The differences between working in public accounting versus working in private accounting - Essay Example

The difference between working in public accounting versus working in private accounting Private sector accounting and public sector accounting are the major accounting branches within which a person may chose to work. Non-profit making organizations form another branch of accounting with distinct working environment and rules. Differences in operational rules and guidelines and work environments vary among these sectors and may influence an accountant’s preference to work in one sector than another.

I, in this paper, explore the difference between the scope of an accountant’s work in the public sector and in the private sector and outline personal goal and interest in the accounting profession. One of the perspectives to understanding the difference between working, as an accountant, in private sector and working in the public sector is the scope of work with respect to the environment. The different stakeholders in the two sectors, the extent of need and involved scope of meeting the stakeholders’ interest form an aspect of the sectors’ distinction.

Major stakeholders to the public sector accounting are the public, political personalities, and investors in government initiatives. Apart from the investors, the other stakeholders are politically motivated and may influence operations on political lines as opposed to professional perspectives. This is contrary to stakeholders in private sector accounting whose interest in the accounting process and personnel is majorly economical. Working in public sector accounting is therefore likely to present dilemmas between meeting political interest and ensuring adherence to accounting standards as opposed to working in private sector in which professional standards are the only forces (Wynne 3).

The scope of operation in the public sector accounting is also more diverse than the scope of work in the private sector. Public sector accounting handles all the diversified transactions that the government branch may deal in and therefore involves many and different clients while operations in private sector are specialized, especially among large-scale organization and an accountant has to deals with similar transactions and clients. This identifies easier work in the private sector than in the public sector accounting.

Organizational structure is another basis for the difference between public sector accounting and private sector accounting as the public sector is more bureaucratic, involving more formalities than the scope of accounting in the private sector. A public sector accountant is therefore, in most cases, reduced to an operational instrument for implementing instructions and formalities as opposed to creative personnel (Conceptual Framework Task Force 12). Accounting role in the public sector is also more diversified and therefore more demanding than the private sector’s scope.

This also emanates from the wide scope of public sector accountancy and involves such roles as provision of accounting services, distribution of resources to the entity’s branches and establishment of accounting based policies to the entity’s operations. Accounting scope in the private sector however focuses on service delivery with the remaining roles left for managers and other departments within organizations (Conceptual Framework Task Force 9). Applied accounting concepts in the two sectors are another basis for the sectors’ difference.

In private sector accounting, especially for the profit making enterprises, accounting for cash flow is done on an accrual basis while accounting in the public sector is done on a budgetary approach. The accrual concept recognizes values when transactions occur and does not regard cash flow. This is contrary to the accounting approach in the public sector where economic value is recognized with realized cash flow and not transactions (Bernard n.p). The forms of documents that accountants deal with and applicability of accounting concepts in the two sectors are other important bases for differentiating the professional of the two sectors.

The public sector accounting also deals with income and expenditure account instead of the predominantly trading, profit and loss account in the private sector’ profit making organization. This is majorly because of the difference in the sector’s objectives and the purpose for preparation of the financial statements. The income and expenditure account records revenues and expenses for a public sector organization, a scope that is narrow as compared to the private sector’s income statement that offer wider scopes for comparative analyses such as ratio analysis (Prowle 98; Bean and Hussey n.p.).

Apart from the difference in income statements, public sector accounting involves other statements such as “statement of administrative cost” and a statement of “supporting revenue and changes in tax payers’ equity” that do not exist in the private accounting scope (Fumiki 1). My career goal is to establish myself as a competent and recognized accountant in the global environment. I however plan to practice in the private sector because of its freedom from political forces and its narrow scope that allows for specialization and developed efficiency in accounting practice.

Works cited Bean, Jennifer, and Hussey, Lascelles. Finance for non financial public sector managers: Essential skills for the public sector. London, UK: HB Publications, 2011.Print. Bernard, Francois. “Public sector accounting, an obstacle to fair evaluation of the performance of public service.” December, 2004. Web. April 28, 2013. < http://www.pecc.org/resources/doc_view/709-public-sector-accounting>. Conceptual Framework Task Force. “Characteristics of public sector entities.” Conceptual Framework Task Force.

August, 2011. Web. April 28, 2013. < http://www.frascanada.ca/standards-for-public-sector-entities/documents-for-comment/item52207.pdf>. Fumiki, Sakurauchi. “Public sector accounting system and public governance.” Research Institute of Economy, Trade& Indstry. n.d. Web. April 28, 2013. < http://www.rieti.go.jp/en/papers/research-review/003.html >. Prowle, Malcolm. The changing public sector: A practical management guide. Burlingtone, MA: Gower Publishing, Ltd., 2012. Print. Wynne, Andy. “Do private sector financial statements provide a suitable model for public sector accounts?

” Association of Chartered Certified Accountants. n.d. Web. April 28, 2013. < http://www2.accaglobal.com/doc/publicsector/ps_doc_012.pdf>.