Public vs Private Accounting

The key difference between Public and Private Accounting is that Public accounting is the accounting of financial documents required to be disclosed to the public by the individual or corporation. In contrast, Private accounting is the accounting of the company's financial information in which the accountant is generally employed as the internal manager.

The biggest question arises when you complete your graduation and are looking for career options to pursue. Now, if you intend to pursue a career in accounting, then the decision may come down to the choice between public and private accounting.

The decision may be driven by a few factors (not exhaustive), which include the expectation of the type of work, one's personality traits, and career goals. This article attempts to provide insight into both types of accounting careers, which will help one determine which career path is the best for your future.

Public accounting is the type of accounting where an accountant acts as an independent third party with various client companies to examine the financial statements that a company is required to disclose to the public. The public accountant also supports the preparation of the financial statements to ensure fair representation of the client companies' results, financial position, and cash flows.

• Essentially, a public accountant intends to validate the financial documents, reports, and disclosures from an outside perspective. A public accountant works for companies that provide third-party accounting services to others.
• Some of the examples of work of a public accountant include auditing, tax advisory, and consulting services. The Big Four (Deloitte, E&Y, KPMG, and PWC) are the prime examples of such public accounting firms globally.
• A public accountant must be a certified CPA (certified public accountant).

On the other hand, private accounting is the type of accounting where a company employs an accountant to act as an internal manager and prepare and analyze its financial statement.

• The work of a private accountant revolves around setting up internal systems, which include the recording of business transactions that is eventually the basis for the preparation of the financial statements.
• A private accountant works toward the benefit of a specific company. Additionally, the third-party, public accounting firms are the ones who review and audit the financial statements prepared by the private accounting professionals.
• The validation by the third party is an independent assessment to ensure that the private internal accounting practices meet reporting standards.

The public accountant is trained to develop proficiency in the analysis of accounting systems of companies and the validation of their financial disclosures. A public accountant must also be well versed with the accounting standards (GAAP or IFRS) governing the accounting standards followed in the preparation of the financial statements of client companies. On the other hand, a private accountant’s training helps in developing expertise in recording accounting transactions, which may include billings, accounts receivable and accounts payable, etc. However, owing to the nature and scope of the work, the knowledge of a private accountant may remain limited to certain areas of accounting only.

• Since a public accountant has to work with many client companies, they may develop experience in different industries. On the other hand, a private accountant works on the accounting of an individual company and, as such, develops strong knowledge about the concerned industry but has limited knowledge about other industries.
• A public accountant must be a certified CPA, while a private accountant is not compulsorily required to hold CPA certification. However, there are several other certifications for private accounting.
• Given the nature of work, a public accountant might be required to travel to the site of the client's location and work for long hours to meet tight deadlines. On the other hand, the work of a private accountant is relatively stable, with very little to no travel (fixed work location) and regular hours.
• A public accountant may start their career as an entry-level accountant and advance through a senior accountant position to eventually hold senior management positions like an audit partner in the firm. The career of a private accountant, on the other hand, also begins as an entry-level accountant but eventually advances into a senior management position in the company, like a chief financial officer (CFO).

As can be seen from the above explanations, both accounting categories are very different and serve important roles in assessing a company’s financial statement in their unique ways; Both public and private accounting involve more or less similar kinds of job activities, skills, and education.

However, the distinctions can be seen in the skill developed after the fresh graduates join either career path. Public and private accounting can be seen as "external" accountants and "internal" accountants of a company, respectively. It is important to understand the various facets of the two in the pursuit of either career option. I hope the article helps you to decipher the two cost categories.

This has been a guide to Public vs. Private Accounting. Here we discuss the top differences between public and private accounting and infographics and a comparison table. You may also have a look at the following articles –

• Accounting Firms in Singapore
• Audited Financial Statements Definition
• Mark to Market Accounting