When you apply to one of the big accountancy firms, you’ll be expected to know which area of accountancy you want to go into. We take a look at the different types of accountancy and the points you should be considering when thinking about which type you want to pursue a career in.
What types of accountancy are there… and which would suit you best?
Audit
Every year, companies have to produce an annual report which includes a statement of their accounts. Auditors are external accountants who check that the report is accurate and the company’s financial practices are up to standard.
- Auditors go into a company as part of a team and perform checks on all different aspects of its finances.
- They get their hands into everything – they might ask for access to warehouses, physical receipts, accounting spreadsheets, and seek expert valuations of the company’s machinery, buildings, products and other assets.
- They check that everything they inspect matches up with the information in the financial report.
- Then they write their own report giving their findings.
Auditors get a fascinating inside look at all the different businesses they audit. They spend a lot of time on-site with their clients, sometimes working in a different office every week.
It’s a role that takes a lot of tact and good people skills – the company’s employees will find their daily lives disrupted by the auditors’ questions and requests, so auditors have to be polite and personable.
You’ll enjoy it if you’re fascinated by business, you’re a people person and you like to travel.
Financial accounting
Financial accounting is what you might traditionally expect an accountant to do – keeping track of a company's financial transactions. It’s the book-keeping side of accountancy, which used to involve ledgers with black and red ink. Financial accountants follow specific procedures to produce financial reports for shareholders and regulators.
- Financial accountants track the company’s current financial position based on incomings, outgoings, liabilities and how money is moving through the company.
- They monitor the company’s share value and make statements of stockholders’ equity.
- Their reports are used externally – by people outside the company, such as shareholders and potential investors.
Financial accounting is very much about the process – each company has its own processes and software for keeping the accounts accurate. In larger companies, this is like a production line, with many people contributing. In smaller companies, a financial accountant might have a lot of say in streamlining and improving the company’s accounting processes.
You’ll enjoy it if you’re organised, meticulous, and love keeping things neat and perfect.
Management accounting
In some ways, management accounting is similar to financial accounting – it’s about tracking the company’s financial position and making reports. However, where financial accountants provide reports to be used externally, management accountants create reports to be used internally.
- Management accountants provide the financial information that managers need to make business decisions – for example, reports on which business areas have been profitable.
- They often use charts and statistical techniques to present the data in a way that supports decision-making.
- At the higher levels, management accountants can make business recommendations or even be part of a company’s senior management team.
Management accounting is more than just stating the figures – it’s about interpreting trends, making predictions and considering the non-financial, qualitative aspects of business too.
You’ll enjoy it if you’re strategic, ambitious and want to get into the higher levels of management.
Tax accounting
Tax accounting deals with an organisation’s tax liabilities – what tax they must pay and why. It involves interpreting complex and continually changing tax legislation, as well as jumping through all the necessary hoops for Her Majesty’s Revenue and Customs (HMRC).
- Tax accountants track all the transactions that affect how much tax a company pays and calculate how much tax is due.
- They try to find ways to reduce the tax paid, if possible within the legal tax framework.
- They complete all the necessary forms for HMRC and ensure that the correct amount of tax is paid.
Tax accountants can also work on behalf of individuals – especially wealthy individuals who want to reduce their tax bills.
You’ll enjoy it if you’re good at interpreting complex information and solving problems.
Forensic accounting
Forensic accountants are financial detectives. Just as a forensic scientist uses scientific tests to solve crimes, forensic accountants use accounting techniques.
- Forensic accountants analyse financial evidence to detect fraud and embezzlement.
- They may analyse information to be used in other legal proceedings – for example, analysing a couple’s income during a divorce to decide on a fair settlement.
- If a case goes to trial, part of a forensic accountant’s job is to translate the results of their analysis into terms that a jury can understand.
Large companies may have their own forensic accounting team dedicated to detecting fraud.
You’ll enjoy it if you’re interested in law, and you take a logical and analytical approach to problem-solving.
Other types of accountancy
In addition to the types of accountancy detailed above, there are many more accountancy fields to consider, for example:
- Project accountancy
- Insolvency
- Internal audit
- Government accountancy
Interested in getting into accountancy? Get ahead with Bright Network Academy
Learn more about the skills needed to cultivate a career in accountancy by taking the Bright Network Academy core skills needed for accountancy module and stay ahead of the competition when it comes to applying for opportunities in this varied sector.