Public Accounting Firms Overview: Public accounting firms prepare, maintain and/or review their clients’ financial statements and records. They also assist clients with the calculation of taxes and the submission of tax returns. The principal career paths in public accounting tend to require a CPA license. Law degrees are especially useful qualifications in the tax field.
Positives: Recent graduates unsure of their final career destination frequently choose a period of work at a major public accounting firm as a paid internship of sorts, a means to gain hands-on experience with a number of different companies and industries. Likewise, public accounting experience is a great resume enhancer, highly respected by a wide range of employers. Doing excellent work for a client company also frequently opens doors to job opportunities there.
The Big 4 firms (see below) tout high rankings in one or more independent surveys of the best places to work. They also claim high rankings in independent surveys of the most prestigious employers. Also, becoming a partner in a Big 4 firm can be highly rewarding financially.
Negatives: Major public accounting firms have issues with employee burnout. Partners have a direct economic incentive to maximize employees' billable hours. While the Big 4 firms today trumpet their employee retention policies, they have histories of high staff turnover, partly due to treating staff as disposable.
Partners can withdraw as pay only a portion of their share of the firm's profits, leaving the rest invested in the firm as working capital. The politics surrounding promotions to partnership can be intense and ruthless.
Potential conflicts of interest are rife in public accounting, creating a difficult balancing act. Strict adherence to the profession's ethical canons can result in loss of a client’s business, such as when audit results do not meet with the client's expectations.
Audit: The smallest businesses often outsource all their financial record keeping to public accounting firms. Larger businesses normally have accounting and finance personnel on staff to do this work, but they hire public accounting firms to conduct periodic accounting audits, or reviews. A company with publicly traded securities is required under law to make its financial reports public, and to have these reports audited by an independent CPA or public accounting firm. Holding a CPA license is a vital job qualification in the audit field. Audit experience also develops many analytic skills directly applicable to securities research.
Tax: Small businesses, as well as individuals, frequently hire an independent CPA or public accounting firm to prepare their tax returns. Larger businesses tend to have in-house staff to do this, but often rely upon their auditor to review this work. The tax function requires staff with CPA licenses and/or law degrees. The tax professionals within a public accounting firm also advise clients on strategies to reduce their taxes in the future.
Systems Consulting: Larger public accounting firms have sidelines in systems consulting, helping clients design and implement data processing systems for a wide variety of purposes, not just accounting and financial reporting systems. Holding a CPA normally is not necessary to advance in this division of a public accounting firm, but it can be very helpful if you plan to specialize in accounting and financial reporting systems. Technical expertise will be helpful, but not necessarily required, depending on the firm and the position. Much of the work in the field involves understanding clients’ needs and developing user-friendly solutions in tandem with programming experts.
Management Consulting: The largest public accounting firms also offer general management consulting, another special field in which a CPA is not normally required. Broadly stated, management consultants advise businesses on a wide variety of issues, from the setting of overall business strategies to the solving of highly specific problems, like improving workflows in a given department or analyzing a proposed merger. The management consulting practices of public accounting firms are normally involved in the latter types of engagements. They also tend to organize their staffs as specialists, by industry and/or by function (like marketing, finance, manufacturing, etc.).
Specialization: There are pros and cons to specialization in consulting, for all parties. The public accounting firm normally finds it easier to sell engagements to clients if it proposes to staff them with industry and/or functional specialists. Specialists can hit the ground running faster, based on their experience in and knowledge of similar situations. On the other hand, specialization can constrain the consultants’ perspective and creativity, leading to rote, cookbook solutions for clients, not original ones. For the consultant, while specialization can enhance productivity, it also may reduce job satisfaction if you seek maximum variety in your assignments.
The Big Four: Public accounting firms vary in size from one-person shops to the huge Big Four (also written Big 4) that dominate the sector. Even the largest firms tend to be organized as partnerships rather than as corporations.
