Accounting refers to the measuring, processing as well as depicting and communicating the information related to finances of firms, companies or businesses. It is also known as accountancy which has been formulated in the 15th century by the mathematician Luca Pacioli from Italy. The practice of accounting has been used as the business language and acts as a measure of an organization’s economic achievements by communicating this information to investors, managers, regulators as well as creditors. The people who execute accountancy are referred to as accountants. This paper is aimed to address the differences related to working in private and public accounting sectors.
The field has a history of several thousand years and has emanated from ancient communities that have begun to be civilized. The early accountancy development is dated back to the early Mesopotamia and has been attributed to evolvement of money, counting and writing. Bookkeeping has also existed in the ancient Iranian community. The double entry bookkeeping sprang from the medieval Europe and the practice of accountancy was split into managerial and financial accounting as the joint stock companies began to develop. Consequently, Luca Pacioli published the first double entry bookkeeping work. In the 19th century, accounting began to transform into a well-structured profession, which led to the uniting of professional bodies in Great Britain that formed the Institute of Chartered Accountants in England and Wales.
The field has been split into several spheres, namely financial accounting, auditing, tax accounting and managerial accounting. Financial accounting deals with financial reports of an organization that target an external group of suppliers, investors or regulators. Managerial accounting deals with the analysis, measurement and reporting of the information that is necessary for guidance in decision-making so as to meet the targets of the organization. Auditing refers to the verification of payment records of an organization. Tax auditing refers to the act of preparing, analyzing and presenting tax payments as well as tax returns of corporations, partnerships, sole proprietorships as well as limited liability companies. A public accountant refers to an independent third party that analyses the financial records of client firms to find out whether the assertions in the financial statements are true or not. A private accountant, on the other hand, refers to a person employed by a specific firm to record business transactions that are incorporated into the financial statements of this particular firm.
In terms of experience, public accountancy is better than private accountancy, because the former exposes an individual to many industries as well as international bodies, while the latter restricts experience to the specific firm that the individual is employed by. However, in terms of working environment, the latter is better as it does not involve much travels, strict timelines and different clientele, as opposed to the former. Nevertheless, an individual can gain a lot of valuable experience by starting the career as a public accountant so as to gain experience and thereafter switching to private accountancy with a desirable working environment.
Training is one more criterion used to judge the two accountancy fields. A public accountant possess relevant skills and training in the analysis of accounting systems, evidence collection as well as conducting tests to prove whether assertions are right or not. This accountant also possesses substantial knowledge of the standards of accounting for that apply to the financial statements of the clients. A private accountant, on the contrary, is trained in the processing of transactions such as accounts payable and billing. Therefore, this training may restrict accountant’s knowledge to one specific area. The differences in training bring a wide knowledge and skills gap between the two accountant types, and, thus, a public accountant has a competitive edge over the private one. These skills may enable the public accountant to have a part-time job or extra work hours besides the official employment hence increasing the earnings.
In terms of experience, public accountancy also beats private accountancy in that a public worker is employed in many industries depending on the variety of clients available. This professional also possesses experience in a wide range of skills as a result of executing numerous tasks as opposed to the private employee. This difference leads to the exposure that increases personal knowledge making public accountancy more desirable. A private accountant, on the other hand, works in a single firm/industry and thus he/she is less exposed. Combined with the limited tasks, this situation leads to less experience as well as a narrower range of skills.
Moreover, public accountant is normally certified by professional bodies. This certification adds to the professionalism of the individual and it thus gives him/her better chances of getting a promotion or a job. A private accountant, on the other hand, does not necessarily need certification and thus has less academic significance as opposed to the former. The former also has another benefit of being a member of a professional body. Thus, in this respect public accountancy is much better as compared to the private accountancy. Moreover, the professional body has the power for advocating better payment as well as working conditions for its members, and, thus, an individual member is shielded by the body.
What concerns the matters of career path and promotions, both public and private accountancy are-well organized, whereby in the former, a professional encounters the stages of an auditor, audit manager and an audit partner, whose work is to manage relations and develop new businesses. A private accountant professional also undergoes a series of stages which include an accountant, assistant controller, controller, and, lastly, the chief finance officer who is responsible for internal accounting, treasury functions, investor relations as well as risk management. Therefore, both public and private accountancy have career paths involving various promotions which allow the professional to develop and advance his/her career in either field.
When it comes to the working environment, public accountancy is disadvantageous as it involves a lot of travelling, because the professionals serve many clients who may be in different locations. Long working hours as well as strict timelines characterize public accountancy, because the individual has to serve many clients based in particular deadlines that must be met. Thus, sometimes accountants tend to overwork these deadlines so as to avoid disappointing the industry. The working conditions, therefore, become unstable due to travelling as well as serving many people. However, in private accountancy, travelling is minimal because the professional works in a single company and in a fixed location, and, therefore, the work is not very stressful. When working in such environment, the individual is able to organize him/herself and thus the deadlines are met without much pressure. Minimum travelling also adds value to the social life, especially family matters, because one is able to spend much time at home as opposed to an environment involving long distance travels. The working conditions, therefore, provide a private accountant with a better environment as opposed to a public accountant.
A public accountant can usually boast of having a better resume than a private accountant. Being an employee of a big international audit firm such as Deloitte, PricewaterhouseCoopers or other company that serves a wide range of clientele in different geographical locations adds value to the working credentials of an individual. Therefore, the image as well as the reputation are improved. On the other hand, a private accountant may also be working in a local company that is small and not famous. This company may not add a lot of value to the credentials of this accountant, and, therefore, the individual will possess less competitive power as opposed to the public accountant.
Social skills possessed by both public and private accountant are necessary for dealing and interacting with people. A public accountant needs this skill as he/she is involved in interviewing the clientele as well as criticizing the failures. These interviews might turn into confrontations hence complicating the work, especially for those people who prefer not to talk much. A private accountant, on the other hand, liaises with other departments of the company to formulate and revise the systems meaning that there are no confrontations involved, as opposed to the public accountancy.
Public accountants are not as satisfied with their jobs as their private counterparts, because the public work mainly involves examining the assertion of others in financial statements and judging them as either wrong or correct. However, public accountant’s includes commercial transactions as well as related reports. Private accountancy is, therefore, believed to produce more job satisfaction as opposed to the public accountancy, as, in the case of the former, an individual feels proud of developing a financial transaction and being responsible for it.
What is more, public accountancy can offer more international opportunities. Many public accountancy and audit firms such as Deloitte and the PricewaterhouseCoopers are multinational, and, therefore, accountants who work in these firms have an opportunity of travelling to different countries and getting the necessary exposure. On the other hand, private accountants work locally, and, thus, their chances becoming expatriates are slim because not many corporations become transnational.
Generally, public accountants have the benefit of having more doors open, because these people serve different companies and thus they are in a better position to gain employment overseas. The chances of a private accountant being hired to serve a company are slim as compared to public accountants who are able to audit different firms. A wide range of skills and qualifications also puts public accountants in a good position where they are able to secure employment. Therefore, public accountancy may be considered more desirable as compared to private accountancy.
Higher salaries are reported by public accountants due to the fact that they serve many clients and travel a lot, which requires allowances. Thus, if an accountant spends the allowance wisely, he/she is likely to end up with more money that his/her actual salary. People are not only motivated to work by passion. Income plays a great role too in the choice of a career. Thus, it is advisable to choose a profession that will be able to provide maximum returns. However, even more benefits can be realized if a public accountant ventures into the private accountancy so as to practice his profession in both private and public fields.
In conclusion, public accountancy is advantageous in terms of work experience, certification, training, exposure, more opportunities, resume impact, and international opportunities. As a result, these benefits enable it to have a competitive edge over the private accountancy. However, the latter has got its own benefits that include better working conditions, job satisfaction, less confrontations among others. Both fields, however, share some benefits, especially those that concern career paths and promotions, whereby each field has different stages to be undergone by each professional. Although, despite public accountancy having more advantages, especially in training, experience and opportunities, it has a difficult working environment due to travels, deadlines and confrontations with clients. In order for an individual to reap maximum benefits, it is wise to start by being a public accountant so as to gain a wide variety of skills, experience and exposure as well as certification and then switch to private accountancy. As a result, such an expert will have a wide variety of experience and skills while at the same time enjoying good working conditions. Students should, therefore, aim at gaining all these benefits by becoming public accountants, and thereafter - private accountants. What is more, a private accountant who is also a trained public accountant can be in a position to work for clients as a part-time public accountant or consultant, which will increase the salary through these extra earnings. Wide knowledge in this field is extremely valuable and treasured in the modern economy. Therefore, the urge to learn can drive a public accountant into the private accountancy enabling him to gain knowledge in both fields and thus creating double knowledge. Furthermore, transition from the public accountancy to private accountancy is not very difficult, because the knowledge in these both fields is built on similar fundamentals.