Accounting Career Advice (#263)

In this podcast episode, we discuss a number of listener requests about accounting careers. Key points made are noted below.

Moving from Public Accounting to Private Accounting

The first comment comes from Weston, and it is, I don’t want to stay in public accounting my whole life, but would rather go elsewhere and track for a CFO position. Please talk about careers outside of public accounting that accountants who start there can branch out into, and the type of firm that I would learn the most for doing something like that?

I’m surprised no one has asked this question before, because almost everyone in public accounting ends up somewhere else – and the chief financial officer position is a great target, since I think it’s the most interesting job out there. A pretty common career transfer is from being an auditor to being a company controller. Once you’re a controller, the next promotion is to CFO, so that’s a great track to follow. The trick is to stay in auditing long enough to qualify for a controller position somewhere else. That usually means hanging in there long enough to make it to audit manager, and then staying in that position for a couple of years. If you just can’t stomach being an auditor long enough to make manager, then keep in mind that shifting out of a more junior auditor position will land you in a more junior corporate job, too – like assistant controller or general ledger accountant.

As for the question about the type of firm that you’d learn the most from – it’s more a matter of the size of the audit firm. A big audit firm has a larger alumni network and a bigger client list, which makes it easier to network your way into a good job somewhere else. So in short, bigger is generally better. That does not mean that you absolutely have to work for a Big Four audit firm. It’s also quite acceptable to work for a large local or regional firm.

The Differences Between Finance and Accounting

The next comment comes from Nathaniel, who says, I’m interested in a career in finance or accounting. Please discuss the differences. Also, please describe the characteristics of a good accountant. I’ve been describing accounting on this podcast for the last ten years, so I’ll assume you’ve figured out that part. Finance is a bit more of a gray area for accountants. It’s essentially about tracking cash, organizing cash, and - of course - getting more of it. So that means setting up bank account structures to collect cash, aggregating the cash in those accounts into investment accounts, and investing the cash. It also means conducting a lot of cash forecasts, and working with lenders and investors to pull in more cash when you need it. On the one hand, this is an incredibly valuable job, since a company can go under if no one is watching the cash. On the other hand, it’s completely intangible – there’s nothing you can see, so you might not get an overwhelming sense of satisfaction from working in finance. Of course, you could say the same thing about accounting.

Another issue with finance is that smaller firms don’t have these positions. Instead, this is handled within the accounting department. So, there just aren’t as many finance jobs as accounting jobs.

As for the characteristics of a good accountant, I’ll focus on just one thing, which is the ability to see both the big picture and be detail oriented – at the same time. Most people think that great accountants just dig into the details and make sure that every transaction is accounted for perfectly. The accounting standards are followed and the correct accounts are used. That is a baseline requirement for the job, but if that’s all you are, then you’re more of a really good clerk than an accountant.

That’s where the big picture part comes in. A really great accountant is also able to see which informational items really matter to a business, and which ones can be ignored. For example, the great accountant will zero in on variances that could be leading indicators of a major problem, like an uptick in the number of customer returns that could indicate a product flaw, and will investigate it in detail. Management needs to know about that kind of information. At the same time, that accountant will completely ignore a jump in office supplies expense, because in the greater scheme of things, it just doesn’t matter. Not many accountants have both of those attributes, especially the big picture view. It’s worth pursuing.

Career Paths for Tax People in CPA Firms

The next comment comes from Tyler, who asks, please talk about the career paths of people who work in tax at a large CPA firm. The range of options available to a tax person is not that broad. If you really like taxation – and yes, some people do – then your best bet is to stay at the CPA firm for as long as you can. By doing so, you get to deal with more clients, each having a different set of tax problems that you can get your kicks out of solving. If you get hired away by a large company to do their tax work, you may find that the work is more boring, because you’re now dealing with the tax issues of just a single client.

And your final option is to go into business for yourself. In this case, you’ll probably end up doing tax work for smaller clients or individuals, since the big CPA firms tend to scoop up the tax work for the largest companies. You may find that these smaller tax jobs aren’t all that interesting; on the other hand, there are plenty of smaller firms out there, so you could develop a large group of clients. But give it time. Creating your own tax practice can take years of networking before you’re maxed out.

Why it is So Difficult to Get a Financial Analyst Job

And our final comment comes from Jason. It’s a long comment, so I’ll summarize it to say, how come it’s so difficult to get a job as a financial analyst? There are a couple of issues here. The financial analyst job is a hybrid between accounting and finance, and only large companies even have the position. This causes a couple of problems. First, you may need degrees in both accounting and finance to be fully qualified to do the work – though if you have a choice, get the accounting degree first – it’s more relevant. And second, because the position is only offered at large companies, you have to be willing to work where those companies are located, which usually means larger cities.

One variation on the financial analyst position is that it’s also commonly used in funding companies, like investment banking and private equity firms. They use these positions to calculate future cash flows for their clients, which is then used as one basis for deciding whether to invest in them. The same analysis can be used to convince investors to put money into a startup company. So if you want to make a lot of money, have virtually no time off, and experience an incredibly stressed life while flying business class, then consider pursuing one of those positions. But keep in mind, investment bankers usually only hire from the top 25 business schools.