Want to know what is public accounting and the top 10 service providers? In this article, we will learn all about public accounting.
Public accounting refers to a business or an individual that provides accounting services to other firms. They serve businesses, individuals, governments, and non-profits by preparing their financial statements, filing tax returns, conducting audits, providing consultation and advice, etc.
What is a public accountant?
A public accountant is an accounting professional licensed by the board of accountancy of each state. The resources to obtain the license are provided by the American Institute of Certified Public Accountants (AICPA). The CPA designated accountants help in enforcing professional standards in the public accounting industry.
These accounting professionals offer financial statements audits and other attestation services to help organizations get information regarding their financial health. They help families and individuals as well by providing valuable knowledge and advice on taxes and financial planning. Public accountants are committed to lifelong learning and follow a strict code of professional conduct.
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What is private accounting?
Private accounting definition refers to the business practices of an accountant serving a single company. A private accountant is responsible for analyzing and preparing financial reports internally of a company, sending invoices to clients, and holding accounts payable. When a company is getting audited, the work of the private account department is reviewed by the public accounting firm professionals.
The basic motive of establishing a private accounting department is to set up an internal system to record business transactions. They also help company’s stay informed regarding their financial statements. In terms of education, there isn’t much difference between public and private accounting.
Certified public accountant definition
A certified public accountant definition, an accounting professional who has met licensing requirements through educational training, public accounting experience, and qualifying for the CPA exam successfully is known as a CPA certified accountant. Typically, if a local certified public accountant earns a license in one state they can get licensed in other states as well based on reciprocity laws.
Across the industry, jobs for certified public accountants are higher due to their reliability, in-depth industry knowledge, and credentials. While we define certified public accountants, we should understand that along with keeping and interpreting financial records they perform several additional services.
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Top 10 public accountants services
A public accountant job description includes multiple job roles for his or her clients. Below, we will look into some of the major services provided under public accounting,
- Audits and reviews
The primary task involved in public accounting jobs is to audit the books of clients. A lesser form of audit is known as a review, which a business might prefer due to its lesser cost.
- Consulting services
A business may hire the services of a public accountant for consulting activities such as describing possible strategic options, advising on the adequacy of a system of controls, and providing assistance in information system installation.
- Taxation services
Another important role of a public accountant job is to advise individuals or businesses on effective tax strategies and provide their expertise in preparing tax returns for the clients.
- Forensic accounting
Forensic accounting is a specialized field in public accounting where accountants reconstruct destroyed financial records or investigate if there are any signs of fraudulent activities. Certified public accountants gain specialization in forensic accounting to perform this role.
- Financial planning
Public accounting job description includes advising a client with financial planning strategies, such as how to transfer a business to a buyer to minimize the short-term tax impact on the client.
- Litigation services
Public accounting job descriptions also involve providing detailed analysis to an attorney in order to present a winning case in court. Public accountant titles typically use these skills for divorce settlements, bankruptcy proceedings, business disputes, etc. They may also provide testimony as an expert witness.
- Valuation services
Valuation services are provided as part of public accounting that includes valuation reports, valuation engagements, limited scope valuation engagements, calculation engagements, and more.
- Financial reporting services
Under financial reporting services, a public accountant performs several jobs such as compilation, preparation of financial statements, disclosures and notes to accounts, corporate secretarial services, performing calculations required by accounting standards, etc. The financial reporting framework has a summary of significant accounting policies and other explanatory information.
Public accountant job title includes bookkeeping services that comprise of preparing budget, income and loss statements, maintaining and evaluating financial records, making statutory returns as permitted by law.
- Management accounting
Accounting job titles often cover management accounting services that contribute to a company’s long-term growth. They help managers make smart business decisions by providing accurate and timely financial and statistical information through management reports and accounts.
Public versus private accounting
While comparing private vs public accounting, the main difference is that in public accounting the professionals keep account of financial documents which are supposed to be declared to the public by an individual or a business, whereas private accounting is the accounting of financial information of a business in which an accountant manages internal finances.
In public accounting vs private accounting, the latter exposes an individual to more industry experience as compared to the former. Public accounting vs private also suggests that a public accountant must be CPA certified while it is not compulsory for a private accountant.
Top 10 public accounting firms
According to the Inside Public Accounting’s IPA top 400 firms list, here are the top 10 public accounting firms in the U.S.
- Deloitte provides audit, consulting, tax, and advisory services to many of the world’s largest organizations, including nearly 90 per cent of the Fortune 500 and more than 7,000 private companies
- PwC is a New York-headquartered professional services firm
- Ernst & Young LLP is a member firm of Big 4 accounting legend EY
- KPMG fourth-largest accounting firm in the U.S. by revenues
- RSM US LLP in Chicago is the leading U.S. provider of audit, tax, and consulting services focused on the middle market
- BDO USA, LLP is the U.S. member firm of BDO International Ltd., one of the world’s largest accounting and advisory organizations serving the middle market
- Grant Thornton LLP is one of the world’s largest organizations of independent audit, tax, and advisory firms
- CLA (CliftonLarsonAllen) is the 8th-largest CPA and consulting firm in the country according to Accounting Today’s 2021 Top 100 rankings
- Baker Tilly US, LLP (Baker Tilly) is an advisory, CPA firm headquartered in Chicago. It currently ranks among the top 15 largest CPA firms in the U.S.
- Crowe Horwath LLP was founded in 1942 and is a public accounting, consulting, and technology firm with offices around the world
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Public versus private accounting
The top differences between public accounting and private accounting are,
- Professionals in public accounting are more likely to move up the ladder as compared to private accounting due to their vast industry exposure.
- Public accounting professionals may have to travel frequently to the client’s office whereas private accountants are usually linked to a single business or company.
- Public accounting professionals get more opportunities to specialize in a particular area unlike private accountants
- There is a huge amount of stress on public accountants to carry out their duties effectively whereas a private accountant works in a stress-free environment.
Key items to include in public accounting resumes
Keep in mind these 4 key items while writing a certified public accounting resume,
- Relevant experience – Make sure to mention the experience relevant to the public accounting job position you are applying for.
- Mention the right skills – Don’t forget to mention the right skills for the role. Look at the keywords in the job description and find the ones applicable to you.
- Achievements and accolades – List quantifiable achievements instead of writing dry job descriptions.
- ATS-friendly – Use keywords smartly to get past the Application Tracking System used by the hiring managers.
Differentiating accountant versus bookkeeper
Here’s what you should know about the difference between an accountant and a bookkeeper,
- A bookkeeper keeps a direct record of all purchases and sales related to a business whereas in public accounting the collected data is analyzed to find out what that means for your business.
- An accountant cannot be a bookkeeper, but a bookkeeper cannot be an accountant without earning a proper certification.
- Bookkeeper is more of an administrative role that handles day-to-day financial tasks. Comparatively, an accountant is a more subjective role in which an accountant uses bookkeeping data to provide financial insights to the business owner.