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Choosing A Public Accounting Firm: A Guide For Accountancy Graduates

by Mark E. Steadman, PhD, CPA, CMA

The job market for accountancy graduates is particularly strong at this time, especially in the public accounting field. Several students are receiving multiple job offers and are having difficulty deciding which type of firm (Big 5, regional, or local) to enter upon graduation. In the past, every student's career goal was to work for a Big 5 firm upon graduation. Today, some students are bypassing these firms to start their careers in regional or local firms. The decision is difficult, and this guide is designed to assist you in your decision. Ultimately, the choice is yours, but you should have some insight into the firms and the work environment at each.

The content of this guide was developed through various speakers in class, conversations with CPAs, my personal experience, and the experiences of several close friends. Also, a caveat is needed: these observations are generalizations and may not be true in every case. Ask the recruiters questions to clarify any uncertainties that you may have.

The Big 5
The advantages of working for the Big 5 are:

Prestige---These firms have national and international recognition. Everyone in the business world will recognize experience from a Big 5 firm if you ever change jobs.

Training---Big 5 firms have extensive training schools for all their personnel. You will be sent to school for 2-4 weeks early in your tenure, and you will receive additional formalized training each year. The training at these firms is well known and highly respected in the profession.

Exposure---Working for the Big 5 can expose you to the inner workings of some of the world's largest firms. Every job is a learning experience, and learning how a Fortune 500 firm does something provides excellent professional development. Who knows, you may be invited to a party at Bill Gates' house someday.

Marketability---These first three factors (prestige, training, and exposure) allow you to be highly marketable in terms of changing jobs. PUBLIC ACCOUNTING ISN'T FOR EVERYONE!!! Some people love it, some people hate it. You won't know which category fits you until you've worked for a while. Therefore, stay prepared to change jobs. Big 5 experience will provide excellent preparation for moving on.

Salary---In most cases, Big 5 firms will offer you a higher starting salary. Most, if not all, of the Big 5 incorporate overtime into the starting salary (a key point when comparing salaries at other firms). Pay increases are usually based upon merit, and a raise of 10% a year is not unusual. Also, excessive overtime can earn you a bonus at the end of the year. SALARY SHOULDN'T BE YOUR PRIMARY DECISION CRITERION!!! Having a job that you hate or working with people you dislike will drive you crazy, and no amount of money can help.

Specialization opportunities---The Big 5 can make you an expert in a specialty area through training and work assignments. If you like the idea of being on CNN and talking about income taxes, this is the way to do it. Also, if you want to open your own firm someday, specialty consulting can be very lucrative.

Mentor programs---Most of the Big 5 firms have a formalized mentoring program to assist newly hired individuals in their transition to the working world. This program can help you learn the ropes and plan your career.
Family issues---The Big firms are starting to take family issues seriously. For too many years, they lost some of their best professionals due to pregnancy, day care, etc. In the big cities, they have day care centers. In smaller cities, they may assist with the cost of day care and help you locate an acceptable provider.

The disadvantages of working for the Big 5 are:

Travel---The Big 5 recruiters are saying that the amount of travel is less than it used to be. That's probably true. Still, because of the client base, overnight travel with a Big 5 firm will be more than with a regional or local firm.
Assignments---The old story goes that a professor ran into an ex-student one day and asked her how she liked auditing with a Big 5 firm. The student responded that she didn't know; she had only examined the cash account at three firms over the past year. Entry level persons working on large audits typically will only audit one or two areas (cash and accounts payable being the favorites). You may do this for your first year.

Overtime---Comparatively speaking, overtime at a Big 5 firm will be more than overtime at a smaller firm. Also, the timing is more unpredictable. In regional/local firms, the overtime is mostly during tax season. With the Big 5, it can occur any time during the year, and you may not have much warning (see stress/pressure).
Professional competition---Watch your back. Some people who work for Big 5 firms are very competitive and will do anything to get ahead. With a large number of staff, getting noticed by the partners may require shafting someone else.

Stress/pressure---Relative to smaller firms, this factor will be greater with a Big 5 firm. When IBM wants a report, IBM gets the report regardless of the stress endured by the audit firm personnel to prepare it. This adds to the unpredictability of overtime.

Specialization---Along with the advantages of becoming a specialist comes a disadvantage. What if you're that tax expert on CNN and the flat tax is passed? Being a specialist also makes it harder to open your own CPA firm that offers a variety of traditional services.

Regional/Local Firms
Regional and local (r/l) firms vary dramatically in terms of size. Regional firms can have 50-200+ professionals, 3-8 offices, and several million dollars in revenue each year. Some are listed in the Top 100 CPA firms in the country, in terms of size. The larger local firms can have 20-100+ professionals.
R/l firms can provide excellent employment opportunities for students who can not relocate to larger cities (where the Big 5 are often located) because of family or other factors. Also, the relatively higher amount of travel and overtime at Big 5 firms may deter students with family commitments.
R/l firms have several advantages and disadvantages also. The advantages include:
Salary---In order to hire the best and brightest candidates, regional/local (r/l) firms are having to increase their entry-level salaries. Not only are starting salaries competitive with the Big 5, but raises and bonuses are increasing in order to keep their professionals from leaving for other opportunities. In some r/l firms, any differences in starting staff salary compared to the Big 5 may disappear as you advance through the ranks.
Assignments---The assignments at r/l firms usually provide more overall exposure to the auditing process. You may start in cash and accounts receivable, but if you do a good job and seem to understand what's going on, you'll progress to other areas very quickly. In some cases, you may be doing an entire audit of a small client within two years.

Training---Regional and local firms rely primarily on AICPA, state society, and university programs to train their staff and to earn CPE each year. These programs are excellent and provide you with current technical updates and important information. Also, many of the firms have in-house training sessions for their staff.
Recognition---Compared to a larger Big 5 firm, it is easier to really stand out and get noticed. There is a quicker recognition of your abilities and skills earlier in your career with r/l firms. You are performing a wider variety of assignments and have a better opportunity to excel. This opportunity can translate into quicker advancement, higher raises, and more responsibility.

Specialist/generalist---Many of the firms will let you do audits during the year and prepare tax returns from January to April. This helps you decide which area you like the best and increases your knowledge in all areas of accounting.

Family issues---Most smaller r/l firms are very attuned to family issues. Some allow you to work at home, part-time or flex-time.

Clients---One thing you will notice in all r/l CPAs is their attitude for their clients; they are almost like family. Watching a client grow and prosper is very rewarding both financially and emotionally.

Camaraderie---At r/l firms, the professional competition is not as big a problem---there is more of a "team" feeling among the professional staff. The staff and your fellow employees usually become your friends and encourage you personally and professionally.

See Big 5 disadvantages---Most of the disadvantages of working for the Big 5 are advantages to working for smaller firms. Travel, overtime, and stress are relatively lower.

The disadvantages of working for a regional/local firm are:

See Big 5 advantages---As you can see, there are tradeoffs and compromises which must be made in choosing a firm. Your job is to weigh each of these factors and make one of the most important decisions you've had to make in life so far---a decision that will affect your life for your remaining years. Just kidding. You really can't go too wrong working for any of these firms. It all depends on your long-term goals, family concerns, ability to move, etc.

Final Thoughts

Audit vs. tax?

If you are certain you want to go into tax, go there. If you are unsure at this stage of life, go into auditing first. You'll learn more accounting in three months than you did in three years of college, and you can always transfer to tax later. Don't even consider consulting at the entry- level---very few firms will start you in consulting without several years of previous experience.

The fit.
When you go on an office visit, you should be assessing how well you fit in with the current professional staff and the support staff. You will be working very closely with these people and you want to feel comfortable. By the way, that's what they're looking at too---how well you'll fit in. You wouldn't be there if they didn't like you in the interview.

Location/office size.
Big 5 firms in large cities can have 500-1000 professional staff members. Large offices can make it hard to get noticed and promoted; therefore, the professional competition factor is increased. Big 5 firms can offer the possibility of transferring to another city or for an extended international tour (two years in Sydney, Australia or London or Tokyo might be neat).
Enjoy---for a while.

Each of you is in an enviable position. Unfortunately, there will be few times in your life when you will feel so wanted. Enjoy it. You've worked hard to get to this point and you should reap the benefits. Too bad you can't rest on your laurels. For those who haven't passed it yet, the CPA exam is the next step. Take it as soon as you are eligible, your knowledge base will decrease over time. And you just thought your studying days were over.
Good luck! When you're rich and famous, don't forget to give back. Give back to your community, to the profession, and to your alma mater. If you've had a scholarship during college, think how much it has helped. If you haven't, think about how much it would have helped. Either way, remember the scholarships at your university or state society scholarship funds. Also, stay in touch. Professors love to hear from graduates so that they can keep up with your career progress. One final point. If you ever need to change jobs, give your ex-professors a call. They usually have a good feel for the current job market in the public, private, or governmental areas.

Mark E. Steadman is a professor in the College of Business at East Tennessee State University, Johnson City, Tennessee.

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