Esther
What is the difference between public and private accounting firms?
Whenever I hear the word "accounting," my mind would immediately think of the four big four firms. I never fully understood what is the difference between the big four (public firms) and private firms that makes the big four, distinguished targeted employers. I learned before that private company's accountant would be in charge of the company's taxes, while public accountants deal with different companies' taxes. I was also told before that they consist of very different cultures that is not suitable for everyone. Now I am wondering are there any other major differences between the function of the public and private firms? #accounting #accountant #financial-accounting #senior-accounting-manager
5 answers
Ly Pham
Ly’s Answer
Hi Esther. One major difference between public and private accounting is that public firms offer multiple services to a variety of business clients in a variety of industries. These services are generally assurance (audit) or compliance (tax). The SEC dictates all publicly traded companies to report audited financials in accordance to GAAP. The Big 4 accounting firms often score publicly traded companies as their clients. Working for the big 4 is often challenging because of the complex nature of the job and you will be working long hours. Private accounting means compiling a company's financial statements or whatever necessary, depending on the size. This company can be a private company (mom & pop shop) or a publicly traded company (Fortune 500). To be an accountant for a publicly traded company or auditing one, you will need to be a licensed CPA.
Jason Williams
Jason’s Answer
Quick definitions to help frame my answer. While a firm can be any company, for this answer I'm going to use firm to mean an accounting firm and a company to mean a business (corporation, partnership, LLC, etc).
When we say public accounting, it means you work for a an accounting firm. In this case, public is used to denote you are serving the public (not a company). You will mainly be auditing company financial statements, which means doing work to assure that they are not misstated. Public accounting firms also prepare tax returns on behalf of companies and also provide consulting services (but not to audit clients). So if you go into public accounting, you work for an accounting firm and companies are your clients.
When we say private accounting, you work In the accounting department of a company. This could be AP/AR, payroll, benefits accounting or accounting for things specific to that company (i.e. Loan Accounting for a bank). Companies register with SEC that have their stock listed also have financial reporting teams, internal audit teams and other areas that accountants can work.
Within both public and private accounting, there is a whole range of firm/company size and complexity. The Big four are the largest 4 public accounting firms and they audit the largest public traded companies. But there are literally thousands of accounting firms so the vast majority are not big four.
It's much easier to go from public to private, so common path is start in public, get your CPA then if that career isn't what you want love to private. But there are many successful accountants who work in private their whole career and move up the corporate ladder that way.
Barbra Taher
Barbra’s Answer
Kristina Verras
Kristina’s Answer
Rose McGovern
Rose’s Answer
A CPA is not required for just any job at a Public Accounting firm, but most associates are on track for licensure within 2-3 years. Public firms include both the Big 4 and thousands of smaller firms that deal with multiple companies and individuals. Private accounting jobs include senior CPA-preferred jobs, as well as entry-level and mid-level internal jobs.
I started as an accountant at a bank, got an MBA, became a financial analyst, and then sought my CPA license. It would be very difficult for me to enter public accounting now, except as a sole proprietor.