Though most people have a general idea of both the public and corporate/private sectors, it is vital to note intricate differences which exist between the two terms. The public sector is normally composed of public organizations that are operated and owned by the government and government agencies like state offices and federal. The public sector therefore refers to a public body or public authority. Other federal institutions that are involved with police services, health care, local and central government management, the prison services and their departments are also regarded as part of the public sector. The corporate sectors, on the other hand are organizations which are private and because of this, they are neither part of government nor owned by the government. Profit and non-profit organizations, partnerships, charitable organization, small businesses, middle to large entrepreneurs and other corporations are regarded to belong in the private sector and as such, they are in the corporate sector (Holt 70).
Year in year out, nearly 26 per cent of about fifty thousand graduates who receive bachelors degrees usually opt for public accounting. For individuals opting to work in the public sectors, they will have to determine whether to work for a national or local accounting firm. Being able to understand the working environment of national and local firms is essential because it has been proved that they have a great impact of the employee turnover. For one to be able to effectively maximize the success of the accounting career, it is vital to match and evaluate one's abilities, personality and professional aspirations as compared to that of the corporate and culture and working environment of an organization. Some of the factors that should be considered before one choose to work for either a private or a corporate sector includes competition for promotion, evaluation process, variety and scope, growth opportunities training, job satisfaction and the hours worked per week (Needles 42).
Accounting is one the major areas of study for majority of college students in the contemporary society. Many people choose to study accounting as a major but they are not sure which avenue of accounting that they could like to specialize in. the two major sectors of accounting that individuals can choose from is therefore private and public accounting. Public accountants are those professionals who have opted to work for a particular accounting firm and in their capacity; they serve various customers in a variety of fields. Private or corporate accountants on the other hand, opt to work as internal accountants for one specific organization or company. For young accounting majors, the task of choosing between the corporate and public accounting is not always an easy one. For an individual to be able to choose whether he wants to work in the public or corporate sector, one should have the relevant information and the right skill sets so as to arrive at a relevant choice (Bragg, et al 132).
The first main sector of the accounting profession is public accounting. Public accounting is a sector of accounting in which excellent people skills and communication are a must. Unlike working in the corporate sector, public accountants usually serve a wide range of customers and therefore having the best communication skills is very essential for people working in the public accounting sectors. During interviewing processes, most public accounting firms look more towards customer service skills and personality. Individuals opting to work in the public sector accounting are therefore required to choose between a local, national or regional firm. When choosing to work towards the accounting degree, there is usually no precise choice in either becoming a private or public accountant. For people wishing to serve various customers, then the public accounting sector is the best for them while on the other side, people who aspire to work for one particular organization will opt to work in the private accounting sector. Private and public accounting can be however, be rewarding careers so long as one has had the necessary experience and skills in both sectors (May 150).
Public accountants working in the public sector are external accounting professional who render their services to their clients like consulting, auditing and tax planning services. On the other hand, corporate accountants also know as private or non-public accountants are usually internal accountants who work in a non-profit making organization, company or a specific government agency. Professional accountants working in the corporate accounting sectors may be required to work in the treasury, budgeting, management accounting, financial accounting, and in the internal audit departments that exist within a particular corporation. The choice of either working with the private or public sector therefore heavily depends on an individual's skill sets and interest (Chalmers 290).
For individuals working in the public accounting sectors, they will be need to have good people skills because unlike the corporate accounting sector where someone only deals with a specific corporation or organization, public accounting, being client oriented in nature, calls for accountants with good people skills. Accountants in the public sector, will for instance be needed to effectively communicate with their clients in order to understand their businesses and request from them information to be used by analysis. Since public accounting may involve dealing with difficult customers, public accountants are normally required to possess vital skills to enable them deal with such clients (Needles 43).
Unlike the accountants working in the private sector who tend to work with their colleagues as a group and therefore have relaxed lifestyles, accountants working in the public sector are prone to work in more stressful environments because they deal with a wide range of clients who usually have a variety of demands. Similarly, because public accountants working in the public sector normally work with colleagues versus clients, meeting hard deadlines proves to be hard and for junior accountants, this may involve working up to late at night. For private accountants working in the corporate sectors, their work is simply less a 9-5 job (May 215).
Accountants working in the corporate world or sector normally lack the exposure of working for different entities unlike professional accountants working in the public sector who are exposed to various projects of different industries and therefore gaining unrivalled experience as compared to their friends working in the corporate sector. It is also easier for accountants working in the public sector to go into the private accounting unlike accountants working in the corporate sector going to the public sector. However, both the corporate and public sectors give rewarding careers for accountants who are interested and therefore give interesting and excellent Certified Public Accountants (CPA) path where individuals can be able to gain more experience in their career (Bragg, et al 134).
Accountants working in the public sector are known for provision or supply of good to the general public and as such, they cannot compete with other institutions for the aim of making profit. On the other hand, professional accountants working in the private sector normally have a major goal and objective of overtaking their competitors and as a result, maximizing on their profits. While accountants working with the corporate sector will normally be under corporate settings, accountants working in the public sector normally work under majority of sectors which are managed under a broader chain of control and command. While the public accountants offer services whose beneficiary is normally the general public, accountants working in the private sector, it is the consuming public that used the services and the goods offered that return profit. In general therefore, accountants working with the public sector normally do so under institutions and agencies which are usually owned and operated while the corporate sector on the other hand is comprised of corporations, small businesses as well as other non-profit and profit making entities (May 200).
Working in the corporate accounting sector involves preparation of monthly closes in which a monthly analysis and journal entries are made every month while working in the public accounting sector involves auditing of financial statements belonging to either private/corporate or public companies. Working in the public sector accounting therefore is more challenging and because of the many hours of working and the different organizations one deals with (Holt 71).
Comparable, understandable and consistent financial information is vital for investment and the livelihood of commerce. Currently, there exist two types of accounting standards which are universally recognized for international use. The International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles are the two sets of accounting standards and they are issued by the International Accounting Standards Board (IASB) that is based in London. Many foreign companies which are attracted to being listed in the United States are faced with challenges like compliance with the onerous Sarbanes-Oxyley Act and the GAAP. The International Financial Reporting Standards (IFRS) will come into force on the 1st of April 2011 have made many countries to undergo significant changes. For instance, the search for a new financial order will aim at creation of one global standard which will make financial reporting to have some sense (Needles 45).
To be listed as enterprises, various countries in the European Union like New Zealand, Australia, Russia and have adopted the International Financial Reporting Standards and as for Canada, it has decided to adopt the IFRS as from 2011 while China as from 2008. The U.S GAAP has over the years, evolved to become onerous and complex as depicted by the many companies and nations that are abandoning it. The convergence of the Sarbanes-Oxley Act (SOX), the convergence between U.S GAAP and IFRS has impacted negatively and positively on the accounting profession (McEwen 130).
The use of the IFRS by foreign registrants based in the US will lead to it being globally promoted and therefore, it will provide a way for reduction of differences in standards of accounting between the IFRS and the US GAAP. As a result, this will lead to greater harmonization and enhancement of accounting standards in the whole world. The prevalence of a single set of effective and high quality universally recognized standards will promote confidence in capital markets and as a result, this will lead to a decrease in the cost of capital, while on the other hand, it will promote efficiency of the markets globally. Unless such a single set of global standards of accounting are in place, a judgment will be delivered concerning the level to which the required reconciliation to US GAAP is needed for entities which list in the United States of America and thereafter required to report their financial systems by use of the International Financial Reporting Standards (Holt 73).
Unlike the US GAAP which contains detailed guidance, it will be easier for accountants to use the International Financial Reporting Standards because they do not contain much detailed guidance. Significant events impacting the accounting profession such as the passage of Sarbanes-Oxley Act (SOX), the convergence between U.S. GAAP and IFRS will create a significant rationale for global standards instead of having a Babel of contradictory and sometimes competing national standards. Global accounting standards like these ones will therefore improve the confidence of the investors as long as the standards are rigorously applied, comprehensive and of high quality. It will also be easier for accounts to prepare financial costs for issuers who will also benefit by the lowered costs and incurring less in the preparation of financial statements through the use of different sets of standards of accounting (McEwen 134).
The accounting profession will benefit from the convergence of these accounting standards with special regard to those that are globally or universally accepted because they will be able compare financial statements. Accountants, being the main users of financial statements will be better paced to assess the prospects of one organization or firm versus another one given the fact that all both firms will be using the same set of rules in reporting similar events and transactions. On the other hand, some of the accounting experts have argued that IFRS needs significant improvement because it is of lower quality. They attribute this to the fact that some disclosures which are contained under the IFRS have fewer details than those which are required under GAAP. They also argue that it is not sensible to allow companies to revalue plant and equipment and general property given the fact that such items are not for sale (Bragg, et al 136).
They also argue that IFRS is of lower quality because it bans using LIFO flow of consumption in relation to inventory. Accountants therefore say that IFRS cannot be compared to LIFO since LIFO gives its users the much needed information which can be used to better predict future results. The new regulations that have been imposed by the Sarbanes-Oxley Act will bring about a great impact on the accounting processes of various organizations but the lack of real leadership and the failure of self regulation in the professional bodies which serve the profession of accounting will substantially contribute to the conflict between the Higher Authority and the Certified Public Accountants (CPA). And due to this, new structure was established which will not only affect private companies but also accounting firms. The convergence of the Sarbanes-Oxley Act will therefore have a great impact on accounting profession the Sarbanes -Oxley Act will therefore restore confidence and trust in the profession of Accounting. It will enhance the reliability of the audit reports and the integrity of the auditing process on the financial statements of issuers (Holt 75).