Tax vs. Audit: A Q&A with BS in Accounting Program Director John Barden

[Reyed Mia (Apprentice, DIU)]

Tax vs. Audit: A Q&A with BS in Accounting Program Director John Barden

If you?re new to the field of accounting, we know you?ve got loads of questions. In fact, you may not have even known that there was more than one type of accounting. To ease your mind, we sat down and interviewed John Barden, the director of the BS Accounting program here at JSOM. Whether or not you?re an accounting major, learning the answers to these questions will help you get a better understanding of accounting as it pertains to the professional world.

Q: What are the main differences between Tax and Audit Accounting?

A: Let?s focus first on tax?The biggest difference between tax and audit is that with tax you will be working in either public accounting or corporate accounting. If you?re in the public accounting area, you?re going to review the financial statements and then assess the tax liability for the corporation. You?re going to have to follow Generally Accepted Accounting Principles (GAAP) and rules that are set by the Internal Revenue Service & Securities and Exchange Commission (SEC).

With audit, you?re going to follow Generally Accepted Auditing Standards (GAAS), the Public Company Accounting Oversight Board (PCAOB) and the SEC. In the auditing world, there are two types of auditors: internal auditors and external auditors. Most everyone starts in external audit.

In external auditing you?re going to work for a public accounting firm, such as PwC, KPMG, EY, Deloitte, Grant Thornton, BDO or a small to mid-size regional firm. You will go from client to client, reviewing their procedures and their financial statements to make sure they adhere to GAAP. You also will make sure they follow the PCAOB, and they have internal controls within a corporation.

In internal auditing you?re going to work for companies such as Southwest Airlines, J.C. Penney or Pepsi. You?ll audit their procedures to make sure that they are working efficiently to safeguard their assets. You?ll also act as an internal consultant to make the organization operate more effectively.

Regardless of the type of accounting you go into, I would recommend you get your Certified Public Accountant (CPA) license as soon as you can.

Q: What type of things will you learn about in each type of accounting course?

A: Here at UTD in the undergraduate accounting area we?re going to put you through a set of core accounting classes that will get you ready for the profession:

?   ACCT 3331 Intermediate Financial Accounting I

?   ACCT 3332 Intermediate Financial Accounting II

?   ACCT 3341 Cost Management Systems

?   ACCT 3350 Fundamentals of Taxation

?   ACCT 4334 Auditing

?   ACCT 4342 Analysis and Design of Accounting Systems

These courses will prepare you for public, corporate and not-for-profit accounting.

Q: What does a typical day in each job field look like?

A: In a typical day in tax, you?re trying to reduce the client or corporation?s tax liability. There?s a lot of reading, research and questions to be answered in tax. There are a lot of standard procedures that you need to follow ? so there?s a lot of at-your-desk time spent researching and analyzing.

In audit, you?re going to be out talking to the client. You need strong people and communication skills. You?re going to be out asking your clients a lot of questions. You?ve got to make sure that all of the controls and procedures are in place. You?re going to be testing, tracing and recording information as an external auditor. You?re going to do a lot of questioning, and you?ve got to get back answers that make sense.

Both types of accounting involve computer and communication applications, so you?ve got to be very knowledgeable about that as well.

Q: What are some of the differences in pay between tax and audit accounting?

A: The pay is going to be consistent, whether you go into public accounting ? that is, work for a company that provides accounting services to other companies ? or you go into private accounting, where you do the internal accounting for the firm that employs you. The corporate ? private ? side is probably going to start you out about $48,000. On the public accounting side, whether you start in tax or audit, they?re going to start you out between $53,000 and $55,000.

Now the pay for corporate is a little bit lower, but there is going to be a lot less travel and a lot fewer demands; whereas in the public side, it?s all about billable rates.

So it?s great pay and a great career. You can go any place and start off with an average salary of about $52,000, and I know a couple of CEOs and CFOs who make over a million dollars a year; so there?s a very big upward trajectory in your career.

Q: How should I choose between tax and audit?

A: It?s going to come down to personal preference. You?re going to have to know yourself. If you?re outgoing, very personable and you like to travel, I highly recommend you do audit. If you?re quieter, shy and are more of a homebody, then go into tax.

Also, if you?re an accounting major, I highly recommend you get an internship in a company that lets you put your accounting skills to work; and at that internship they?re going to give you the opportunity to either go tax or audit. So just try it out and do both.

It?s like marriage. You don?t just walk up to your spouse one day and get married. You date each other; if you like each other, you get serious. Then you get a ring and get married. It?s the same thing with a career in accounting. You have to try it to see if you like it. I would recommend you try both audit and tax before you make a decision.

Sources: https://jindal.utdallas.edu/blog/tax-vs-audit