Public Accounting Myths

Upon graduation and unknowingly escaping the public accounting myths, I went on to work for Household Credit Services (now HSBC) as an internal auditor and that’s how I started my professional career. While starting my internal audit career at the credit card company, I was fortunate to work with and learn from bright people who had left the public accounting firms to join the industry. Is it possible the same public accounting myths followed them even longer than they followed me? Maybe they joined the firms because of the same public accounting myths and stayed there for as long as they thought it was the best and only option for them at the time.

Let’s now talk about the public accounting myths that followed me in the past and analyze today's realities:

Myth #1 - I need public accounting audit hours to get certified – In the past, accounting graduates who wanted to become a Certified Public Accountant or CPA, had to pass a 2-day test in a large crammed space and provide required number of audit experience hours with the public accounting firms to become a CPA. Today, accounting graduates no longer need to join a public accounting firm to gain the experience required for becoming a CPA. Today, the required experience hours can be obtained from the private industry as an internal auditor and the test can be taken online. Unless accounting graduates really and only wanted to become a CPA, they had other career choices such as becoming a Certified Internal Auditor or Certified Information Systems Auditor. You can see some of the other choices under my professional career. But we didn’t see these other opportunities and choices because of the public accounting myths. The accounting firms loved the fact that the accounting graduates had to work for them for two years in order to get their CPA license. In essence, they controlled the CPA supply to the market and they had the luxury to select only the brightest accountants who wanted to become CPAs. Today, they no longer have that privilege and must compete for the best talent with Internal Audit Departments of major companies. Personally, I didn’t know exactly why we all wanted to work for the accounting firms although some of us never wanted to become CPAs nor had the desire or talent for it but thinking back and knowing what I know today, I’m sure we were brainwashed by the public accounting myths and rarely considered other career choices.

Myth #2 - Public accounting life is glamorous – Although working for a public accounting firm appeared very glamorous at the time, I don’t know any one today who has worked for the public accounting firms and believes that their life is or was glamorous regardless of whether they’re staff, managers or partners within the firm. The public accounting myths including glamorous life was only a perception until new graduates actually started working for the firms as some may also call the "audit sweatshops". As I mentioned, the accounting firms knew that the accounting graduates needed to work for them to get certified and they abused that power to some extent. Although, accounting graduates no longer need to work for them to get certified as a CPA and public accounting firms have somewhat balanced the work and life ratio for their employees, the perception of "sweatshop" continues to float around to this day and works against the firms.

Myth #3 – Public accounting pays well – While considering public accounting firms as potential employers in the past, we all had the impression that it paid well to work for them. This was yet another public accounting myth as I found out years after graduation. In fact, due to their competitive advantage in the past, the accounting firms didn’t have to pay premium salaries to recruit the new accounting graduates although some of the partners were highly compensated in the millions of dollars. Today, as the firms have to compete with major companies for accounting talents, they have increased the salaries for staff and managers while reduced the partners’ total compensation for balanced budgets.

Myth #4 - Training is great – There is some truth to this public accounting myth as the firms have established methodologies, adequate budgets, formal procedures, guidelines, and internal knowledge databases, but so do many of the best companies in the world. For example, whether you select accounting, audit or information security as a career, chances are these corporate functions have adequate training budgets, tools and expert management teams to train new recruits, with a few exceptions. However, the few exceptions are not or should not be included in the list of "best companies to work for".

Myth # 5 – Working for a public accounting firm helps me build my resume – So does working for a fortune 100 company. For example, whether you are an accountant, information security analyst or internal auditor, by working for a large well-known company, you get to build a great resume. The trick is to stay with a great company long enough to build a solid resume but the value of the experience is the same whether you work for a large and well known company or a big accounting firm.

Myth #6 – Public accounting firms are creative – Actually, I think it’s exactly the opposite. Similar to the jungle where smaller animals have more flexibility and speed for changing direction when chasing their preys, smaller companies in a specialized niche can adapt faster in a rapidly changing business environment. The public accounting firms similar to large companies and consulting firms are the giant gorillas that can’t adapt fast enough to market changes and their managers and staff can’t deviate much from their established policies, procedures and hierarchy to be as creative as they can be. However, once the change of direction is made to fill a market need, smaller companies should watch out for the giant gorilla catching up from behind. Once a market need is established or created such as SOX 404 compliance, smaller companies have more flexibility, drive and speed to serve that market demand initially and should take advantage of their strength. I think creative individuals have a better chance of expressing themselves in a smaller business environment, which is less bureaucratic, has flat organization, and is eager to compete.

Myth #7 - Public accounting staff are experts. This public accounting myth was certainly viewed as such in the past but I personally know of some excellent internal controls and audit experts within the public accounting firms, however, there are also many boutique firms which employ some of the best specialists available in the market. Specialists within a technical firm in a niche market which only deal with a unique subject matter whether it's tax or information security without the pressure of having to sell services have also in depth expertise in their select professions. As in any organization, unqualified and non-performing individuals also known as fists in a bucket of water exist in abundance.

Myth #8 - Public accounting firms are credible - Well, this public accounting myth was certainly true before the accounting scandals and the collapse of Arthur Andersen, the largest public accounting firm at the time, which destroyed most of the public accounting firms' credibility. Sarbanes Oxley was created to oversee public accounting firms' activities and rebuild public trust which will take many years, however, while the public accounting firms continue to be allowed to perform independent audits and sell consulting services, another public accounting scandal is inevitable.

Past public accounting myths have somehow faded away and there are good reasons to join the accounting firms. For example, if you want to be exposed to diverse industries, companies and projects before selecting a career path, it’s a good idea to join a large well-known accounting firm upon graduation. You can join their accounting, tax, consulting, internal audit or external audit forces for a few years before selecting a particular career or industry such as internal auditing for a healthcare company. Therefore, your career moves should be based on research of your interests, your talents, market demand, market supply and future business environment. For example, I predict that privacy regulations will expand and further consolidate in the United States in the coming years, thus creating a huge market demand for identity risk management and privacy professionals. Now, it’s up to you to decide if you have the interest and talent to be part of this growth or whether your consulting company has the aptitude to serve this increasing market demand.

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