Accounting is a vast and complex field with various specialties, but there are primarily two types of accountants: public accountants and private accounts. What’s the difference? Basically, public accountants are independent third-party accountants who examine the financial statements of client companies while private accountants work for the companies themselves.
Training and Certification
Public accountants need to know the accounting standards issued by entities like the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). Lenders, creditors and investors expect companies to follow these accounting standards. This accounting framework outlines how to document assets, liabilities, expenses, revenues, etc. when managing financial statements. Following this standard allows for external audits by public accounts who verify the financial statements accurately represent the cash flow and financial position of the company.
Unlike private accountants, public accountants must pass the Certified Public Accountant (CPA) examination administered by the American Institute of Certified Public Accountants. Obtaining a CPA implies that a public accountant has at least a general competency of standard accounting practices and permits an accountant to render an opinion on the accuracy of a company’s financial records. Public accounts may also need to complete additional work or educational requirements as imposed by state regulatory agencies.
Career Path and Work Environment
Public accountants generally begin their careers as external auditors within an accounting firm. External auditors examine the accuracy of business transactions for client companies. External auditors may eventually be promoted to audit managers and then audit partners. Audit partners are responsible for managing relationships with current clients and finding new clients for the accounting firm. Working at any level in a well-respected accounting firm will have a greater impact on a resume than working as a private accountant at a lesser known company.
Working as a public accountant can be both exciting and exhausting. Since public accounts audit client companies there is often substantial travel involved. Since there are often tight deadlines, the hours can be long. Working onsite can also mean cramped or inadequate space as the public accountant is squeezed into existing, often occupied, offices.
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Skills Required
In addition to knowledge of accounting standards and certification, public accountants need a special set of skills. If a public accountant has aspirations of rising in the ranks in any reputable firm, a CPA will need to have leadership skills. For this reason, many public accountants pursue high-demand credentials like a master’s in accounting, a master’s in business, or the designation of Chartered Global Management Accountant (CGMA).
A public accountant will also need effective communication skills. A CPA often needs to present information in a compelling way to persuade companies to take action. A CPA must also be able to discuss sensitive company information and politely address accounting system failures without offending the client. As a public accountant it will also be necessary to explain data and findings to both peers and non-specialists.
Overall, a career in Public Accounting can be a rewarding experience, but it does require special training beyond the requirements of a private accountant. With training and opportunities in the right accounting firm, it can be upwardly mobile.
