Accountants and Auditors
Outline:
Nature of the Work
Working Conditions
Employment
Training, Other Qualifications, and Advancement
Job Outlook
Earnings
Related Occupations
Sources of Additional Information
Nature of the Work
Managers must have up-to-date financial information to make
important decisions. Accountants and auditors prepare, analyze, and verify
financial reports that furnish this kind of information to managers in all
business, industrial, and government organizations.
Four major fields are public, management, and government
accounting, and internal auditing. Public accountants have their own businesses
or work for accounting firms. Management accountants, also called industrial or
private accountants, handle the financial records of their company. Government
accountants and auditors maintain and examine the records of government agencies
and audit private businesses and individuals whose dealings are subject to
government regulations. Internal auditors verify the accuracy of their firm's
financial records and check for waste or fraud.
Within each field, accountants often concentrate on one phase
of accounting. For example, many public accountants are employed primarily in
financial auditing (examining a client's financial records and reports and
attesting that they are in conformity with standards of preparation and
reporting). Others concentrate on tax matters, such as preparing income tax
forms and advising clients of the tax advantages and disadvantages of certain
business decisions. Still others concentrate on consulting and offer advice on a
variety of matters. They might develop or revise an accounting system to serve
the needs of clients more effectively or give advice about how to manage cash
resources more profitably.
Management accountants, the largest group of accountants and
auditors, provide the financial information executives need to make sound
business decisions. They may work in areas such as taxation, budgeting, costs,
or investments.
Internal auditing is rapidly growing in importance as top
management must increasingly base its decisions on reports and records rather
than personal observation. Internal auditors examine and evaluate their firm's
financial and information systems, management procedures, and internal controls
to ensure that records are accurate and controls are adequate to protect against
fraud and waste. They also review company operations--evaluating their
efficiency, effectiveness, and compliance with corporate policies and
procedures, laws, and government regulations.
Accountants and auditors also work for Federal, State, and
local governments. Many persons with accounting backgrounds work for the Federal
Government as Internal Revenue Service agents or in financial management,
financial institution examination, and budget administration.
In addition, a small number of persons trained as accountants
staff the faculties of business and professional schools as accounting teachers,
researchers, or administrators. Some work part time as accountants or
consultants.
Computers are increasingly being used in accounting and
auditing. With the aid of special computer software systems, accountants
summarize transactions in standard formats for financial records, put the data
in special formats that aid in financial or management analysis, and prepare
income tax returns. Controls are placed in systems to enable auditors to ensure
the reliability of the systems and the integrity of data. Software systems
coming into use in accounting and auditing generally are easily learned and
require few specialized computer skills, but greatly reduce the amount of
tedious manual work with figures and records. Newer, less expensive personal
computers are enabling accountants and auditors in all fields--even those who
work independently--to use these special software systems and extract
information from large mainframe computers. A few accountants and auditors have
extensive computer skills and specialize in correcting problems with software
systems or developing special software programs to meet unique data needs.
Working Conditions
Most accountants and auditors work in offices and have
regular hours. Self-employed accountants, who may set up offices at home, work
as many hours as the business requires.
Tax accountants work long hours under heavy pressure during
the tax season. Accountants employed by large firms may travel extensively to
audit or work for clients or branches of the firm.
Employment
Accountants and auditors held about 962,000 jobs in 2002. They worked throughout private industry and government, but nearly one-third worked for accounting, auditing, and bookkeeping firms, or were self-employed. Many accountants and auditors were unlicensed management accountants, internal auditors, or government accountants and auditors. However, in 2002 there were 501,000 State-licensed Certified Public Accountants (CPAs), Public Accountants (PAs), Registered Public Accountants (RPAs), and Accounting Practitioners (APs). Many accountants and auditors have voluntarily earned professional designations that certify their professional competence in fields of accounting and auditing that are not State regulated: About 16,500 were Certified Internal Auditors, over 8,500 were Certified Management Accountants, about 5,800 were Certified Information Systems Auditors, and about 4,300 held certificates of accreditation in accounting or taxation awarded by the Accreditation Council for Accountancy.
Most accountants and auditors work in urban areas where
public accounting firms and central or regional offices of businesses are
concentrated. About 10 percent of all accountants were self-employed and fewer
than 10 percent worked part time.
Training, Other Qualifications, and Advancement
Most public accounting and business firms require applicants
for accountant and internal auditor positions to have at least a bachelor's
degree in accounting or a closely related field. Many employers prefer those
with a masters degree in accounting or a master's degree in business
administration with a concentration in accounting. A growing number of employers
prefer applicants who are familiar with computers and their applications in
accounting and internal auditing.
For beginning accounting and auditing positions, the Federal
Government requires 4 years of college (including 24 semester hours in
accounting or auditing) or an equivalent combination of education and
experience. However, applicants face competition for the limited number of
openings in the Federal Government.
Previous experience in accounting or auditing can help an
applicant to get a job. Many colleges offer students an opportunity to gain
experience through summer or part-time internship programs conducted by public
accounting or business firms. Such training is invaluable in gaining permanent
employment in the field.
Professional recognition through certification or licensure
also is extremely valuable. Anyone working as a Certified Public Accountant must
have a certificate and a license issued by a State board of accountancy. The
vast majority of States require CPA candidates to be college graduates, but some
states substitute a certain number of years of public accounting experience for
the educational requirement. Based on recommendations made by the American
Institute of Certified Public Accountants, a few States require or are
considering requiring CPA candidates to have training beyond the usual 4-year
bachelor's degree--for example, a 5-year bachelor's degree or a master's degree.
This requirement may become more common in the coming years.
All States use the four-part Uniform CPA Examination,
prepared by the American Institute of Certified Public Accountants, to establish
eligibility for certification. The CPA examination is rigorous, and candidates
are not required to pass all four parts at once. However, most States require
candidates to pass at least two parts for partial credit. Many States require
all sections of the test to be passed within a certain period of time. Most
States require applicants for a CPA certificate to have some public accounting
experience. For example, bachelor's degree holders most often need 2 years of
experience, while master's degree holders often need no more than 1 year.
To become a licensed public accountant
(LPA) or
"accounting practitioner," some States require only a high school
diploma; others require college training. However, with dramatic growth in the
number of CPA's, some States no longer offer the LPA designation. Information on
requirements may be obtained directly from individual State boards of
accountancy or from the National Society of Public Accountants (NSPA).
Professional societies grant other forms of certification on
a voluntary basis. The Institute of Internal Auditors, Inc., confers the
designation Certified Internal Auditor (CIA) upon graduates from accredited
colleges and universities who have completed 2 years' experience in internal
auditing and who have passed a four-part examination. The EDP Auditors
Association confers the designation Certified Information Systems Auditor (CISA)
upon candidates who pass an examination and who have completed 5 years'
experience in auditing, of which at least 2 involved auditing electronic data
processing systems. The National Association of Accountants (NAA) confers the
Certificate in Management Accounting (CMA) upon candidates who pass a series of
uniform examinations and meet specific educational and professional standards.
The Accreditation Council for Accountancy awards accreditation in accountancy
and taxation to persons who have passed a comprehensive examination.
Accreditation is maintained by competing mandatory continuing education.
Persons planning a career in accounting should have an
aptitude for mathematics, be able to analyze, compare, and interpret facts and
figures quickly, and make sound judgments based on this knowledge. They must
question how and why things are done and be able to clearly communicate the
results of their work, orally and in writing, to clients and managements.
Accountants and auditors must be patient and able to
concentrate for long periods of time. They must be good at working with business
systems and computers as well as with people. Accuracy and the ability to handle
responsibility with limited supervision are important.
Perhaps most important, because millions of financial
statement users rely on their services, accountants and auditors should have
high standards of integrity.
A growing number of States require both CPA's and licensed
public accountants to complete a certain number of hours of continuing education
before licenses can be renewed. The professional associations representing
accountants sponsor numerous courses, seminars, group study programs, and other
forms of continuing education. Increasingly, accountants and auditors are
learning how to operate computers so they can use accounting software packages
that enable raw transactions data to be quickly transformed into a variety of
specialized reports and tabulations.
Capable accountants and auditors should advance rapidly;
those having inadequate academic preparation may be assigned routine jobs and
find promotion difficult. Many graduates of junior colleges and business and
correspondence schools, as well as outstanding bookkeepers and accounting clerks
who meet the education and experience requirements set by their employers, are
successful in landing junior accounting positions.
Beginning public accountants usually start by assisting with
auditing work for several clients. They may advance to intermediate positions
with more responsibility in 1 or 2 years and to senior positions within another
few years. Those who deal successfully with top industry executives often become
supervisors, managers, or partners, or transfer to executive positions in
private firms. Some open their own public accounting offices.
Beginning management accountants often start as ledger
accountants, junior internal auditors, or as trainees for technical accounting
positions. They may advance to chief plant accountant, chief cost accountant,
budget director, or manager of internal auditing. Some become controllers,
treasurers, financial vice-presidents, or corporation presidents. Many
corporation executives have backgrounds in accounting, internal auditing, and
finance.
Job Outlook
Employment of accountants and auditors is expected to grow as fast as the average for all occupations through the year 2010 due to the key role these workers play in the management of all types of businesses. Although increased demand will generate many new jobs, most openings will result from the need to replace workers who leave the occupation, retire, or die. While accountants and auditors tend to leave the profession at a lower rate than members of most other occupations, replacement needs will be substantial because the occupation is large.
As the economy grows, the number of business establishments
increases, requiring more accountants and auditors to set up their books,
prepare their taxes, and provide management advice. As these businesses grow,
the volume and complexity of information on costs, expenditures, and taxes will
grow as well. Plant expansion, mergers, or foreign investments may depend upon
the financial condition of the firm, tax implications of the proposed action,
and other financial considerations. Also, growing international competition is
forcing many businesses to develop more cost information to help make their
operations more efficient. Requirements may also be affected by changes in
legislation related to taxes, financial reporting standards, business
investment, and other financial matters. In addition, increases in investment
and lending associated with general economic growth also should spur demand for
accountants and auditors. Growth in demand for management advisory services and
personal financial planning assistance may also contribute to growth in
requirements for public accountants.
Opportunities are expected to be favorable for college
graduates seeking accounting and auditing jobs. Certified accountants,
particularly CPA's, should have a wider range of job opportunities than other
accountants. However, competition for jobs with prestigious accounting firms
will remain keen; a master's degree in accounting should be an asset.
Opportunities for accountants without a college degree will occur mainly in
small businesses and accounting firms.
Many employers prefer graduates who have worked part time in
a business or accounting firm while in school. In fact, experience has become so
important that some employers in business and industry seek persons with 1 or 2
years' experience for beginning positions.
Accountants rarely lose their jobs when other workers are
laid off during hard economic times. Financial information must be developed
regardless of the state of the economy.
Earnings
According to a survey conducted by the National Association
of Colleges and Employers, bachelor's degree candidates in accounting received
offers averaging $27,900 a year; inexperienced master's degree candidates,
$31,500.
Beginning public accountants employed by public accounting
firms averaged $25,400 a year in 1993, according to a national survey. The
middle 50 percent had starting salaries ranging from $23,000 to $28,200.
Salaries of junior public accountants who were not owners or partners of their
firms averaged $28,100, but some had salaries of more than $39,500. Many owners
and partners of firms earned considerably more. The starting salary of
management accountants in private industry averaged $23,100 in 1990, according
to the same survey. The middle 50 percent had starting annual salaries ranging
from $20,800 to $25,300. Salaries of non-supervisory management accountants
averaged $34,850 in 1990, and some of the most experienced had salaries of over
$78,000. Chief management accountants who direct the accounting program of a
company or one of its establishments averaged $55,450 a year. Their salaries
ranged from $39,525 to more than $100,900, depending upon the scope of their
authority and the size of their professional staff.
According to the same survey, beginning trainee internal
auditors averaged $24,500 a year in 1990. The middle 50 percent had annual
starting salaries ranging from $21,8500 to $26,000. Internal auditors averaged
$34,225, but some of the most experienced had salaries of more than $48,900.
In the Federal Government, the starting annual salary for
junior accountants and auditors was about $18,700 in 1995. Candidates who had a
superior academic record could begin at $23,200. Applicants with a master's
degree or 2 years'
professional experience began at $28,300. Accountants in the
Federal Government averaged about $50,500 a year in 1995; auditors, about
$53,600.
Related Occupations
Accountants and auditors design internal control systems and
analyze financial data. Others for whom training in accounting is invaluable
include appraisers, budget officers, loan officers, financial analysts, bank
officers, actuaries, underwriters, tax collectors and revenue agents, FBI
special agents, securities sales workers, and purchasing agents.
Sources of Additional Information
Information about careers in public accounting and about
competency tests administered in colleges and public accounting firms may be
obtained from:
American Institute of Certified Public Accountants, 1211
Avenue of the Americas, New York, N.Y. 10036.
Information on specialized fields of accounting and auditing
is available from:
National Association of Accountants, P.O. Box 433, 10
Paragon Dr., Montvale, N.J. 07645.
National Society of Public Accountants and Accreditation
Council for Accountancy, 1010 North Fairfax St., Alexandria, Va. 22314.
The Institute of Internal Auditors, 249 Maitland Ave.,
P.O. Box 1119, Altamonte Springs, Fla. 32701.
The EDP Auditors Association, 373 South Schmale Rd.,
Carol Stream, Ill. 60188.
For information on accredited accounting programs and
educational institutions offering a specialization in accounting, contact:
American Assembly of Collegiate Schools of Business, 605
Old Ballas Rd., Suite 220, St. Louis, Mo. 63141.
