Accounting (Auditors) 101

When you hear "accounting", what are your first thought? More times than not, I'm going to bet that your first thought involve something related to "taxes". But, accounting is much more than that.

There is public accounting and then there is private accounting. In public accounting accountants generally provide services to multiple companies, whereas in private accounting you typically provide services to one firm. Public accounting firms include the Big 4 - PwC, Deloitte, Ernst and Young, and KPMG and other mid-tier and  local firms. Private accounting is usually internal; meaning companies like AAPL or NFLX will have accountants working in their own accounting department. 

Nowadays it seems like everyone who holds a financial reporting position has a CPA or is encouraged to become one. I'm in the process of submitting my initial licensing fee for the CPA and then I will be officially a CPA, but I digress.

Q: Who are accountants?

A: We are financial statement auditors, tax professionals, internal audit, consultants, and much more.

Q: What is the difference between PwC, Deloitte, EY, and KPMG? 

A: The biggest difference between the Big 4 is by far the culture. Generally speaking, all the Big 4 firms provide more or less the same services. Meaning they all provide audit, tax, and some form of advisory services. Correct me if I am wrong and I could be as I have not worked at all the Big 4 (only one), PwC I would say is more mellow of the four. Largely known for having more knowledgeable staff members. Part of this is probably due to the fact that staff members are up for promotion after three years versus two in the other Big 4. Deloitte is where more of the hip people are. They party hard and work hard. They've been doing quite well this past year and actually surpassed PwC in total revenue. I would say there is a good balance between knowledgeable individuals and those that enjoy partying. Ernst and Young is more serious than I would say Deloitte and KPMG. KPMG is known to be more outgoing than the other Big 4. They party harder than all of the other Big 4.  

Q: What is the difference between Big 4 accounting firms, mid-tier and local firms?

It comes down to the type of clients. Big 4, in aggregate, have all the Fortune 500 companies as clients. If not, they have the majority. Mid-tiers usually have more private companies with lesser market capitalization as clients than the Big 4. Local firms have more governmental organizations as clients than Mid-tiers and Big 4. 

Q:What do accountants do? 

I can only speak for audit. Here is a day in a life of an auditor. I'm considering doing a tax rotation, so when/if that pans out I can do a day in a life of a tax professional at a Big 4 as well.