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Accounting is a process of recording and analyzing the financial data in business. Accounting is not only needed by profit motive businesses but also non-profit organization and government agencies to perform their daily financial activities. This makes accounting a very lucrative field in terms of high salary package and fast job placement. But with it comes confusion in deciding what to choose between accounting practices such as Private accounting and Public accounting. Many of college and university students struggle to decide whether they want to pursue career in private or public accounting. Most students make decisions based on pay scale and eventually start to dislike their jobs because that type of accounting practice doesn't match their lifestyle.
The purpose of this report is to analyze between the two main type of accounting practices (private and public accounting) mainly based on criteria such as salary, duties performed and scope of promotion. Through this report, the best option will be recommended to students who will be looking forward to pursue a career in accounting field.
How is Public accounting different from Private accounting?
Public accountants can perform numerous jobs within their field such as accounting, auditing, evaluating tax, and advising their clients. Their clients can be corporations, governments, nonprofit organizations or individuals. They may be assigned to 4-5 or even more companies during the course of a year and may not deal with same client again. Some public accountants focus on forensic accounting, which includes investigation of fraud or money laundering within a company by an employee or employer, while other accountants specialize in preparing individual income tax returns or providing solution and advice to corporate firms on taxation matters that are related to business decision. They also do consulting in activities such as compensation or employee health care benefits and how to design accounting and data processing systems. (http://www.articlesbase.com/recruitment-articles/a-brief-summary-of-accounting-field-1334638.html) Public accountants, who succeed in their CPA examination, become Certified Public Accountant, and they can run their own businesses or work for Public accounting firms.
Conversely private accountants generally work for a particular employer, even though they perform task same as public accountant, however these duties are specific to the businesses for which they work, such as internal auditing, financial analysis, and taxation within the company. (http://www.wisegeek.com/what-is-tax-accounting.html).
Most private accountants are employed by corporations or businesses, government agencies as well as nonprofit organization to perform internal audit of the company, prepare and analyze company's several financial statements and reports. They also guide their managers on government policies and regulations, so that company can always make correct decisions. Even though private accountant may have a title, such as "internal auditor or management accountant, but all perform the similar function, therefore it is considered as part of private accounting.
Both Public and private accountants work in normal office environment, while a few may work at home. Public accountants often travel to perform audits and accounting services for different companies or forensic accounting activities at numerous government facilities from time to time. Generally private accountants work normal 40 hour shift, but Public accountants have to work longer than usual 40 hours. This is because public accountants deal with many clients during the session and they have to accomplish all their jobs within the given period. Quote "most public accountants went through in the last few months; early morning appointments, 10-minute lunch breaks, late night appointments, weekend marathon sessions at the office, cranky clients, looming deadlines and an empty chair at the dinner table at home. Burnout in public accounting is so common that many of us in the recruiting profession now hear about it from candidates in the majority of our private conversations" Jack Causa of Meris group http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2008/Careers/Private_Side.jsp
Private accountants usually work for normal office hours as they perform duty for only a particular company where they have been employed. Readmore:http://www.articlesbase.com/recruitment-articles/a-brief-summary-of-accounting-field-1334638.html#ixzz0vy74LJcZ
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Majority of the graduates make their decision about choosing either of the accounting field (Private or Public) on the basis of salary scale. Therefore this criterion is of great importance when it comes to deciding the accounting path. There are mainly three different pay scales for both public and private accountants depending on seniority level. The following is pay scale of accountants for the year 2009 according to Ontario Public Accounting Salary Survey:
1. Entry Level:
· Entry-level accountants with no professional experience who worked at public accounting firms earned an average of $45,500 annually. These individuals were new graduates from colleges and universities. On the other hand, private accountants at junior positions in private businesses or corporations earned an average of $35,750 annually, according to Pay Scale.
· Most staff accountants have one to four years of experience. In 2009, Staff accountants working at public accounting firms in Ontario earned $53,500 annually while Private accountants earned approximately $53,250 annually.
Senior accountants have five to nine years of experience and usually supervise other accountants. In 2009, senior accountants working under public accounting firms earned an average of 57,500 while private accountants earned an average of $50,750-65,500 depending on the size of the company.
1st and 2nd year manager:
According to 2009 salary survey 1st year manager in public accounting firm earned an average of 67,000 and 2nd year manager earned84,000 annually while managers in private accounting earned between 80,000-134,750 depending on the size of the company.
Lastly the salaried partner, these individuals are partners in every manner apart from equity ownership and higher in the hierarchy, in public accounting salaried partners topped the earning with an average of 182,500 in year 2009.
On the other hand, chief financial officer of private business earned between the ranges of $94,250-183,250 respectively
It's true that the average compensation is more rewarding in public accounting, but lifestyle benefits always come at a price. And if your burnout has driven you to make the move to the private side, don't worry about burning bridges with your firm - they'll see you as a strong connection to a possible future client.
U.S. Bureau of Labor Statistics, Last Modified Date: December 17, 2009 http://www.bls.gov/oco/ocos001.htm#oes_links
Ontario Public Accounting Salary Survey Results, 2009. Published 4 may 2009 by MFA group Inc