By William J. Hayes, managing editor, Pennsylvania CPA Journal
PICPA member James J. Caruso, CPA, CGMA, has experienced life in both public accounting and industry. He started his career at Deloitte, quickly progressing to the level of senior. He has also served as a partner with Fesnak LLP and RSM US LLP. But he has also found a comfort zone in the corporate setting, holding the rank of chief financial officer at Irving Tanning Company, Simplura Health Group, and now J. Knipper and Company | KnippeRx. As someone who has seen several sides of the accounting world, Caruso agreed to sit with us and discuss the differences between the two work environments, including daily routines, education levels needed, and opportunities.
Can you give us an idea of how the daily routines differ between public accounting firms and industry?
This depends on many variables, such as career level, type of role (even in public accounting, there are differences among audit, tax, consulting, etc.), size of firm or company, etc. Broadly, work in a public accounting firm is often project-based, whereas in private industry the focus is more on day-to-day routines. Of course, you might be involved in one-time projects even in industry, and there are day-to-day administrative responsibilities even in public accounting. But generally speaking, daily routines in private industry are going to be built around regularly recurring processes such as month-end closing and financial reporting, forecasting, budgeting, transaction processing such as billing and payments, etc., while in public accounting your days will be driven by one or more client engagements and their respective project plans.
Would you say the education levels or certifications to work for either are different or basically the same?
I would say they are largely the same, except that holding a CPA certification is a bit less important in private industry than in public accounting. Many higher-level positions in private industry prefer a CPA or master’s in business administration, while in public accounting it is going to be mostly a CPA (except in certain types of consulting).
What are the differences in career paths? Are there more opportunities in one versus the other?
I tend to think there are more opportunities to reach high-level positions in public accounting, although private industry probably has a greater variety of roles. The top position in public accounting is partner, and theoretically there is no limit to the number of partners there can be in the firm, as long as the firm is growing. In private industry, the top financial position is CFO, and there is only one of those – with no guarantee that the position will open up. If your public accounting firm is acquired, you are very likely to keep your role as partner, but if you are a CFO and your company is acquired by a strategic buyer, well, the combined company only needs one CFO. In fact, in private industry, accounting overall is a cost center at risk of elimination upon acquisition by a strategic buyer, whereas in public accounting you are a revenue producer. Of course, if you aspire to be a managing partner in public accounting, there is generally only one of those also. Not everyone aspires to either of these top positions, and the availability and variety of other opportunities is going to depend more on the size of the CPA firm or private company. Public accounting generally has five or six levels: staff, senior, manager, senior manager, partner (and maybe director). In larger firms there may be some lateral moves you can make into different practice areas or industry groups. In industry, there may be fewer rungs on the ladder in a small or middle-market business: staff and senior, controller, and CFO. There may or may not be an accounting manager and/or assistant controller. Larger companies, though, have these same positions at both the business unit and corporate level, and likely have a variety of other positions in financial planning and analysis (FP&A), cost accounting, pricing, internal audit, etc.
What personality traits work better in public accounting and private industry? Does it take a certain type of person to do one versus the other?
Rising to the partner level in public accounting generally requires the ability to bring in business, so if you do not want to be involved in sales and business development you may be better off in private industry. You can rise to a certain level in public accounting before you really have to worry about this, but at some point you'll need to decide if sales and business development are for you. Even at lower levels in public accounting, you may not need to originate business, but you will be involved in proposals and pitches. So, you need to like that sort of thing. Even in private industry, you will need to sell yourself and your ideas, and in a large company networking is still important. Ultimately the skill set is similar if you think about it. But some people do not like the obligation or pressure to bring in business and prefer to be a technician working behind the scenes. Larger public accounting firms do have those opportunities, but smaller ones may not. I think people that enjoy a more structured, academic approach to things, with access to tools and methodologies, may be happier in a public accounting environment; whereas many private industry situations (except large companies) are more "roll up your sleeves," ad hoc types of environments. Public accounting tends to stay on the cutting edge with technology and business practices, and you will see a variety of them among different clients. In private industry, you will be limited to what your company has, and that in turn will be limited by budgetary constraints and the ordering of other (often nonfinance) priorities. Public accounting is good for people that prefer variety, because clients and engagements are always changing. In private industry, things can be much more routine, especially if you are not in a high-growth or distressed scenario. Finally, public accounting tends to favor project management skills, whereas private industry is more about day-to-day management with less-structured workflows that require you to personally organize your own work.
What would you say the advantages are of working in industry versus public accounting? Are there disadvantages?
This gets back to the above factors. It depends on what you want out of your career. Public accounting may have more opportunities to make partner than private industry has opportunities to reach CFO. If you like selling, then public accounting is an advantage; if you don't, then it's a disadvantage. If you like variety, public accounting may be better; if you like routine, then maybe private industry is for you. I think the size of the firm or company has a lot to do with it. Think of a four-quadrant matrix: small public accounting firm, large public accounting firm, small company in private industry, and large company in private industry. The calculus between any two boxes is very different. If your choice is small public versus large private, you might prefer private. But if your choice is large public versus large private, you might choose public. There are also several considerations in the industry realm aside from size, such as private-equity backed or publicly traded or family-owned or venture-backed start-up. I will say that I think public accounting is a great place for someone to start a career in accounting. The apprenticeship model teaches fundamental skills like workpaper preparation, audit documentation, project management, etc., which will serve you well throughout your career. I think it is easier to move from public to private than it is to move from private to public, so my personal opinion is that new graduates should first put in their time in public accounting. Having public accounting experience – especially with a national CPA firm – is a great credential, and there are only a select few companies in industry that have an explicit reputation for developing accounting and finance talent.
James J. Caruso, CPA, CGMA, is CFO of J. Knipper and Company | KnippeRx in Somerset, N.J. He can be reached at email@example.com.
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