The different types of accounting

Are you thinking of applying for a grad job at an accountancy firm? Before you do so, you’ll need to know which area of accountancy you want to go into. There are various types of accounting, and each specialism hires different types of accountants. So, what type do you want to be?

To help you figure out your future in accountancy, we’ll outline different kinds of accounting:

• Audit
• Financial
• Management
• Tax
• Forensic
• Other types of accounting

There are several types of accounting, including auditing, financial accounting and management accounting. Each one focuses on a specific area.

Once you understand the distinct types of accounting and the different kinds of accountants in the sector, you can figure out which area and role would suit you best.

Every year, publicly traded companies (ie. businesses with shareholders) are legally required to produce annual financial reports. Within the reports, businesses must include a statement of accounts (a document that outlines all financial transactions between a company and its clients). Auditors are accountants who check that the report is accurate and that the company’s financial practices are above board.

Do private limited companies need auditors? Yes. Businesses still need to prepare accounts for bodies like Companies House, so they might use auditors to check everything’s in order before submitting their figures. The exception is for small companies – businesses are exempt from auditing if they meet certain requirements for their number of employees and annual turnover.

There are two types of auditors: internal auditors and external auditors. Internal auditors work for the company they’re auditing, while external auditors are employed by a separate organisation (typically a consulting firm). Firms in highly regulated industries like finance and the public sector are more likely to hire internal auditors, while businesses of all kinds need to temporarily use external auditors.

As an audit accountant, your job is to:

• Perform checks on all aspects of a company’s finances
• Delve into everything – you might ask for access to warehouses, physical receipts and accounting spreadsheets and seek expert valuations of the company’s machinery, buildings, products and other assets
• Check that everything you find matches up with the information in the financial report and any account statements
• Write a report giving your findings

Auditors get a fascinating inside look at how businesses operate. As an external auditor, you could work with multiple clients each year.

It’s a role that takes good people skills. As an auditor, you’ll need to disrupt people’s days to ask them questions, so you’ve got to be polite.

If you’re fascinated by business and like to chat with people, audit accounting might be the right accountancy area for you.

When somebody says “accounting”, they often mean “financial accounting”. Financial accountants do what many traditionally expect an accountant to do – keep track of a company's financial transactions. It’s the bookkeeping side of accountancy.

As a financial accountant, you:

• Follow specific procedures to produce financial reports for shareholders and regulators.
• Track a company’s current financial position based on incomings, outgoings, liabilities and how money is moving.
• Monitor the company’s share value and make statements of stockholders’ equity.
• Produce reports that are used externally (ie. by people outside the company, such as shareholders and potential investors).

Each company will have its own processes and software for keeping the accounts accurate. In larger companies, being part of the accounts team is like being in a production line with many people contributing. In smaller companies, a financial accountant might have a lot of say in shaping the company’s accounting processes.

You’ll likely enjoy it if you’re organised. Wondering if it’ll suit you? Learn the key skills you need to become a good accountant.

In some ways, management accounting is like financial accounting. Both are about tracking the company’s financial position and making reports. However, while financial accountants provide reports to be used externally, management accountants create reports to be used internally.

If you become a management accountant, expect to:

• Provide the financial information that managers need to make business decisions (eg. report on which areas have been profitable).
• Use charts and statistical techniques to present data in a way that supports decision-making.
• At the higher levels, make business recommendations or even be part of a company’s senior management team.

Management accounting is more than stating the figures. It’s about interpreting trends, making predictions and considering the non-financial, qualitative aspects of business.

You might suit being a management accountant if you’re strategic, ambitious and want to get into the higher levels of management.

Tax accounting deals with an organisation’s tax liabilities (ie. how much tax they must pay). It involves interpreting complex (and changing) tax legislation.

To do their role, tax accountants:

• Track all the transactions that affect how much tax a company or individual pays (ie. income and expenses).
• Calculate how much tax is due.
• Find ways to reduce the tax paid, if possible and legal, by maximising tax efficiencies and claiming any appropriate tax reliefs.
• Complete all the necessary forms for His Majesty’s Revenue and Customs (HMRC) and ensure that the correct amount of tax is paid.

Tax accountants typically work for accounting firms, in-house for large corporations or public sector organisations. Sometimes, they’ll also work on a freelance basis for individuals (especially high earners who want to reduce their tax bills).

Do you like interpreting complex information and solving problems? You might enjoy being a tax accountant. To explore the specialism more, learn what to expect from a career in tax.

Forensic accountants are financial detectives. Just as a forensic scientist uses scientific tests to solve crimes, forensic accountants use accounting techniques.

If you work as a forensic scientist, you need to:

• Analyse financial evidence to detect fraud.
• Inspect information to use in legal proceedings (eg. look at a couple’s income during a divorce to decide on a fair settlement).
• Translate the results of your analysis into terms that a jury will understand (if a case goes to trial).

Large companies (like insurance firms and banks) may have a forensic accounting team dedicated to detecting fraud.

If you’re interested in law and take a logical approach to problem-solving, you’re well suited to a career in forensic accounting.

In addition to the kinds of accountancy detailed above, there are many more accountancy fields to consider. For example:

• Project accounting (planning, tracking, managing and reporting on individual projects’ finances)
• Insolvency – insolvency practitioners (IPs) work with insolvent individuals and entities (ie. those who can’t pay their debts)
• Government accountancy (recording and managing government spending)

There are many different types of accounting, including audit, financial, management, tax and forensic accounting.

As there are several accounting specialisms, there are different types of accountants. The day-to-day role of a tax accountant will be different to an auditor, although all accounting roles will involve analysing finances in some way.

Which field you’re interested in will influence the type of accounting firm you go on to work for. Take your time to explore the specialisms and research the top employers within each area. Good luck!

This article was last updated in June, 2025.