Public accounting generally entails a fairly rigid, hierarchical career path, as follows:
Staff Auditor (year 1-3). Staff auditors perform the meat of an audit, engaging in the often mentioned “ticking and tying” activities, i.e., analyzing and verifying the information contained in the myriad ledgers and statements provided by the client. Under the supervision of an audit senior, they will work with the client to obtain information and determine the validity and accuracy of the accounting records. It is the staff accountant’s responsibility to investigate specific accounts assigned to them and to identify, resolve and document any material issues. Staff auditors will often start to direct small audits (and will be referred to as the “acting senior” on the engagement) in their second years.
Senior Auditor (year 3-6). Audit seniors are the glue that holds the audit together. They supervise the audit fieldwork of staff auditors and review their work products to ensure the audit is thorough and properly documented. They are responsible for resolving any accounting issues as they arise. Seniors are also responsible for identifying and documenting audit risks, creating and managing client relationships, administering budget issues and ensuring that the audit manager and partner are adequately informed of all relevant items. Specific senior auditor activities could include client meetings, partner and manager meetings, research on the relevant accounting standards and conversations with company headquarters.
Audit Manager (year 6+). The manager is ultimately responsible for managing client relationships. Although both the senior and staff auditors will be at the audit site each day during the audit, the manager will typically visit the audit site once a week, maybe more depending upon the status and time remaining to completion for the audit. The manager will perform a high level review of all the audit work after the senior is satisfied with the thoroughness and resolution of all issues. The manager supervises trains and evaluates seniors and staff. They are also responsible for audit program approval, personnel scheduling, audit working paper review, financial statement disclosure/footnote approval, day-to-day client relationships and final determination of billings for engagements.
Partner/Senior Partner. Partners are responsible for overall client relationship and business development activities. Partners will sign the audit opinion and are responsible for the overall audit and coordination for the concurring partner review and any correspondence with headquarters. Partners will review and concur on all major accounting issues. They may visit the client site once on small audit engagements, if at all. The partner may be the only audit team member that attends audit committee meetings. Only 2 percent of the accountants entering CPA firms will reach the partner level. Partners typically purchase equity in the firm and share in all profits. Ordinarily, a professional must be a CPA to become a partner.
Tax Staff (year 1-3). Like their audit counterparts, tax staff personnel perform the meat of the tax work. They prepare tax returns, research tax issues and counsel clients on tax matters under the supervision of a tax senior and/or tax manager. Generally, tax staffs do not have as much direct client contact as their audit counterparts. This level encompasses a significant amount of learning and training as the tax staff gets up to speed regarding basic aspects of income tax reporting, compliance and analysis.
Tax Senior (year 3-6). Tax seniors prepare and review tax returns, research tax issues, offer suggestions for tax planning manage tax staff and study the Internal Revenue Code and other applicable tax laws for potential client tax savings. They may also work with audit personnel in the preparation of tax items included in financial statement disclosure. This level also encompasses a significant amount of learning and training as the tax senior is expected to apply an increased technical tax comfort level to his or her client engagements in preparation for the manager level.
Tax Manager (year 6+). Unlike audit, where staff and seniors have the most extensive exposure to the client, client contact in tax engagements is generally the domain of the tax manager. Tax managers direct and review tax seniors and tax staff personnel; approve corporate tax returns prepared by tax staff; perform tax planning and research unusual tax matters; handle day-today client relationship issues; plan engagement billings and other administrative duties. They may also review tax items included in financial statement disclosure. Tax managers are expected to have a strong grasp of the technical tax issues applicable to their specific industry or tax function (e.g., State & Local, International). Many tax managers (and partners) are referred to as “Code heads” for their ability to recite on command the exact Internal Revenue Code section applicable to a given tax issue. They are also expected to begin developing their marketing skills in preparation for the business development responsibilities of the Partner level.
Tax Partner/Senior Partner. Similar to their audit counterparts, tax partners are responsible for overall client relationship and business development activities. Tax partners often become specialists/experts for their deep knowledge of and experience with a specific industry or tax function.
While many firms recruit hires by highlighting a young accountant’s ability to gather experience in different service lines of the firm by transferring between audit and tax or business consulting, such behavior is often not encouraged and moves are usually not a frequent occurrence. Usually, such a transfer results in a move backward for a transferee in terms of having to learn a totally different set of work skills within their new group. Potential hires should not have the impression that transferring is expected or desirable.
Up or out
Public accounting is a mature industry, persons entering with the idea of making a lifelong career of the profession should take note: the partnership tracks at the larger firms continue to lengthen and involve many more steps along the path than ever before. Many professionals have found that transferring to a specialty line within a large accounting firm has offered them increased opportunities for advancement when compared to the traditional audit and tax departments.
Be sure that you understand the current requirements to make partner within any specific firm you join. Also, know that it will likely be much harder than you are told to actually reach such a position due to these industry factors. Traditionally, public accounting firms have held an “up or out” attitude in their retention practices. While this has recently changed slightly at the manager and partner levels, it still very much exists at the lower levels of these organizations.
A public accounting firm employee needs to take an active role in monitoring and managing their career so that no news comes as a surprise. If the worst-case scenario comes true and an employee is let go (and it does happen more frequently than most firms speak of), then usually they are given a grace period to search for a new job. In general, public accounting firms view ex-employees as potential clients and treat them professionally.