Accounting is a field that involves collecting, analyzing, summarizing, recording, and reporting financial transactions. It includes branches that apply to various areas. One of these branches includes public accounting, which is a prevalent field. It is one of the most prominent forms of business based on accounting services. Therefore, it is crucial to discuss what public accounting involves.
What is Public Accounting?
Public accounting is a branch of the accounting field that considers where accountants work. It involves using all the services provided by these professionals working in a public accounting firm. In other words, these are accountants who work for a company or organization that serves a wide range of clients. These clients may include other companies, firms, businesses, organizations, individuals, etc.
Public accounting hires accountants that provide various types of services. These include accounting, auditing, taxation, consultancy, and much more. Here, accountants work for a firm or company specializing in finance-related services. Public accounting firms hire independent accountants to offer a wide range of services to many clients.
How does Public Accounting work?
It is crucial to understand firms that offer public accounting services to understand this field better. These firms involve one or several highly qualified and experienced individuals forming a firm or company. On top of that, it also includes other accountants that work under these individuals to offer accounting services. Usually, public accounting firms work with clients based on a contract.
In most cases, public accounting firms offer ongoing services to clients. These services may differ based on a client’s needs and the contract with the specific firm. The most prevalent of these services include the following.
- Ongoing bookkeeping services.
- Preparing financial statements.
- Auditing financial statements.
- Forensic investigations.
- Preparing and filing tax returns for corporations and individuals.
- Consulting on various business-related issues.
Public accounting firms hire accountants that specialize in these areas. Based on the client’s needs, they allocate their staff to every project or job. On top of that, these firms have partners or directors that overlook specific projects. The essence of these firms is the highly-specialized services provided by the staff.
What is the difference between Public and Private Accounting?
Public accounting is the direct opposite of private accounting. However, both have some similarities. For example, both require accountants with accounting knowledge. Similarly, they may involve highly-specialized work. Despite these, public and private accounting have some differences. Some of these include the following.
Clients
Public accounting involves a single firm working to serve various clients. On the other hand, private accounting has accountants working for one company, firm, organization, or business.
Employment
Public accountants work for public accounting firms. These accountants are employees of an external entity that serves various clients. In contrast, private accountants are employees of a company or entity and provide services to it only.
Services
Public accountants offer a wide range of services, including accounting, auditing, consultancy, taxation, etc. However, private accountants only focus on a specific area.
Conclusion
Public accounting refers to the branch of accounting that involves a specialized firm offering services to several clients. Usually, it involves accountants working for a firm that provides various services that relate to finances. This branch differs from private accounting, where accountants work in other industries.
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