So you want to be an accountant.
Many think that to be an accountant, you have to love numbers, or at least be very good at math. This just isn’t true. Yes, you have to know how to add, subtract, divide and multiply, but that is all you need to do really, unless you get into finance.
Accountant have been called “bean counters” and many view this appellation as demeaning. But in fact, it is what accountants do. What accounting is really is just getting the right beans into the right pots. It is a logical issue (which many view as a branch or math, or is it the other way around?).
But the term accountant means so very many things.
A bookkeeper is a person who records transactions. You write a check, she reduces cash and charges an expense or an asset. You collect cash, and he applies it against the correct person’s receivable. Bookkeeping is different from what many view as “accounting” and the people who are good at it are very valuable. A good bookkeeper can make $45,000 to $50,000 a year or more. You can become one by taking a couple of college courses or just by practice with a bookkeeping software, like Quickbooks. You have to be able to keep track of a bunch of things and be able to understand what is being done so you can record it correctly. This is not a talent most Certified Public Accountants have and most CPA’s have a great deal of respect for good bookkeepers.
Internal accounting, also referred to as “Corporate” encompasses bookkeepers, who may be the only accounting staff in a small company, to those who work in multi-national corporations. The difference is that in a small business, the bookkeeper does pretty much everything, while a large company may have 50 people doing nothing more than dealing with accounts payable or receivables. The entry into corporate accounting requires about the same skill set as that of a bookkeeper. Going up the ladder will require something else. Sure, you can become a manager of an accounts payable department without more schooling, but becoming a controller or more will typically require more.
Again, the title “Controller” can mean many things, depending on the company. In some places, it is equivalent to Accounting Manager, in others, it is essentially the Chief Financial Officer. The typical controller is responsible for a complete set of books, which includes all assets, liabilities, revenues and expenses and is required to have a significant amount of accounting training. In a large company, this means an undergraduate degree in Accounting. This is not an easy course of study and requires courses in Accounting, Taxation, Auditing, Finance, Economics, Marketing and Business Law.
Tax Accountants are those who specialize in taxation. This does not mean they fill out tax returns, but a lot do. It requires research, a lot of it. Again, the entry level of training is an undergraduate degree, unless all you want to do is complete 1040’s, in which case, you can get the training in a few months.
The Treasurer is a person who handles the investment and often the debt structure of a company. This is a quasi-accounting job. It probably requires a deeper understanding of Finance than most general accountants have.
An Internal Auditor is the job of someone who tests to make sure everyone else is doing their job in accordance with company policy. Typically, the person in this job has some Public Accounting experience and is using this position to find a good fit in the company. Most of these people are CPA’s (I’ll get to them later). They are not so much concerned with the financial statements, but with procedures.
The Chief Financial Officer is the top accounting dog in most large companies. Most of them are CPA’s, and while one of the best I ever met was not, he was the exception rather than the rule. They need a lot of understanding of the rules and principles and how they get applied. Every other accountant in the organization ultimately reports to the CFO. Nowadays, a Masters Degree and several years of being a CPA are required for this position. In addition to making sure the books are correct (or at least not materially wrong), the CFO will get involved in acquisition analysis, forecasting, budgeting, and debt negotiation. She is probably the most well-rounded accounting person in the company, being a generalist in all areas, but not necessarily an expert in any of them.
The Certified Public Accountant is the title of those who pass a really tough certifying test. These days, to take it, you need, more or less, a Master’s Degree (the actual rule is called the 150-hour rule, which pretty much equates to a Master’s Degree). The certifying exam essentially ensures the CPA has the skills to perform an audit of a typical public company. It tests for tax knowledge, accounting theory and practice skills, business law and auditing theory and practice.
To keep the title, the holder must not only have the education and pass the test, but must take continuing education classes every year. In addition, there are rigorous rules to which they must adhere. The word “Public” in the title means something: CPA’s generally have a public trust; that is, they must not misstate or mislead the people relying on their work. Even when employed by a company, the requirements of honesty and fair dealing and “transparency” must be adhered to. In many ways, CPA’s view themselves as working for themselves and, regardless of where the money comes from the most important thing to them is maintaining that license. If someone has a license as a CPA, the public has a right to rely on their work and if they are found to be dishonest, they can, and sometimes do, lose their ability to make a living in the profession.
Holding a license as a CPA is the “membership card”. It will open a lot of doors and holding it, you will have opportunities you would not otherwise be offered.
The accounting programs in most universities are geared to creating CPA’s. And not all schools are the same. If you want to be a CPA, research the schools in your area and find out which are better, understanding that better means harder. It makes a difference.
Every year, the top of the accounting classes tend to migrate towards Public Accounting Firms. PriceWaterhouse Coopers, KPMG, Deloitte Touche and Ernst & Young are the largest and hardest to get into. They have thousands of partners scattered across the globe. The second level are the so-called regional firms, with offices throughout the country.
These places are demanding to work for and hard to stay at for any significant period of time. They are meat grinders, or pressure cookers, or whatever analogy you can think of which means dang hard on the professional staff.
They audit the big companies, like General Motors, IBM, Microsoft. They train people to be auditors. An auditor is a person who works to determine if the financial statements prepared by management are fair. “Fair” does not mean mediocre, but that they present fairly, the results of operation and financial position of the company to its shareholders.
If you go to work for one of these firms, you may have to travel a lot, work many weekends and long hours, and get used to being in over your head. As a part of their existence, they have to continually develop new partners, and this process starts on day one. If, at any point, they come to believe you do not have what it takes to be a partner, you will find yourself looking for work. It is not enough to be able to do you current job to keep it, you have to show you can do the next-higher job. Thinking outside the box is almost required. You can challenge your superiors, in fact, if done correctly, this is one of the best ways to move up.
Having done consulting work for many years, after having a partnership offered to me at one of the “Big Four” firms, I can tell you they are the best places to start, even though they can be the most difficult places to work and darn near impossible to stay at. There is a difference in the training. Walking into a company, I can tell fairly quickly if the CFO had this type of background. It is evident from how people work.
But. Not every one is cut out for this. It takes a special, perhaps aberrant breed. Most bookkeepers would not choose to do this any more than most public accountants would choose to do bookkeeping. It is just plain different.
Accounting is a wide field, with a lot of paths into it and a lot of different jobs with different skills required. Talk to people. Find out which suits you best, and go for it.
Whatever you do, don’t do it the way I did. I didn’t know what the letters “CPA” stood for when I got hired by Price Waterhouse. Luck got me through the early stages.