This research proposal examines the professional distinctions among three major accounting career paths available to entry-level graduates: public accounting, corporate (managerial) accounting, and governmental accounting. Drawing on literature from the U.S. Department of Labor, academic sources, and professional publications, the paper outlines the specialized roles within each field—including audit services, tax advisory, cost accounting, budgeting, and criminal investigation. The study employs a qualitative methodology combining literature review and professional interviews. Preliminary findings highlight the fundamental differences in client base, regulatory environment, and job function across these three vocational tracks, and recommend further research to help accounting graduates make informed career decisions.
Career options available to entry-level accounting graduates include those of public accounting, corporate accounting, and governmental accounting. Each of these vocational options is divided into more specialized areas of practice.
Purpose of the Study: The purpose of this study is to conduct an in-depth examination of the areas of accounting represented by the specialized areas of practice within the public, corporate, and governmental accounting vocations.
Statement of the Problem: Accounting seniors and recent graduates possess theoretical knowledge of accounting, but often know little or nothing about the careers available to them upon graduation.
Objective of the Study: In order to make a competent decision about which career to pursue, the available options should be scrutinized. That is the objective of this study, which will research each area of professional practice in order to eliminate confusion concerning the professional variation in accounting positions.
Research Question: This study seeks to answer the question: "What are the professional differences in working in the fields of public accounting, corporate accounting, and governmental accounting?"
Proposed Methodology: The proposed methodology is qualitative in nature and will be conducted through an extensive review of literature in this area of study. Literature sources will include—but will not be limited to—books, journals, and other professional and academic peer-reviewed materials found in libraries, as well as peer-reviewed literature available online. In addition, the research intends to conduct interviews with accounting professionals regarding how they began their careers and the job functions of the accounting positions they have held.
Limitations and Delimitations: The time available to conduct the research is limited, making the deadline of the research study a constraint. A major delimitation relates to the scope of the research, which will be limited to three major career fields within accounting.
Data Collection and Analysis: Data will be collected from a variety of sources, including personal interviews, websites, books, and journal articles. The data collected will be analyzed qualitatively.
The vocational field of accounting requires at least a bachelor's degree in accounting or a related field. According to the Occupational Outlook Handbook published by the U.S. Department of Labor, Bureau of Labor Statistics, "opportunities will be best for jobseekers who have a master's degree, obtain certification or licensure, or who are proficient in the use of accounting and auditing computer software" (U.S. Department of Labor, Bureau of Labor Statistics, 2009). It is additionally reported that there will be "faster-than-average growth of accountant and auditor jobs" resulting from "an increase in the number of businesses, changing financial laws and regulations, and greater scrutiny of company finances" (U.S. Department of Labor, Bureau of Labor Statistics, 2009).
The U.S. Department of Labor, Bureau of Labor Statistics states that accountants and auditors "help to ensure that the Nation's firms are run efficiently, its public records kept accurately, and its taxes paid properly and on time. They analyze and communicate financial information for various entities such as companies, individual clients, and government. Beyond carrying out the fundamental tasks of the occupation—preparing, analyzing, and verifying financial documents in order to provide information to clients—many accountants also offer budget analysis, financial and investment planning, information technology consulting, and limited legal services" (2009).
The specific job duties, which vary widely, fall within the following major fields of accounting and auditing:
(1) Public accounting;
(2) Management accounting;
(3) Government accounting; and
(4) Internal auditing (U.S. Department of Labor, Bureau of Labor Statistics, 2009).
Public accountants perform "a broad range of accounting, auditing, tax, and consulting services for their clients, which may be corporations, governments, nonprofit organizations, or individuals" (U.S. Department of Labor, Bureau of Labor Statistics, 2009). Public accountants focus on tax matters including "advising companies about the tax advantages and disadvantages of certain business decisions and preparing individual income tax returns. Others offer advice in areas such as compensation or employee health care benefits, the design of accounting and data-processing systems, and the selection of controls to safeguard assets. Still others audit clients' financial statements and inform investors and authorities that the statements have been correctly prepared and reported. These accountants are also referred to as external auditors. Public accountants, many of whom are Certified Public Accountants (CPAs), generally have their own businesses or work for public accounting firms" (U.S. Department of Labor, Bureau of Labor Statistics, 2009).
Some public accountants "specialize in forensic accounting—investigating and interpreting white-collar crimes such as securities fraud and embezzlement, bankruptcies and contract disputes, and other complex and possibly criminal financial transactions, including money laundering by organized criminals. Forensic accountants combine their knowledge of accounting and finance with law and investigative techniques to determine whether an activity is illegal. Many forensic accountants work closely with law enforcement personnel and lawyers during investigations and often appear as expert witnesses during trials" (U.S. Department of Labor, Bureau of Labor Statistics, 2009).
According to the U.S. Department of Labor, Bureau of Labor Statistics, federal legislation passed in response to recent accounting scandals has restricted the nonauditing services that public accountants may provide to clients. "If an accounting firm audits a client's financial statements, that same firm cannot provide advice on human resources, technology, investment banking, or legal matters, although accountants may still advise on tax issues. Accountants may also advise other clients in these areas and may provide advice within their own firm" (U.S. Department of Labor, Bureau of Labor Statistics, 2009).
Management accountants—"also called cost, managerial, industrial, corporate, or private accountants—record and analyze the financial information of the companies for which they work. Among their other responsibilities are budgeting, performance evaluation, cost management, and asset management. Usually, management accountants are part of executive teams involved in strategic planning or the development of new products. They analyze and interpret the financial information that corporate executives need in order to make sound business decisions. They also prepare financial reports for other groups, including stockholders, creditors, regulatory agencies, and tax authorities. Within accounting departments, management accountants may work in various areas, including financial analysis, planning and budgeting, and cost accounting" (U.S. Department of Labor, Bureau of Labor Statistics, 2009).
Government accountants and auditors work in the public sector "maintaining and examining the records of government agencies and auditing private businesses and individuals whose activities are subject to government regulations or taxation. Accountants employed by Federal, State, and local governments ensure that revenues are received and expenditures are made in accordance with laws and regulations. Those employed by the Federal Government may work as Internal Revenue Service agents or in financial management, financial institution examination, or budget analysis and administration" (U.S. Department of Labor, Bureau of Labor Statistics, 2009).
Internal auditors "verify the effectiveness of their organization's internal controls and check for mismanagement, waste, or fraud. They examine and evaluate their firms' financial and information systems, management procedures, and internal controls to ensure that records are accurate and controls are adequate. They also review company operations, evaluating their efficiency, effectiveness, and compliance with corporate policies and government regulations. Because computer systems commonly automate transactions and make information readily available, internal auditors may also help management evaluate the effectiveness of their controls based on real-time data, rather than personal observation. They may recommend and review controls for their organization's computer systems to ensure their reliability and the integrity of the data. Internal auditors may also have specialty titles, such as information technology auditors, environmental auditors, and compliance auditors" (U.S. Department of Labor, Bureau of Labor Statistics, 2009).
The U.S. Department of Labor, Bureau of Labor Statistics reports that rapidly expanding technology is changing the nature of the work performed by both accountants and auditors. Through the "aid of special software packages, accountants summarize transactions in the standard formats of financial records and organize data in special formats employed in financial analysis. These accounting packages greatly reduce the tedious work associated with data management and recordkeeping. Computers enable accountants and auditors to be more mobile and to use their clients' computer systems to extract information from databases and the Internet. As a result, a growing number of accountants and auditors with extensive computer skills specialize in correcting problems with software or in developing software to meet unique data management and analytical needs. Accountants also are beginning to perform more technical duties, such as implementing, controlling, and auditing computer systems and networks and developing a business's technology plans" (U.S. Department of Labor, Bureau of Labor Statistics, 2009).
It is also reported that accountants serve as personal advisors, providing clients not only with "accounting and tax help, but also help them develop personal budgets, manage assets and investments, plan for retirement, and recognize and reduce their exposure to risks. This role is in response to clients' demands for a single trustworthy individual or firm to meet all of their financial needs. However, accountants are restricted from providing these services to clients whose financial statements they also prepare" (U.S. Department of Labor, Bureau of Labor Statistics, 2009).
The work entitled "The Reality of the CPA's Role" states that modern CPAs work "behind the scenes as trusted advisors in nearly all significant business decisions. Successful accountants display the ability to think strategically and creatively and to be problem solvers and business advisors" (Douglass, 2006). Douglass states that perceptions of the CPA vary widely, "whether from the viewpoint of the investing public or from the perspective of the companies that engage CPAs to audit their financial statements or perform other functions. In fact, many people not involved in business management or the accounting profession may perceive CPAs as 'book smart,' reclusive number crunchers who sit quietly in a cubicle typing numbers into a ten-key adding machine. But decision makers in the corporate world know that successful CPAs are highly interactive, where most of their time is spent in face-to-face communications while performing complex tasks within the ever-changing boundaries of today's regulatory and legal landscape" (Douglass, 2006).
While the non-business community's respect for the profession may seem less critical than that of the CPA's clients, the reality is that the outcomes of cases litigated in court are determined in large part by jurors' perceptions of the accounting profession. Auditing is described as a process "where a reasonable level of assurance can be provided to third parties" in relation to claims made by a company (Douglass, 2006). The primary function of auditing is to "enhance the reliability of financial information. As a result, auditing also serves to facilitate the free flow of capital in a market system. This function is driven by the necessity for standardized, comparable financial information in a free market so that decision makers are better able to choose between alternatives" (Douglass, 2006).
When an independent, competent third-party report is provided on a company's financial statements, Douglass states that "the comfort level of a potential investor or lender is enhanced, and that person is more likely to make the required funds available for the company's cash needs. Thus, even if the law did not require an audit, the free market system would tend to encourage—if not necessitate—one" (Douglass, 2006).
Douglass states that the accounting profession "has encountered perhaps its greatest degree of change in recent years, most recently with the passage of the Sarbanes-Oxley Act (SOX), which dramatically altered the landscape of modern public accounting. SOX requires that auditors now express an opinion on the effectiveness of internal control over financial reporting of the companies being audited. It also reinforces the requirement for auditors to be independent of their audit clients and limits how much work the auditor can perform. It is necessary for the auditor to be independent and objective. Otherwise, he or she may not be as willing to highlight and reject improper accounting treatments. It also leads to the appearance of unethical behavior. If CPA firms are not independent of their clients in both fact and appearance, they diminish their role of enhancing the reliability of financial information and inhibit the free flow of market capital" (Douglass, 2006).
The Public Company Accounting Oversight Board (PCAOB) is a private-sector, nonprofit corporation established by SOX to oversee auditors of public companies. The PCAOB bases its independence requirements on four basic principles:
(1) An auditor must not act as management or as an employee of the audit client;
(2) An auditor must not audit his or her own work;
(3) An auditor must not serve in a position of advocacy for his or her client; and
(4) An auditor must not have mutual or conflicting interests with his or her audit clients (Douglass, 2006).
It is noted that "if an auditor is to avoid auditing his or her own work, certain complex tasks that a company is not able to perform internally may have to be outsourced to a second CPA firm. For example, auditors cannot prepare the tax accrual for their clients because they would then be unable to independently audit the accrual. Many larger firms take this a step further by taking advantage of separate audit and tax departments. Using the example of the tax accrual, the client would prepare the accrual, the auditor would audit it, and the firm's tax department would assess the reasonableness of the auditor's work" (Douglass, 2006).
These independence issues mean that auditors should not "serve as business consultants to their audit clients, since the desire to retain lucrative consulting engagements would compromise their audit independence. However, there are many other services CPAs can provide to non-audit clients. Many of these clients may still need to be educated on exactly what services a CPA firm can—and cannot—provide. For instance, an audit is just one form of assurance, which can include many other services to improve the quality of information for decision makers. Such information can be financial or non-financial. Electronic commerce, elder care, comprehensive risk assessment, entity performance measurement, and information systems quality assessment are just a few examples of assurance service areas" (Douglass, 2006).
Additional services provided by CPAs include accounting, litigation support, management consulting, personal financial planning, and tax advisory services. Within each of these services is a subset of countless possible specialties, such as environmental accounting, forensic accounting, information technology services, and international accounting. In an internal business or industry setting, the CPA may provide financial management, financial reporting, internal auditing, management accounting, tax planning, or any number of non-financial services (Douglass, 2006). CPAs are described as business experts "whose knowledge and skills are sought and valued by management in a variety of capacities. They can help businesses succeed in whatever complex circumstances they face, using their analytical skills and their ability to think creatively, strategically, and solve intricate problems in a variety of situations" (Douglass, 2006).
The work of Erard (1992), "An Analysis of the Role of Tax Practitioners in Tax Compliance," states that tax practitioners "possess the means to exert an extraordinary influence on the tax compliance process. Their knowledge of tax rules and enforcement procedures far exceeds that of ordinary taxpayers, and they are directly responsible for preparing nearly one-half of all individual returns" (Erard, 1992). Tax practitioners are described as a "diverse group of individuals who provide a broad range of services for their clients" (Erard, 1992).
Erard's work identifies key factors that influence the decision of individuals to use a tax practitioner, as well as the factors influencing the amount that individuals spend on tax practitioner services (Erard, 1992).
"Cost accounting, controllership, and internal auditing roles"
"Budgeting, criminal investigation, and government auditing"
"Key differences across accounting career fields"
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