To someone from the outside, accounting is simply accounting. On average, not that many people require the services of forensic accountants or auditors over the course of their lives. To people in industry and to students who are looking to become accountants, the different kinds of accounting have different kinds of allure. To take this a step further, the different kinds of accounting call for different kinds of personalities.
This is my topic for this post – finding the type of accountancy that best suits various personalities and deciding on which sub-specialization to pursue – but bear in mind there are many areas of specialisation – PAYE, Company Formation, Practice, International – below is just a small sample.
According to the UK laws, a business is required to have an annual audit conducted by an independent, external organization. Audits are conducted in general by accountants (not necessarily accountants) who go through a company's books and ensure that the company is well-run. Audits can also be required by potential partners or buyers of the business, while some companies also like to do their own internal audits from time to time.
Auditing is best done by someone who is ready to jump from company to company, from job to job and who is quick to find their way around any company in a matter of seconds. Auditors also have to be inquisitive and have a penchant for noticing the slightest discrepancies which may hide major issues. This type of accounting also requires great communication skills and a certain level of confidence, as auditor's words can sometimes decide fates of entire companies.
Tax accounting, as its name would suggest, is all about taxes. In essence, tax accountants track all of the transactions that a company has engaged in and that might have an effect on how much the company owes in tax. In addition to this, tax accountants are always on a lookout for ways in which they can reduce the amount of taxes the company has to pay.
It should be pointed out that some tax accountants are also hired by individual clients, as opposed to corporate ones. These are invariably very wealthy individuals who have plenty to pay (and look for ways to reduce the amount).
Tax accountants have to be able to handle immense amounts of information, make sense of it all and find ways in which this information can be used in order to reduce the amount of taxes their clients will have to pay. Creativity is another personality trait that works out well for tax accountants as their job sometimes entails making some seriously complex and difficult maneuvers in order to save their client's money.
Financial accounting is what comes to mind to laypeople when they think about accountancy – staying on top of financial transactions that occur as a part of a company's everyday functioning. Financial accountants analyse a company's financial position, share value and more, all for the benefit of regulators and shareholders.
A financial accountant is someone who is meticulous and who is ready to work in a team. In large companies, these are often huge teams where interpersonal skills and proclivities can also play a big role. Another great trait that will serve a financial accountant well is adaptability since most companies have their own processes and software and it can often be difficult to find one's way in all of it.
Perfectionists will also find financial accounting quite attractive as there is a lot to get in order and work on until every single digit falls into place.
Management accounting is actually quite similar to financial accounting – it revolves around establishing, analysing and reporting where a company stands financially. The difference is who receives the report and the accountant's input. This time, the insights are provided internally, mostly to managers and other members of the C-suite.
According to the information provided by management accountants, the managerial staff then makes decisions that guide a company in the future. Moreover, top management accountants often join the managerial staff, becoming important figures in their companies.
Management accounting is perfect for people who are highly analytical and who are naturally talented in noticing trends and patterns that can be acted on in the real world. Minds that are not foreign to strategic thinking also tend to thrive in this type of accounting.
Of course, a certain amount of ambition is also a welcome trait in a management accountant, especially one who wishes to move up the ladder, so to say. This kind of impact also requires someone who is not too afraid to voice their opinion and stand behind it, even when it is particularly risky.
Forensic accounting probably sounds the most alluring of all the types of accounting and many accountants (especially those who do the forensic kind) will tell you that this is just the case. Forensic accounting entails detective work, solving crimes that might have been committed by people and organizations.
While much of forensic accounting actually has to do with embezzlements, fraud, and similar crimes, some of it is less cinematic, like when forensic accountants go through decades of a marriage to decide who made what when and who is entitled to what.
As you might expect, accountants that excel in this kind of accounting are those with an inquisitive mind and a tenacity to pursue a case until it is resolved without a shadow of a doubt. Advanced analytical and logical minds also tend to have great careers as forensic accountants.
Instead of a Closing Word
It should be pointed out that these are mostly some ideas and that these are in no way any indication as to how someone will perform in a certain sub-specialization of accountancy. For example, someone who is not particularly ambitious can still make a spectacular management accountant. Similarly, just because you have an analytical mind, it does not mean you will make a flawless forensic accountant.
Personality traits can make it easier for some people, but in the end, it will mostly come down to studying hard, working hard and never settling for the knowledge you already possess.
A previous manager of mine trained to be an actuary. He said being an actuary was the career choice for people who find accountancy too exciting.