Friday, January 31, 2020
The Differences Between Public and Private Accounting Research Paper
The Differences Between Public and Private Accounting - Research Paper Example According to Eisen, accounting refers to the Ã¢â¬Å"art of organizing, maintaining, recording, and analyzing financial activitiesÃ¢â¬ (1). The work of an accountant is to convert the accounting information into meaningful terms that are understandable and thus can be used by interested parties. An accounting system can use a simple check register or use the Microsoft Office Accounting which is more appropriate. Although accountants follow the same procedure as bookkeepers, an accountant can design a system that will capture all the necessary details that are needed in a business (Snyder Microsoft.com). Accounting systems are there to serve the control, management, and planning purposes of public finance administration. There are many reasons why accounting is said to be very vital. Just like the language of business, every business owner should be able to know the importance of accounting. Accounting is important as it helps in interpretation of companies operations and finances. Another reason why accounting should be considered important is the fact that it is usually considered as the guiding force to good management decisions in a particular company. No company management team can make sound decisions without knowing how the company finances are. It is important because it helps people to move to a next level in their plans for business. For example, with accounting, a business owner is able to avoid fraud that can cause the downfall of his or her businesses. 2. Differences between Private Accounting and Public Accounting There are many ways of classifying accounting and accountants but the most common method is whether it is private or public. Most college students get stranded on whether to start their career in private accounting or public accounting. Lecturers and university professors are of the opinion that public accounting is the best path to a successful accounting career. The advantage of following this route (public accounting) is there are hi gh salaries involved, more interesting and diverse work which gives an accountant the chance to get exposed to many other companies because his or her work is not limited to a particular company. For example, a public accountant performs three to four audits in different companies in one year, while the private accountant is usually stuck monitoring ledges for a year in one company (Vault Editors 91). Differences between the two types of accounting arise from the differences that exist in payments and accountants training, experience, working environment, social skills, and certification. 2.1 Payments Public accountants are paid directly for providing their services to businesses or individuals. According to Pride, Hughes and Kapoor, Ã¢â¬Å"a public accountant works on a fee basis for clients and may be self-employed or be the employee f an accounting firmÃ¢â¬ (446). In other words, the payment is made to the accountant himself and not via a company (Vault Editors 90). Private ac countants on the other hand are not paid directly as it happens in public accounting. Payments are made via the company a private accountant is attached to. Direct payment is not possible in this type of accounting (Ã¢â¬Å"What is the difference,Ã¢â¬ accountingtools.com). 2.2 Training A public accountant is trained on how to evaluate of accounting systems, gather evidence and make assessments to find out whether statements are correct (Ã¢â¬Å"