June 19, 2019
Caitlyn Grimme, CPA | Supervisor | Published by Crow Shields Bailey PC
One of the biggest decisions an accountant will face is the choice to specialize in tax or audit. While this decision may come easily to some, for others it can be the most difficult choice of their career.
Tax vs. Audit – What’s the Difference?
While both are accounting professions, the tax and audit paths can vary greatly. In the tax division, your day will focus on trying to reduce the client’s tax liability. Meanwhile, the purpose of an audit is to express an opinion as to whether the financial statements of a company are free from material misstatement. As such, auditors devise testing measures and scopes to evaluate the information provided by the client in order to express an opinion. Additionally, auditors may also work on other forms of attestation engagements such as reviews and compilations, which provide limited to no assurance regarding the financial statements.
Both tax and audit are rules and research based. Tax professionals must comply with rules set by the Internal Revenue Service and The U.S. Securities and Exchange Commission. Auditors must also follow generally accepted accounting principles (GAAP), generally accepted auditing standards (GAAS), additional SEC and PCAOB guidelines if required, as well as certain industry-specific guidance. However, while auditors rely on research and rules, they also rely heavily on auditor judgment.
Audit professionals must have strong interpersonal communication skills, as you are onsite communicating with clients on a daily basis. Tax professionals typically work in the firm office and might not communicate directly with a client for several months.
Both career paths are now heavily dependent on computer and software applications, so regardless of your choice, proficiency in technology is important.
There is conflicting information from online sources regarding differences in pay for auditors vs. tax professionals. Some sites state that lower level audit staff jobs are more plentiful than tax staff positions starting out and might offer higher initial pay. However, other sites argue that tax professionals have higher initial earning power. At the end of day, I would recommend choosing the path that you are more passionate about, as the earning potential doesn’t appear drastically different for either course (note this may vary by firm, industry specialization, etc.).
Are There Pros and Cons to Each Path?
Although not every firm is the same, here are a few standard pros and cons:
I’m Still Undecided – What Can I Do?
If you are still unsure which path is a better fit, try out some of the following:
Apply for an internship – internships are a fantastic way to learn the basics of both disciplines. Most large firms will offer internship experience on a tax or audit basis which allows full immersion in either path. Smaller local firms may offer internship opportunities with exposure to both tax and audit in the same internship round (typically a “busy season” internship from January through April 15th).
Online forums – in the age of technology we live in, information is at the tips of our fingers, literally. There are several sites with forum posts or resources surrounding this subject. Check out the CPA exam forum on www.another71.com or the AICPA career guidance section, just to name a few.
Ultimately, the career you choose must be the best fit for you. What are pros for one person might be cons for another (ex. frequency of travel engagements). However, as long as you know yourself and what is most important to you, you will make the right decision. Feel free to contact Emilee Shuler to set up a job shadowing appointment if you would like to get a glimpse at a normal day for tax and audit professionals.