An important choice for all college graduates is to decide on a path for their accounting career. Most college students are told the same thing: get an internship for some quality experience prior to graduating. For those going into public accounting, there historically were only two choices — tax or audit. A recent shift has provided a new niche to focus on — advisory services. I consulted with some partners at my firm about the differences among the three and what to expect in a typical workday.
Tax compliance is extremely deadline driven. Depending on the size of the firm, you may be a specialist in partnerships, corporations and/or nonprofits, each of which have their own deadlines throughout the year. If work piles up, there can be lengthy work hours to get through any backlogs, but there is potential for slow times throughout the year. Very rarely is compliance work done at the client’s office. Typically, financial statements are provided, and a tax return is furnished from this information. The time it takes to prepare returns can vary based on complexity. A tax professional may have hundreds of clients they work on throughout the year.
Taxing jurisdictions are constantly adapting to the changing financial world. The Tax Cuts and Jobs Act of 2017 made significant changes to the tax code, specifically to the international market, making earnings and profits earned overseas taxable regardless of repatriation. Tax planning is extremely valuable in this situation to minimize taxes paid. These are typically done in specialized grounds such as international or state and local tax.
Audit deadlines are based on client needs, such as a bank application or board of directors’ request. This provides for more consistent work throughout the year without the influx of work congested around a few certain deadlines. The length of the audit can vary based on many factors such as accessibility of documents needed and what type of report is being provided (audit, compilation or review). Work is usually done at a client’s location which can be unfavorable if the commute is a burden. Depending on the size of the clients, an auditor could have as few as five to 10 clients.
An auditor will sharpen their accounting skills. Auditors need to understand the blueprints of how financials are built and structured between an income statement and balance sheet. An auditor is providing an opinion on how accurately a company’s books and records are portrayed. They are examining how the financials are compiled from annual transactions. Understanding debit credit accounting is extremely beneficial.
Advisory services are a value-added service. It is a consulting service in which one uses research, conclusions and recommendations that are shown to the client for decision making. It does not necessarily need to be tax or audit related. There are many different types of advisory services that can be provided because most services begin with a client issue that is identified from a conversation. Advisory services can be expensive and time consuming, but it provides many individuals a fast track to partner as they can be offering a service no one else is providing. It gives many young professionals the chance to focus on a specific niche, specialize it and grow the practice.
Summing It Up
The options for today’s accounting professionals far exceed what use to be the norm. What it really boils down to is that everyone needs to be some type of advisor. Every auditor or tax professional needs to always be considering ways to improve their client’s situation. The days of just preparing a tax return or an audit report are no more. Resolving problems for your clients will build your value as a trusted advisor.
You can look at tax, audit and advisory as driving a car. Your rearview mirror is typically your tax compliance. You are looking back at the past year and reporting the financial data based on what has happened. Audit is being in the car. You are reviewing the current status of the company. How are the gas levels, the speed limit? Is everything being portrayed as it really is? Advisory services are looking at the road ahead. Are there any roadblocks? Is there anything we need to adjust for?
Joining a firm where you can be exposed to the various options can help you decide what field you’d like to focus on.