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Accountants and Auditors
Source: Courtesy
Occupational Outlook Handbook
Significant Points
Most jobs require at least a bachelor’s degree in
accounting or a related field.
Overall job opportunities should be favorable;
jobseekers who obtain professional recognition through
certification or licensure, a master’s degree,
proficiency in accounting and auditing computer
software, or specialized expertise will have the best
opportunities.
An increase in the number of businesses, changing
financial laws and regulations, and greater scrutiny of
company finances will drive faster-than-average growth
of accountants and auditors.
Nature of the Work
Accountants and auditors
help to ensure that the Nation’s firms are run
efficiently, its public records kept accurately, and its
taxes paid properly and on time. They perform these
vital functions by offering an increasingly wide array
of business and accounting services, including public,
management, and government accounting, as well as
internal auditing, to their clients. Beyond carrying out
the fundamental tasks of the occupation—preparing,
analyzing, and verifying financial documents in order to
provide information to clients—many accountants now are
required to possess a wide range of knowledge and
skills. Accountants and auditors are broadening the
services they offer to include budget analysis,
financial and investment planning, information
technology consulting, and limited legal services.
Working Conditions
Most accountants and auditors work in a typical office
setting. Self-employed accountants may be able to do
part of their work at home. Accountants and auditors
employed by public accounting firms and government
agencies may travel frequently to perform audits at
branches of their firm, clients’ places of business, or
government facilities.
Most accountants and auditors generally work a standard
40-hour week, but many work longer hours, particularly
if they are self-employed and have numerous clients. Tax
specialists often work long hours during the tax season.
Training, Other Qualifications, and Advancement
Most accountant and auditor positions require at least a
bachelor’s degree in accounting or a related field.
Beginning accounting and auditing positions in the
Federal Government, for example, usually require 4 years
of college (including 24 semester hours in accounting or
auditing) or an equivalent combination of education and
experience. Some employers prefer applicants with a
master’s degree in accounting, or with a master’s degree
in business administration with a concentration in
accounting.
Previous experience in accounting or auditing can help
an applicant 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. In addition, practical
knowledge of computers and their applications in
accounting and internal auditing is a great asset for
jobseekers in the accounting field.
Professional recognition through certification or
licensure provides a distinct advantage in the job
market. CPAs are licensed by a State Board of
Accountancy. The vast majority of States require CPA
candidates to be college graduates, but a few States
substitute a number of years of public accounting
experience for a college degree.
As of early 2005, on the basis of recommendations made
by the American Institute of Certified Public
Accountants (AICPA), 42 States and the District of
Columbia required CPA candidates to complete 150
semester hours of college coursework—an additional 30
hours beyond the usual 4-year bachelor’s degree. Another
five States have adopted similar legislation that will
become effective between 2006 and 2009. Colorado,
Delaware, New Hampshire, and Vermont are the only States
that do not require 150 semester hours. In response to
this trend, many schools have altered their curricula
accordingly, with most programs offering master’s
degrees as part of the 150 hours, so prospective
accounting majors should carefully research accounting
curricula and the requirements of any States in which
they hope to become licensed.
All States use the four-part Uniform CPA Examination
prepared by the AICPA. The 2-day CPA examination is
rigorous, and only about one-quarter of those who take
it each year pass every part they attempt. Candidates
are not required to pass all four parts at once, but
most States require candidates to pass at least two
parts for partial credit and to complete all four
sections within a certain period. The CPA exam is now
computerized and is offered quarterly at various testing
centers throughout the United States. Most States also
require applicants for a CPA certificate to have some
accounting experience.
The AICPA also offers members with valid CPA
certificates the option to receive any or all of the
Accredited in Business Valuation (ABV), Certified
Information Technology Professional (CITP), or Personal
Financial Specialist (PFS) designations. CPA’s with
these designations may claim a certain level of
expertise in the nontraditional areas in which
accountants are practicing ever more frequently. The ABV
designation requires a written exam, as well as the
completion of a minimum of 10 business valuation
projects that demonstrate a candidate’s experience and
competence. The CITP requires payment of a fee, a
written statement of intent, and the achievement of a
set number of points awarded for business experience and
education. Those who do not meet the required number of
points may substitute a written exam. Candidates for the
PFS designation also must achieve a certain level of
points, based on experience and education, and must pass
a written exam and submit references.
Nearly all States require CPAs and other public
accountants to complete a certain number of hours of
continuing professional education before their licenses
can be renewed. The professional associations
representing accountants sponsor numerous courses,
seminars, group study programs, and other forms of
continuing education.
Accountants and auditors also can seek to obtain other
forms of credentials from professional societies on a
voluntary basis. Voluntary certification can attest to
professional competence in a specialized field of
accounting and auditing. It also can certify that a
recognized level of professional competence has been
achieved by accountants and auditors who have acquired
some skills on the job, without the formal education or
public accounting work experience needed to meet the
rigorous standards required to take the CPA examination.
The Institute of Management Accountants (IMA) confers
the Certified Management Accountant (CMA) designation
upon applicants who complete a bachelor’s degree or who
attain a minimum score or higher on specified graduate
school entrance exams. Applicants, who must have worked
at least 2 years in management accounting, also must
pass a four-part examination, agree to meet continuing
education requirements, and comply with standards of
professional conduct. The CMA exam provides an in-depth
measure of competence in areas such as financial
statement analysis, working-capital policy, capital
structure, valuation issues, and risk management. The
CMA program is administered by the Institute of
Certified Management Accountants, an affiliate of the
IMA.
Graduates from accredited colleges and universities who
have worked for 2 years as internal auditors and have
passed a four-part examination may earn the Certified
Internal Auditor (CIA) designation from the Institute of
Internal Auditors (IIA). The IIA recently implemented
three new specialty designations: Certification in
Control Self-Assessment (CCSA), Certified Government
Auditing Professional (CGAP), and Certified Financial
Services Auditor (CFSA). Requirements are similar to
those of the CIA. The Information Systems Audit and
Control Association confers the Certified Information
Systems Auditor (CISA) designation upon candidates who
pass an examination and have 5 years of experience
auditing information systems. Auditing or
data-processing experience and a college education may
be substituted for up to 2 years of work experience in
this program. Accountants and auditors may hold multiple
designations. For instance, an internal auditor might be
a CPA, CIA, and CISA.
The Accreditation Council for Accountancy and Taxation,
a satellite organization of the National Society of
Public Accountants, confers four designations—Accredited
Business Accountant (ABA), Accredited Tax Advisor (ATA),
Accredited Tax Preparer (ATP) and Elder Care Specialist
(ECS)—on accountants specializing in tax preparation for
small and medium-sized businesses. Candidates for the
ABA must pass an exam; candidates for the ATA, ATP, and
ECS must complete the required coursework and pass an
exam. Often, a practitioner will hold multiple licenses
and designations.
The Association of Government Accountants grants the
Certified Government Financial Manager (CGFM)
designation for accountants, auditors, and other
government financial personnel at the Federal, State,
and local levels. Candidates must have a minimum of a
bachelor’s degree, 24 hours of study in financial
management, and 2 years’ experience in government and
must pass a series of three exams. The exams cover
topics in governmental environment; governmental
accounting, financial reporting, and budgeting; and
financial management and control.
Persons planning a career in accounting should have an
aptitude for mathematics and be able to analyze,
compare, and interpret facts and figures quickly. They
must be able to clearly communicate the results of their
work to clients and managers both verbally and in
writing. Accountants and auditors must be good at
working with people, as well as with business systems
and computers. At a minimum, accountants should be
familiar with basic accounting software packages.
Because financial decisions are made on the basis of
their statements and services, accountants and auditors
should have high standards of integrity.
Capable accountants and auditors may advance rapidly;
those having inadequate academic preparation may be
assigned routine jobs and find promotion difficult. Many
graduates of junior colleges or business or
correspondence schools, as well as bookkeepers and
accounting clerks who meet the education and experience
requirements set by their employers, can obtain junior
accounting positions and advance to positions with more
responsibilities by demonstrating their accounting
skills on the job.
Beginning public accountants usually start by assisting
with work for several clients. They may advance to
positions with more responsibility in 1 or 2 years and
to senior positions within another few years. Those who
excel may become supervisors, managers, or partners;
open their own public accounting firm; or transfer to
executive positions in management accounting or internal
auditing in private firms.
Management accountants often start as cost accountants,
junior internal auditors, or trainees for other
accounting positions. As they rise through the
organization, they may advance to 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.
In general, public accountants, management accountants,
and internal auditors have much occupational mobility.
Practitioners often shift into management accounting or
internal auditing from public accounting, or between
internal auditing and management accounting. It is less
common for accountants and auditors to move from either
management accounting or internal auditing into public
accounting.
Earnings
Median annual wage and salary earnings of accountants
and auditors were $50,770 in May 2004. The middle half
of the occupation earned between $39,890 and $66,900.
The top 10 percent of accountants and auditors earned
more than $88,610, and the bottom 10 percent earned less
than $32,320. In May 2004, median annual earnings in the
industries employing the largest numbers of accountants
and auditors were as follows:
Federal executive branch and United States Postal
Service
$56,900
Accounting, tax preparation, bookkeeping and payroll
services
53,870
Management of companies and enterprises
52,260
Local government
47,440
State government
43,400
According to a salary survey conducted by the National
Association of Colleges and Employers, bachelor’s degree
candidates in accounting received starting offers
averaging $43,269 a year in 2005; master’s degree
candidates in accounting were offered $46,251 initially.
According to a 2005 salary survey conducted by Robert
Half International, a staffing services firm
specializing in accounting and finance, accountants and
auditors with up to 1 year of experience earned between
$28,250 and $45,000 a year. Those with 1 to 3 years of
experience earned between $33,000 and $52,000. Senior
accountants and auditors earned between $40,750 and
$69,750, managers between $48,000 and $90,000, and
directors of accounting and auditing between $64,750 and
$200,750. The variation in salaries reflects differences
in size of firm, location, level of education, and
professional credentials.
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In the Federal Government, the starting annual salary
for junior accountants and auditors was $24,677 in 2005.
Candidates who had a superior academic record might
start at $30,567, while applicants with a master’s
degree or 2 years of professional experience usually
began at $37,390. Beginning salaries were slightly
higher in selected areas where the prevailing local pay
level was higher. Accountants employed by the Federal
Government in nonsupervisory, supervisory, and
managerial positions averaged $74,907 a year in 2005;
auditors averaged $78,890.Specific job duties vary
widely among the four major fields of accounting:
public, management, and government accounting and
internal auditing.
Public accountants perform a broad range of accounting,
auditing, tax, and consulting activities for their
clients, which may be corporations, governments,
nonprofit organizations, or individuals. For example,
some public accountants concentrate on tax matters, such
as advising companies about the tax advantages and
disadvantages of certain business decisions and
preparing individual income tax returns. Others offer
advice in areas such as compensation or employee health
care benefits, the design of accounting and
data-processing systems, and the selection of controls
to safeguard assets. Still others audit clients’
financial statements and inform investors and
authorities that the statements have been correctly
prepared and reported. Public accountants, many of whom
are Certified Public Accountants (CPAs), generally have
their own businesses or work for public accounting
firms.
Some public accountants specialize in forensic
accounting—investigating and interpreting white-collar
crimes such as securities fraud and embezzlement,
bankruptcies and contract disputes, and other complex
and possibly criminal financial transactions, including
money laundering by organized criminals. Forensic
accountants combine their knowledge of accounting and
finance with law and investigative techniques in order
to determine whether an activity is illegal. Many
forensic accountants work closely with law enforcement
personnel and lawyers during investigations and often
appear as expert witnesses during trials.
In response to recent accounting scandals, new Federal
legislation restricts the nonauditing services that
public accountants can provide to clients. If an
accounting firm audits a client’s financial statements,
that same firm cannot provide advice on human resources,
technology, investment banking, or legal matters,
although accountants may still advise on tax issues,
such as establishing a tax shelter. Accountants may
still advise other clients in these areas or may provide
advice within their own firm.
Management accountants—also called cost, managerial,
industrial, corporate, or private accountants—record and
analyze the financial information of the companies for
which they work. Among their other responsibilities are
budgeting, performance evaluation, cost management, and
asset management. Usually, management accountants are
part of executive teams involved in strategic planning
or the development of new products. They analyze and
interpret the financial information that corporate
executives need in order to make sound business
decisions. They also prepare financial reports for other
groups, including stockholders, creditors, regulatory
agencies, and tax authorities. Within accounting
departments, management accountants may work in various
areas, including financial analysis, planning and
budgeting, and cost accounting.
Government accountants and auditors work in the public
sector, maintaining and examining the records of
government agencies and auditing private businesses and
individuals whose activities are subject to government
regulations or taxation. Accountants employed by
Federal, State, and local governments guarantee that
revenues are received and expenditures are made in
accordance with laws and regulations. Those employed by
the Federal Government may work as Internal Revenue
Service agents or in financial management, financial
institution examination, or budget analysis and
administration.
Internal auditors verify the accuracy of their
organization’s internal records and check for
mismanagement, waste, or fraud. Internal auditing is an
increasingly important area of accounting and auditing.
Internal auditors examine and evaluate their firms’
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. There are many types
of highly specialized auditors, such as electronic
data-processing, environmental, engineering, legal,
insurance premium, bank, and health care auditors. As
computer systems make information timelier, internal
auditors help managers to base their decisions on actual
data, rather than personal observation. Internal
auditors also may recommend controls for their
organization’s computer system, to ensure the
reliability of the system and the integrity of the data.
Computers are rapidly changing the nature of the work of
most accountants and auditors. With the aid of special
software packages, accountants summarize transactions in
standard formats used by financial records and organize
data in special formats employed in financial analysis.
These accounting packages greatly reduce the amount of
tedious manual work associated with data management and
recordkeeping. Computers enable accountants and auditors
to be more mobile and to use their clients’ computer
systems to extract information from databases and the
Internet. As a result, a growing number of accountants
and auditors with extensive computer skills are
specializing in correcting problems with software or in
developing software to meet unique data management and
analytical needs. Accountants also are beginning to
perform more technical duties, such as implementing,
controlling, and auditing systems and networks,
developing technology plans, and analyzing and devising
budgets.
Increasingly, accountants also are assuming the role of
a personal financial advisor. They not only provide
clients with accounting and tax help, but also help them
develop personal budgets, manage assets and investments,
plan for retirement, and recognize and reduce their
exposure to risks. This role is a response to clients’
demands for a single trustworthy individual or firm to
meet all of their financial needs. However, accountants
are restricted from providing these services to clients
whose financial statements they also prepare. (See
financial analysts and personal financial advisors
elsewhere in the Handbook.)
Employment
Accountants and auditors held about 1.2 million jobs in
2004. They worked throughout private industry and
government, but 1 out of 4 wage and salary accountants
worked for accounting, tax preparation, bookkeeping, and
payroll services firms. Approximately 1 out of 10
accountants or auditors was self-employed.
Many accountants and auditors are unlicensed management
accountants, internal auditors, or government
accountants and auditors; however, a large number are
licensed CPAs. Most accountants and auditors work in
urban areas, where public accounting firms and central
or regional offices of businesses are concentrated.
Some individuals with backgrounds in accounting and
auditing are full-time college and university faculty;
others teach part time while working as self-employed
accountants or as accountants for private industry or
government. (See teachers—postsecondary elsewhere in the
Handbook.)
Job Outlook
Employment of accountants and auditors is expected to
grow faster than average for all occupations through the
year 2014. An increase in the number of businesses,
changing financial laws and regulations, and increased
scrutiny of company finances will drive growth. In
addition to openings resulting from growth, the need to
replace accountants and auditors who retire or transfer
to other occupations will produce numerous job openings
in this large occupation.
As the economy grows, the number of business
establishments will increase, requiring more accountants
and auditors to set up books, prepare taxes, and provide
management advice. As these businesses grow, the volume
and complexity of information developed by accountants
and auditors regarding costs, expenditures, and taxes
will increase as well. An increased need for accountants
and auditors will arise from changes in legislation
related to taxes, financial reporting standards,
business investments, mergers, and other financial
events. The growth of international business also has
led to more demand for accounting expertise and services
related to international trade and accounting rules, as
well as to international mergers and acquisitions. These
trends should create more jobs for accountants and
auditors.
As a result of accounting scandals at several large
corporate companies, Congress passed legislation in an
effort to curb corporate accounting fraud. This
legislation requires public companies to maintain
well-functioning internal controls to ensure the
accuracy and reliability of their financial reporting.
It also holds the company’s chief executive personally
responsible for falsely reporting financial information.
These changes should lead to increased scrutiny of
company finances and accounting procedures and should
create opportunities for accountants and auditors,
particularly CPAs, to audit financial records more
thoroughly. In order to ensure that finances comply with
the law before public accountants conduct audits,
management accountants and internal auditors
increasingly will be needed to discover and eliminate
fraud. Also, in an effort to make government agencies
more efficient and accountable, demand for government
accountants should increase.
Increased awareness of financial crimes such as
embezzlement, bribery, and securities fraud will
increase the demand for forensic accountants, to detect
illegal financial activity by individuals, companies,
and organized crime rings. Computer technology has made
these crimes easier to commit, and they are on the rise.
At the same time, the development of new computer
software and electronic surveillance technology has made
tracking down financial criminals easier, thus
increasing the ease with which, and likelihood that,
forensic accountants will discover their crimes. As
success rates of investigations grow, demand also will
grow for forensic accountants.
The changing role of accountants and auditors also will
spur job growth, although this growth will be limited as
a result of financial scandals. In response to demand,
some accountants were offering more financial management
and consulting services as they assumed a greater
advisory role and developed more sophisticated
accounting systems. Because Federal legislation now
prohibits accountants from providing nontraditional
services to clients whose books they audit,
opportunities for accountants to offer such services
could be limited. However, accountants will still be
able to advise on other financial matters for clients
that are not publicly traded companies and for nonaudit
clients, but growth in these areas will be slower than
in the past. Also, due to the increasing popularity of
tax preparation firms and computer software, accountants
will shift away from tax preparation. As computer
programs continue to simplify some accounting-related
tasks, clerical staff will increasingly handle many
routine calculations.
Overall, job opportunities for accountants and auditors
should be favorable. After most States instituted the
150-hour rule for CPAs, enrollment in accounting
programs declined; however, enrollment is slowly
beginning to grow again as more students become
attracted to the profession because of the attention
from the accounting scandals. Those who earn a CPA
should have excellent job prospects. However, many
accounting graduates are instead pursuing other
certifications, such as the CMA and CIA, so job
prospects may not be as favorable in management
accounting and internal auditing as in public
accounting. Regardless of specialty, accountants and
auditors who have earned professional recognition
through certification or licensure should have the best
job prospects. Applicants with a master’s degree in
accounting, or a master’s degree in business
administration with a concentration in accounting, also
will have an advantage. In the aftermath of the
accounting scandals, professional certification is even
more important in order to ensure that accountants’
credentials and ethics are sound.
Proficiency in accounting and auditing computer
software, or expertise in specialized areas such as
international business, specific industries, or current
legislation, may be helpful in landing certain
accounting and auditing jobs. In addition, employers
increasingly are seeking applicants with strong
interpersonal and communication skills. Because many
accountants work on teams with others from different
backgrounds, they must be able to communicate accounting
and financial information clearly and concisely.
Regardless of one’s qualifications, however, competition
will remain keen for the most prestigious jobs in major
accounting and business firms. |
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