What Is Accounting?
It's one of the best jobs in North America in terms of stress level (low), compensation (high) and career placement after graduation (fast). Vault Career Libraries describes accounting as "a system by which economic information is identified, recorded, summarized and reported for the use of decision makers."
Business degrees for accounting majors are available in nearly every form, both on-campus and online: certificates, associate's degrees, bachelor's degrees, master of accounting degrees and MBAs with accounting specializations. Most jobs require at least a bachelor's degree in accounting or a related field. Job seekers who earn certification or licensure, a master's degree, or specialized expertise will have an advantage in the job market. And now that computers handle the bulk of the "bean counting" functions of accounting, professionals spend more time working on in-depth analysis and serving on decision-making teams.
Requirements for a Successful Accounting Career
If you are considering a career in accounting, you should have an aptitude for mathematics and be able to analyze, compare, and interpret facts and figures quickly. You must then be able to clearly communicate your results to clients and managers. The two newest study areas in accounting degrees are ethics and computer science. High standards of integrity are important in accounting.
Keeping up with industry standards and technological applications is crucial in maintaining a successful, progressive career in accounting. Even accountants with college degrees continue to seek extra training or enroll in refresher courses or work towards more specialized accounting degrees. Online college courses in accounting are allowing more and more students to join the growing industry, from traditional college students to working parents and professionals. Colleges that offer accounting via distance learning are becoming more popular every year, as their students boost their careers without infringing on their personal and work obligations.
Steady career advancement is one of the most appealing aspects of professional accounting. But there are almost a million accountants in the U.S., and it will remain a competitive profession for many years to come. Ferguson's Top Careers for Business Graduates confirms that "competition for jobs will remain, certification requirements will become more rigorous, and accountants and auditors with the highest degrees will be much sought after."
Career Education in Accounting
There are many kinds of accounting degrees available, depending on your career goals:
Associate Degrees in Accounting
An associate's degree in accounting prepares students for entry-level jobs such as accounting assistant, bookkeeper, or management trainee. It can be a step towards national accreditation exams in accountancy. As a graduate you may qualify to work as a tax preparer, auditing clerk, or accounting assistant. If you're anxious to get your foot in the door of the workforce, this is a good option to choose, and it prepares you to continue in an online bachelor's degree program while you work.
Bachelor's Degrees in Accounting
A Bachelor of Science in Accounting prepares you to measure and report the financial events of an individual or entity. Additionally, it teaches you to understand the elements of the audit process, analyze financial statements, and apply accounting information to management-level decisions. A bachelor's degree is required to sit for licensing exams in the U.S.
Also available are Bachelor of Science degrees in managerial and administrative accounting. These teach broad business skills and specialized knowledge in financial accounting, reporting, operations, and other critical areas, but may not be applicable to tax accounting, auditing or used towards CPA credentials.
Accounting and finance certificates, at the undergraduate or graduate level, can open up career opportunities with the myriad of organizations that require accurate financial record-keeping, effective cash management, and investment strategy. Undergraduate certificates prepare you for jobs as an entry-level accountant in business administration, operations, or a financial operations department. Graduate certificates allow you to add accounting expertise to your prior business training, in preparation for a promotion or career switch.
Jobs You Can Get With an Accounting Degree
The accounting field has a high degree of mobility potential and your advancement depends on your continued education and certification. Accountants can specialize in different businesses or fields, or according to particular accounting functions.
Accounting can be divided into four major fields as defined by Bureau of Labor Statistics, U.S. Department of Labor:
- Public Accountants
- Management Accountants
- Government Accountants
- Auditors and Internal Auditors
Careers in public accounting focus on auditing and tax functions. New public accountants usually work for several clients on their own or as part of a firm. Advancement to positions with more responsibility takes one or two years, and a few more for senior positions. Those who excel may become supervisors, managers, or partners; open their own public accounting firms; transfer to executive positions in management accounting; or become internal auditors in private firms. Larger firms prefer to hire master's degree graduates.
Management accountants often start as cost accountants, junior internal auditors, or trainees for other accounting positions within a corporation. As they rise through the organization, they may advance to positions such as accounting manager, chief cost accountant, budget director, or manager of internal auditing. Some become controllers, treasurers, financial vice presidents, chief financial officers, or corporation presidents. Many senior corporation executives have a background in accounting, internal auditing, or finance.
A bachelor's degree in accounting and two years' experience is required and professional licensing is recommended. The focus is on the reporting functions within the organization to contribute to planning and decision making. A management accountant also manages the reporting to stock holders, regulatory agencies, and tax authorities.
Government accountants can work at any level of government to analyze and oversee the performance and allocation of funds. At the federal level, opportunities exist in such diverse areas as the Department of Defense, the IRS, and the Securities and Exchange Commission.
Internal auditors deal with conducting compliance audits, developing internal controls, and establishing accounting information systems. As they advance in their careers, they can become involved in operational audits and provide recommendations and plans for continued financial improvement within an organization.
Public vs. Private Accounting
The breadth of the accounting industry leads to many areas of specialization, such as general, budget, cost, property, systems, forensic, and tax accounting. Private accountants are also in demand for non-profit organizations that need specialized expertise in tax regulations and policies unique to them.
Your choice should depend on your own personal career and lifestyle goals. Public accounting generally offers higher salaries, variety, and advancement based on merit. Your actual working hours as a public accountant are applied to your CPA requirements. Private accounting is more stable with a fixed location, hours, and workload. Private accountants should get a traditional four-year degree, but are not required to obtain their CPA designation. Internal auditors, management accountants and tax professionals can practice without CPA credentials.
In 2014, according to the U.S. Bureau of Labor Statistics, the median annual salary of accountants and auditors was $73,670. The middle half earned between $51,130 and $87,530. The top 10 percent of accountants and auditors earned more than $115,950, and the lowest 10 percent earned less than $40,850. The highest mean annual wage for accountants and auditors is paid by the securities and commodity contracts intermediation and brokerage industry, which pays a mean annual salary of $95,970. The highest-paying accounting and auditing jobs are found in Washington, D.C., New York, New Jersey, Maryland and Massachusetts. Salaries differ depending on the firm's size and location, and the accountant's education and professional credentials.
Certification and Licensure
Professional recognition through certification or licensure provides a distinct advantage in the job market, so about 40 percent of accountants are certified. A CPA (Certified Public Accountant) designation is earned through a combination of experience and passing the Uniform CPA Examination prepared by the American Institute of Certified Public Accountants (AICPA). Each state has its own requirements for certification. In general, to become a CPA you must complete:
In general, to become a CPA you must complete:
- 150 credit hours of college-level education, which translates to five years of college and graduate-level work. The additional year allows for increased development of communication and analytical skills and technical competence.
- Passing grades on all four parts of the Uniform Certified Public Accountants Exam.
- Your state's required years of work experience--usually about two years.
Certification not only demonstrates your professional commitment and expertise, but it is also crucial in certain accounting functions. For example, only a CPA may sign an audit option, which is the official declaration that prepared financial statements reasonably represent a company's financial position. Only about 25 percent of people who take the CPA exam pass all four parts on their first try.
The Institute of Management Accountants (IMA) confers the Certified Management Accountant (CMA) designation upon applicants who complete a bachelor's degree in accounting or attain a minimum score on specified graduate school entrance exams.
The Canadian equivalent of a CPA is a Chartered Accountant (CA). For more information on Canadian Associations and Licensure, see below.
Other Certifications and Associations
The Accreditation Council for Accountancy and Taxation (ACAT): The ACAT examination is sponsored by the National Society of Public Accountants. The examination is offered twice a year, in May and December, at over 200 test sites nationwide. ACAT accreditation demonstrates your professional status to your clients and/or employer.
The Enrolled Agents Examination is a comprehensive four-part exam administered once a year by the Internal Revenue Service. The primary benefits of being an enrolled agent are recognition of attaining a high level of knowledge of federal taxation, and eligibility to practice before the IRS.
A Certified Information Technology Professional (CITP) is a CPA certified as a technology professional and recognized for his or her unique ability to bridge the gaps between business and technology. This is a unique interdisciplinary credential, unlike other certifications that recognize only a narrow scope of skills.
The Personal Financial Specialist (PFS) is the financial planning specialty accreditation held exclusively by Certified Public Accountants (CPAs) who are members of the AICPA. CPAs who wish to distinguish themselves within the competitive financial planning marketplace should obtain the PFS credential.
In Canada, the Certified General Accountants Association Program of Professional Studies incorporates requirements of education, examination and experience that individuals must meet to become a CGA. The CGAA is recognized internationally as a leading developer and provider of competency-based professional accounting education that integrates ethics, information technology, and the best methods of distance learning.
How to Become a Chartered Accountant
Chartered Accountants (CAs) are business professionals who generally work in four key areas. About 40 percent of CAs are in public practice, while the other 60 percent are employed in industry, government, or education.
As in the United States, chartered accountants in Canada must meet minimum requirements for education and work experience, and achieve a passing score on the Uniform Evaluation Exam. The UEE consists of three papers written over three days and allows students to demonstrate their competence by responding to simulations/business scenarios that represent the kinds of challenges they have faced during their work experience, or will soon be facing in their professional careers as chartered accountants.
Bureau of Labor Statistics, U.S. Department of Labor, Occupational Employment Statistics, April 15, 2015, http://www.bls.gov/oes/current/oes132011.htm#nat