Accounting

Accounting practices have been used ever since the first farmer kept track of the number of sheep or cows he owned and the first merchants tracked inventory and kept records of their profits and losses. From these humble beginnings, accounting has grown to become one of the leading business sectors in the world today. Accounting is a system by which financial information is identified, recorded, analyzed, summarized, and reported for the use of decision makers. Put simply, accounting is the language of business.

An accounting system tracks all the financial activities of an organization (whether it’s a Fortune 500 company, a small independent book publisher, a nonprofit theater, or a government agency), showing when and where money has been spent and commitments have been made. This helps decision making by allowing managers to evaluate organizational performance, by indicating the financial risks and benefits of choosing one strategy over another, and by spotlighting current weaknesses and opportunities. It allows managers to take a step back, look at the organization, and assess how it is doing and determine where it should be going.

Many accountants are employed by the Big Four, which are defined as the four largest public accounting/professional services firms. The Big Four is comprised of Deloitte, EY (formerly Ernst & Young), KPMG, and PricewaterhouseCoopers. Accountants, however, don’t work just for the Big Four. They work for public accounting firms of all sizes. Many others work in corporate accounting (from Fortune 500 companies to “mom-and-pop” shops), in government accounting, and for nonprofit organizations. Some own their own accounting firms. Others teach accounting and auditing. Accountants are responsible for four core functions:

  1. Accounting: Overseeing and managing the financial records and operations of an organization to make sure they follow organization, industry, and government regulations.
  2. Auditing: Providing assurance that internal controls in place are adequate to mitigate their organization’s financial risks, that governance processes are effective and efficient, and that organizational goals and objectives are met, as well as determining if an organization’s financial activities are reported accurately in its financial statements to regulators and investors.
  3. Assurance: Defined by the American Institute of Certified Public Accountants as “independent professional services that improve the quality of information, or its context for business or individual decision-makers.”
  4. Tax: Preparing tax returns for corporations, other organizations, and individuals; developing strategies to reduce the amount of taxes paid; and examining the tax implications of various business practices. 

In addition to these core areas, accountants work in a variety of specializations that continue to grow as government regulations increase, business opportunities expand, and U.S. accounting firms increasingly work in the global marketplace. They include:

  • advisory/consulting services
  • business process outsourcing
  • enterprise risk management
  • entrepreneurial
  • environment
  • expert witness
  • feasibility
  • forensics
  • health care
  • information technology
  • insolvency
  • international
  • litigation accounting
  • management consulting
  • mergers and acquisitions
  • personal financial planning
  • restructuring
  • strategic planning

Despite the variety and dynamic nature of the field, accounting has always had an image problem, stuck in public opinion as a boring, tedious career loaded with math geeks who love crunching numbers but little else. While elements of this stereotype may have been accurate in the past, they’re not true today. The basic mechanics of accounting can certainly be tedious at times, but such functions are increasingly becoming automated, with accountants focusing more on analysis, interpretation, and business strategy. This puts them at the forefront of business today. Accounting firms are no longer looking for “bean counters”; they want highly analytical and creative workers with excellent communication and teamwork skills.

In fact, accounting is often ranked as one of the most desirable professions available—including being ranked as one of the top 100 best jobs in 2014 by U.S. News & World Report. In 2013, CareerCast.com ranked the career of “accountant” in the top 50 best jobs in terms of work environment, income, employment outlook, physical demands, and low level of stress. Salaries are also strong for accountants. In 2012, accountants and auditors earned a median salary of $63,550, according to the U.S. Department of Labor, earnings that are much higher than the national average ($45,790) for all careers. 

Opportunities in the accounting industry exist at every career level, although accountants and auditors are the prime movers in this field. They typically have at least a bachelor’s degree in accounting or a related field, although an increasing number of companies require their accountants to have master’s degrees in accounting or taxation. There are also opportunities for lawyers, computer professionals, and marketing workers, and in other related careers. High school graduates can get started in the business working as accounting clerks and office support professionals. The bottom line is that the accounting industry offers a variety of career options and plenty of challenges, and the industry is expected to enjoy steady growth in the future.

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