Accounting

Accounting is the method by which those who are trained practice their trade in managing financial records. All businesses are required to rely on certain accounting procedures in order to track and record all business transactions. Accountants are held in very high esteem and are charged with the record keeping of large and small entities both public and private. Accountants go to school for several years to learn the accounting trade and then they have several choices of how to apply their knowledge in a career that suits them the best.

Accountants do indeed have a lot of choices as to what industry they’d like to work in and what kind of accounting they’d like to do. For example, one accounting professional might be a tax accounting specialist and have several clients for which he does nothing but taxes. Another accounting professional might work in the entertainment industry with just a few select clients for whom he manages their entire financial portfolio.

Those of us outside the accounting profession tend to think of accountanting experts as geeks in suits who love numbers. What many of us don’t realize, however is that accounting can be an exciting career path. Every industry has to have accountants that specialize in specific areas of accounting. That includes the FBI, who has special agents who are also CPAs who practice forensic accounting. It also includes accountants and the accounting firms that certify the results of such voting contests as the Academy Awards!

Accounting professionals have suffered from the unethical reputations of a few bad apples over the last few years and are rigorously working to change and enhance their public image.

A person becomes a CPA or Certified Public Accountant after passing the licensing exam in their state after having met all of the qualifications to sit for the exam which differ by state however most states require at least a bachelor’s degree and some require a certain amount of accounting experience. For example, Texas requires the CPA candidate to have at least a bachelor’s degree and 2 years of public accounting experience. In addition, the candidate must have good moral character. A background check is done by the state Accountancy Board to make sure this is the case.

New York requirements are similar but no accounting experience is required before licensing. There is an age requirement of 21 and they also require the CPA candidate to have good moral character and will conduct a background check. All of these requirements must be met before the candidate can even sit for the exam. Once the accounting exam is completed, the individual earns their certificate and can legally practice accounting anywhere in New York.

All accounting professionals are not CPAs however all CPAs are accountants. Once someone has reached this distinction in their career, they will never be out of a job. That’s because the possibilities of employment exist in so many different industries and also because of the vast array of job titles and responsibilities.

There are other accounting credentials that a accounting professional can obtain as well. CFE (Certified Fraud Examiner) has become increasingly necessary and thousands of CPAs have added this certification.

More than 15,000 CPAs have obtained their Certified Fraud Examiner (CFE) credential. Unfortunately fraud is a multi-billion dollar industry in the public sector today and personnel trained in the investigation and discovery of misappropriated funds are needed to uncover these actions and help to prosecute the persons responsible. Most fraud examiners also have training in some facet of law enforcement or criminal justice. Cerfified Fraud Accounting professionals are needed in various industries where fraud may arise, and some work in tax departments.

There is usually detective work involved in forensic accounting. A firm may call in a CPA who is also a CFE for cases such as suspecting one employee of taking kickbacks or embezzling money or a time discrepancy where there is no suspect but money has been missing every month for six months. Not only does the forensic accounting professional need to find the problem, which will entail investigation and the gathering of evidence, but he also needs to pinpoint the internal controls or lack thereof and suggest different control procedures that would prevent the same thing or a similar situation from happening again.

Forensic accounting professionals are needed in every industry where accounting is practiced. Accountants who hold these types of jobs are not buried in numbers all day monotonously punching numbers into a computer but rather like an investigator, they’re trying to solve a puzzle and find and fix problem areas in the organization.

Say that Joe Smith manages the charitable gifts department of the firm for which he has worked for 3 years now. Since the company he works for sets aside 10% of net profits for charitable contributions, Joe’s job is to investigate worthwhile charities and appropriate a certain percentage of the profits for each charity. His boss gets a report from Joe stating which charities received money for that month and how much. Each month, Joe gets the net profit data from the accounting department and starts contacting charities and interviewing deserving candidates.

When the decisions have been made, Joe types a letter to each respective charity and lets them know how much money they can expect to receive and when a check will be sent to the charity. His boss signs these letters and Joe goes back to work. Joe rarely misses a day of work because he has so much covering up to do regarding his accounting practices. However, he is out one day and one of his assistants needs help locating a file for one of the charities. Joe’s boss finds the file and noting that steps mandatory to establishing a non-profit organization had not been finalized, he makes some calls. It turns out Joe should have gone to work that day because it is his name on all the applications the “charity” had filed.

The Certified Fraud Examiner discovered that this was the third “charity” that Joe was operating. He had gotten in a hurry this time and started writing checks to the charity before it was a legal charity exposing himself as the person who had filed the paperwork. Joe was fired and prosecuted after the accounting investigation concluded he had been embezzling $4000 a month for 16 months.

The CPA had some suggestions for Joe’s boss to implement to ensure this kind of accounting would never happen again. First, he advised Joe’s boss not to have the person who writes the checks be the one to decide which charities can receive them. In addition, Joe’s boss should have an employee or a supervisor research any charity they haven’t heard of to make sure it is a legitimate charity. Having the same employee do too many related tasks is a dangerous practice in the workplace when there are opportunities for dishonesty such as this.

That’s not exactly counting beans is it?

A CPA can hang out his or her accounting shingle, build a loyal customer base and work for themselves the rest of their lives or CPAs can go straight to the public sector. Being qualified to work in the field of accounting affords an individual numerous career options.This is where all the choices come in although understandably you don’t always have a choice as to what career opening is available at the time you are looking for work. You should at least assess your personality and your likes and dislikes and try to come up with the type of accounting job or the type of industry for which you would like to work. Then concentrate your focus in those areas.

Ever think you could be in the heart of Las Vegas excitement after deciding to be a CPA? You can! Casinos have a great need for accounting professionals like CPAs and CFEs. While the CPA is more of the “fix it before it’s broke” person, once it is “broke,” the CFE comes along to investigate. Just think about all the internal controls a casino would need to have in place. With the millions of dollars going through the doors on a daily basis, auditors are kept busy!

A CPA working in a casino is likely to make sure internal controls are followed such as how many people have their hands on the money and who is able to open a slot machine with a key. Employees unfortunately are not above stealing from their employers, even in Las Vegas so the casino has to have stringent accounting policies in place and someone to make sure they are being followed.

Now suppose the same blackjack dealer comes up short once a week for eight weeks. He’s probably going to end up having a meeting with a Certified Fraud Examiner after the investigation has been completed.

When they’re not in Las Vegas or in the FBI or at the Academy Awards confirming the ballots, some CPAs and accounting professionals actually sit in an office and prepare taxes. In fact, an Enrolled Agent (EA) is an accounting tax specialist. An EA is not a CPA or an accountant however but instead works solely with taxes. The IRS tests the EA candidate and also conducts a background check. Many businesses rely on a tax accountant to handle a business’s taxes each year. The appropriate filing of taxes is a serious endeavor and a tax accountant is trained to understand the various laws that surround the process of tax filing.

Tax accounting is a popular field for the CPA to set up shop on his or her own. The costs to start up an accounting business such as this are minimal; some CPAs even work from home. Unlike those seasonal kiosks set up to do your taxes in 15 minutes or less, the tax accountant who is a CPA has plenty of business all year. Some people, such as those who are self-employed pay to have their taxes done on a quarterly basis and may want to hire a CPA.

Additionally, many CPAs consult with clients for a fee. There are clients with all kinds of situations that need tax advice. Some clients hire CPAs to manage their entire budget. In fact, some people don’t even know how much money they have until they ask their CPA!

Some CPAs obtain their Personal Financial Planning (PFP) credential and are then able to help individuals plan their financial lives. A Personal Financial Specialist (PFS) is one who has obtained this particular accounting credential. There are slightly over 3,000 individuals in the United States who have attained the title of CPA/PFS.

Financial planning just makes good sense. This kind of accounting professional can provide you with the tools you need to make a financial plan whether you have a little money or a lot. Financial planning starts with a budget but it is much more than a budget. A budget is how you’re going to spend your money on paper. Or at least it’s the way you intend to spend your money. Then you get a flat tire, the dog throws up on the carpet and your water heater goes out.

Suppose for a moment that you contributed every month to a car maintenance fund. For the past 5 months, you’ve been lucky and only needed oil change. In the meantime your fund has been growing and now you have the money to either pay to get the tire fixed or buy a new one. Suppose again that you have been contributing every month to a household maintenance fund. You may or may not have enough in the fund to get a new water heater and to get your carpets cleaned but you get the idea.

This is part of what professional with the CPA/PFS credentials can help you plan. If you plan for absolutely everything that could happen or at least the things you know will happen, like yearly premiums, Christmas and things that tend to sneak up on us, you will have the money to take care of all your needs and when something unexpected does happen, your budget won’t go out the window.

CPAs will go to school for approximately 4-6 years depending on whether one wants to stop with a Bachelor’s degree or go on for the Master’s. The amount of time spent in school studying accounting is also extended if the student decides to take up accounting part-time. It will be helpful to the student accounting professional to decide ahead of time what major area of accounting to go into. The reason for this is so an individual can take other courses relative to the work he or she will eventually be doing.

For example, you have a degree plan worked out to become a CPA. That’s great but you could still be doing one of a thousand different jobs. Suppose however, that you also knew you wanted to be a fraud investigator. Now you can tailor your education to the exact accounting field you plan to enter. The CFE or Certified Fraud Examiner might take courses in private investigation, criminal justice, law enforcement, psychology or any of the humanities.

Another thing someone just entering school to work towards becoming a CPA should be aware of is that different states have different requirements as to who can sit for the CPA exam. You can find this information on the website of the National Accountancy Board as it is different for every state. Some of the criteria include so many semester hours of certain accounting classes so you’ll want to check this at the beginning of your educational endeavors.

The range of salaries for CPAs and accountants in general vary widely although of course, the CPA is the more lucrative career. The industry in which one works as a CPA may make some difference too. At the bottom of the scale, a new CPA is going to make close to $30,000 a year but with only a few years of experience, that $30,000 can become a 6 figure income.

The government needs morally upstanding, well educated CPAs and there are many government positions available for trained accountants. Actually, there are accounting professionals and CPAs involved in all areas of finance where the government is concerned. The IRS has CPAs that conduct audits and analysis regarding the overall income tax system.

The General Accountability Office is a branch of the federal government that manages finances and tracks spending, monitors internal control and aids in all aspects of financial affairs of the government, including the military. In fact, one of the recent accomplishments of this office as noted on their website is the auditing of military purchase card holders.

Another audit the General Accountability Office recently undertook was the auditing of the major airlines’ loss of billions of dollars due to the events of September 11, 2001.

Government accounting takes CPAs into many diverse situations. Even the FBI uses CPAs that are Certified Fraud Examiners. These CPAs find themselves in all kinds of sticky situations and must be part private investigator, part accountant and on the alert at all times. They have to dig when perpetrators think they have erased all traces of misappropriations of funds yet the forensic accounting team is able to uncover things that are seemingly buried.

Technology and time have changed accounting practices in big ways in the last several decades. We have accountants and CPAs and fraud investigators in areas that didn’t even exist 2 decades ago. On the plus side is the diverse environments accounting professionals can find themselves affiliated with, for example from the Las Vegas Strip to the Academy Awards to analyzing tragedies.

Anyone that still believes accounting is a boring profession should spend a day in the life of a forensic CPA or one working with the government or how about the ones working with major league ball teams who are there to manage all aspects of the finances of the teams.

There are at least 5 CPAs in Congress although as Congressmen and women they are not practicing. However, the knowledge they have obtained about how business and finance works aids them every day in their present duties.

Accounting – It’s not just about numbers anymore.