Career Paths in Accounting

Presentation to St. Breandan Elementary Miami, FL.
April 27th, 2004
By: Rene Velez

Outline of Accounting Career

Who Invented Accounting?

The double entry accounting system used today was made famous by a Franciscan monk Luca Pacioli around 1494. It is based on a math formula used by merchants that looks like this; A = L + C. What this means is “assets” equal “liabilities” plus “capital”. So a whole set of books for any business anywhere in the world uses that formula to keep “the books balanced”.

Why is accounting important?

I am sure you have heard this before; “Everything Costs Money”. Indeed it does! So, accounting is how we record, analyze and report everything to do with money. Every business, every government, country or every person for that matter has there own personal accounting equation. Yes, we have your number! We can tell how much you are worth, how much purchasing power you have, what are your spending habits, how much you will owe the government in taxes, how you compare to others your age and at your social and economic level. Accounting is how we accountants examine your economic strengths and weaknesses. You might say just as a doctor draws a sample of blood to determine your health, accountants can look at your balance sheet, income statement and statement of cash flows and determine how healthy you are from a dollars and cents point of view.

Isn’t accounting boring work?

You do have to like working with numbers and also have a liking towards what happens with money. From that point on accounting is as much fun as you make it! There are many specializations that can be classified by practice or by industry. For example just to name a handful:

Example of by practice would include: (There are specialties here too)

- Taxation - Information Technology
- Forensic Accounting - Advisory Services (consulting)
- Auditing - SEC Compliance
- Estate and Gift Planning - Legal Support Services

Example of by Industry would include:

- Real Estate Finance - Non Profit Organizations
- Oil & Gas industry - Governmental Accounting
- Healthcare Management - Retail/ Wholesale Businesses

You can work for the Federal Bureau of Investigations (FBI), Central Intelligence Agency (CIA) or the Internal Revenue Service (IRS). If you like excitement enlist in law enforcement and investigations or one of the criminal divisions. In some cases you get to wear a badge and have a gun strapped to your hip. Your job is to catch the modern day “Al Capone’s” and other bad boys and girls. You can work for any business in the world or work in public accounting for multinational accounting firm. Or you can be a consultant such as what I do.

Today’s Accountant is smart and must have good people skills!

The public at large often does not know what it takes to be a good accountant. There are a number of reasons for that. First, we are very good at keeping secrets. We are very confidential people because we know a lot of things others don’t need to know. A good accountant is someone you can trust. Second, we generally have not done a great job to show how cool we really are. We do some very cool stuff. We are detectives when we are looking for clues, we are lawyers because we have to work with tax law, and all kinds of other legal issues. We are doctors that can bring business back into health or determine what needs to be done to make a business better. We are trainers because we teach workers and executives. We are a very high tech profession when it comes to information technology. In fact the first computers ever used in business was for accountants. You might say we started today’s information revolution. We are law enforcement when people either break the law or when we keep people from breaking the laws. We are engineers when we deal with manufacturing and very technical science issues that affect business. We are statisticians when we have to figure the odds of something happening like whether we will win the world series or the super bowl or what directions the economy is headed in.

To be a good accountant you have to know culture, religion, education, science, art. If you travel to Japan you have to know what is accepted there besides taking off your shoes when you go to someone’s home. You need to know different religions, if you have clients who are different than your own religion. There are many churches, temples and other religious organizations that need accountants. It helps to read write and speak more than one language. Today business is global so you will do business 24 hours, 7 days a week all over the world. You have to know what technological or scientific discovery can change an entire economy or business such as what has happened now during the information age. The discovery of new medicine often coupled with technology. You should know what art costs as many businesses and individuals invest in these not just for pleasure but for money also.

Your biggest clients will be very wealthy, highly educated, sophisticated and will be very well traveled. You need to be able to have dinner with them and know how to appreciate their life style which may be very different than your own. You have to be a real diplomat have good manners, be polite and be articulate in order to carry a conversation about many different subjects. What you learn from 1st grade through the rest of your life will be part of being a good accountant.

Specializing in an Area:

Just as there are many types of doctors there are many types of accountants. In fact we have many different types of designations. A designation is a title or certification that is given to you when you have studied, practiced or become a master in a particular area. Some of these titles that accountants often get are:

- Certified Internal Auditor (CIA) - Certified Management Accountant (CMA)
- Certified Public Accountant (CPA) - Certified Business Appraiser
- Certified Financial Planner (CFP) - Licensed/ Chartered Insurance Underwriter
- Certified Information Officer (CIO) - Certified or Chartered Actuary

How long do you have to go to school?

To become a Certified Public Accountant (CPA) you sit for a uniform exam you can take in any state. The practice of accountancy is governed by each state so once you pass the exam you request licensing at the State Board of Accountancy of your choice.

Although each state is different, generally the trend is you have to get a 4 year degree typically in business or accounting. Or what is commonly known as the Bachelors degree. In addition you will have to, at minimum, start on your Masters degree to sit for the exam. So in total it’s 6 years for college level education.

The exam covers financial accounting, taxation, auditing and business law. The exam for the CPA designation is completely computerized now. When I took it they didn’t even allow calculators. Yes I passed it! So you can too!

Who makes the rules of accounting?

Generally there is no one source of rules for our profession. We follow what is called “Generally Accepted Accounting Principles”. This is to say we take from many different areas and we come up with very technical and special rules to make sure we can report information that is very useful to everybody who needs to know. However, we have a number of different organizations that set standards and create rules that we follow. Here are some that come to mind.

- The Internal Revenue Service - Office of Management and Budget
- Securities and Exchange Commission - The State Governments
- Financial Accounting Standards Board
- American Institute of Certified Public Accountants

Accounting is a world of high finance, business & technology with a global implication.