants often work in-house within a business and deliver their reports directly to company management. They handle a range of financial responsibilities, from managing budgets to overseeing any investments the company may make. Private sector accountants may also benefit from holding a CPA license, especially if they hope to advance to a high-level position in the future. Private accountants also go by numerous other job titles, including managerial accountant, management accountant, cost accountant, corporate accountant and industrial accountant.
Don’t be confused by the distinction between public and private accounting. Professionals in both fields of accounting work with financial information and require similar fundamental educational backgrounds. Would you prefer to work for yourself, helping multiple clients, or be employed by a single corporation? Would you rather prepare financial documents for public use, like taxes, or for internal business use? By answering these questions, you can determine whether a job in public or private accounting is the right choice for you.