What is Accounting and Why is it Important?
Accountants are a vital professional service to private, public, and nonprofit institutions of all types across the globe. The essence of accounting can be summarized as the process of analyzing, authenticating, and reporting results of financial data to an organization, individual, or government agency. The primary specializations within accounting include forensic accounting, management accounting, financial accounting public accounting, and auditing.
Accounting has rapidly become the pillar of every corporate entity and is a necessary business function to make vital decisions within a company that include: budget preparation, financial goals, strategic initiatives, and the backbone of executive decision making.
A bachelor's degree is the minimum requirement to attain an entry-level position as an accountant. In some higher education institutions, a prospective accountant is required to spend up to 4 years to complete a series of requisite coursework while other institutions require five years to earn an accounting degree by requiring students to go on a one-year compulsory internship. During this period of time, the student is assigned to work for a reputable accounting firm where they will have the opportunity to learn a series of basic accounting principles.
What is the Career Outlook for Accountants?
According to recent reports by the BLS, the accounting field is forecast to grow at an 11% clip through 2024 which is nearly twice the composite rate of all industries through the same period of time. With nearly 1.4 million professionals
currently employed in the field of accounting, the industry is estimated to add approximately 145,000 professionals over the next decade. With the demand for qualified accountants high, job stability and career growth will follow providing a host of opportunities for disciplined professionals.
There is also a wide salary margin for specialists in the accounting arena driven by career track, work experience, and education level. On average, professionals in the accounting field earn nearly $68,000 per year which is 68% higher than the national average income.
Primary Accounting Disciplines
- Forensic Accounting
Accountants working in forensic accounting primarily help organizations and government agencies track down illicit financial activity and criminal funding. How big is the forensic accounting industry? A report by the Association of Certified Fraud Examiners put worldwide fraud at 5% of annual revenue or nearly $3.5 trillion dollars per year. Financial fraud is challenging to detect and deter as criminals are often highly intelligent and patient with the means to carry out extensive financial acts at the expense of others. Examples of financial crimes can include: breach of contract, insurance claims, personal injury, bankruptcy, royalty audits, and cybercrimes of all kinds. Professionals in forensic accounting must be detail oriented, focused, great communicators, tenacious, curious, and hard working.
Forensic accountants have a wide range of entry-level career options available to them. Unlike a lot of other careers in the accounting field, forensic auditors and forensic accountants perform similar functions throughout their careers and have the ability to start as an analyst followed by a manager to a supervisor or senior consultant. Compensation for the job generally starts around $50,000 and rises with additional professional certification, work experience, and education. For senior level forensic accountants, earning a salary in excess of $150,000 is considered the norm.
There are various certification options available to forensic accountants with the following being the most widely recognized: Association of Certified Fraud Examiner (ACFE) Certified Fraud Examiner and American Institute of Certified Public Accountant (AICPA) Certification in Financial Forensics. Many fraud accounting and fraud examiner employment positions will need one or both of these credentials. Even if not required by an employer, a CFE or CFF certification may be worth obtaining as certified forensic accountants can earn an average of 25% more than their uncertified colleagues.
Forensic Accounting Specialties:
Private Accounting Firms
Financial Consulting Organizations
Corporate Security & Corporate Risk Management
- Management Accounting
The role of a management accountant entails the financial and managerial tasks necessary to properly manage a business. Management accountants have a great working knowledge of GAAP (Generally Accepted Accounting Principles) and help companies: monitor expenses, track revenue, establish budgets, create internal financial processes, conduct audits, establish reporting to track historical performance, create financial models to forecast future growth, and work with the executive team to navigate financial matters.
Management accountants have a wide variety of employment opportunities that can range from nonprofit, public, and private entities in a variety of work settings. Each respective company creates unique particular job titles and responsibilities within its organizational structure, industry, and business model.
Management Accounting Specialties:
Chief Financial Officer
- Public Accounting
Public accounting is an expertise that assists corporations and individuals in an array of financial activities including: financial recordkeeping, creating & filing income taxes, assembling financial statements, staying current on relevant financial & tax regulations, and providing prudent accounting advice. Public accountants work in a vast range of business from government and nonprofit to large corporations and entrepreneurs of all kinds. From the entry-level “staff accountant” in a small company to a senior-level “partner” in a larger firm, public accountants play an important function in businesses of all types and sizes.
CPA’s have opportunities for development and specialization throughout their careers which may include:
- Maintaining all financial data and generate reports for clients.
- Auditing the financial records for precision as well as the compliance with rules and regulations
- Calculating income and other taxes; preparing and submitting returns and other documentation.
- Providing advice on a broad range of topics associated to decision making regarding costs, expenditures and other financial practices.
- Using specialized accounting software with accounting management systems in maintaining data and monitoring financial trends
- Communicating effectively in the setting of a business environment.
In order to become a CPA, a student must earn a degree in accounting (consisting of 150 semester hours), successfully complete a CPA examination, and have 1-2 years’ work experience under a CPA. Although the requirements vary by state, the CPA examination will be a computer-based test consisting of four parts: regulation, financial accounting & reporting, business environment & concepts, and auditing & attestation. CPA’s are required to keep up their license through continuing professional education (PCE) that often entails 40 hours per year plus ethics training, compliance hours, and specialty training depending on the type of license & area of employment.
Entry Level CPA
Senior Level CPA
Executive Level CPA
- Financial Accounting
These professionals are responsible for the public reporting a company’s financial status. The public reporting and external groups often include agencies such as banks, board of directors, stockholders, and tax agencies. A financial accountant’s job function involves gathering data, maintaining data, forecasting future needs, and detecting trends. As a result of working with a disparate group of external stakeholders, they must be fluent in business principles, articulate, and business savvy. From a technical standpoint, a financial accountant must understand the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS) to help create a set of reliable and consistent financial reports for domestic and international partners. In addition to working with a variety of business stakeholders, a financial accountant often works arm-in-arm with financial analysts, financial accountants, and controllers.
Financial Accounting Specialties:
- Certified Internal Auditor
A certified internal auditor is an accountant that is hired to perform a review of financial documents and instruments for compliance in an effort to adhere to specific regulations and laws. A certified internal auditor may also be hired by a corporation or government entity to assess procedures and policies along with a systemic review of technology and security to ensure the proper transmission of confidential financial data within an organization. They are involved in the auditing of the company’s records. Common job functions of a certified internal auditor include:
- Analyzing industry trends
- Tracking revenues and expenditures
- Recommending business efficient solutions
- Rendering financial planning recommendations to upper management
One notable branch of internal auditing resides within information technology. Accountants in these positions will combine their background experience in accounting and computer technology to access inherent risks and security issues. They review controls for an organization’s financial computer records systems, evaluating and analyzing financial data to ensure it is gathered from reliable sources. Information technology internal auditors also frequently analyze computer security regarding financial record keeping.
Certified Internal Auditor Specialties:
Information Technology Auditor
The various fields within accounting can be lucrative, stable careers for individuals who are considering a career in accounting at large.