2/24/12

I'm starting my masters in accounting in May. I'm not too experienced in accounting (my program had a cap on the number of accounting classes you could come in with at 9 hours). Before the end of my summer term I have to pick between audit and tax. My question is, how do they really differ on a day-to-day basis on the job? Are the promotion tracks similar? Chances to make partner the same or different?

I see audit as something that will always be around. I like it because it gives you the chance to observe a lot of different companies and figure out your niche. Tax codes may change, but everyone will always need an audit.

Tax? I don't know too much about it. I sat in on a corporate taxation course on my campus visit and the prof made it seem extremely interesting. But what are the odds of the tax code being changed extremely (flat tax/fair tax) and the specialization becoming fundamentally obsolete?

I'll most likely be in Charlotte or Raleigh after graduation, if that makes a difference.

Thanks for the input!

Comments (45)

2/24/12

I can't comment on audit vs. tax, but I can tell you that the chances of the tax code being changed to a flat/fair tax are effectively zero. Lawyers and accountants write the tax code, they aren't going to eliminate their own jobs.

You'll never go broke helping the rich hide their money.

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2/24/12

yea, you're an idiot. choose tax if you like to look through legal codes all day and try to decipher what legislatures meant 80 years ago when they wrote it or do audit and basically ask if the numbers can be reasonably relied upon. The world is yours.

2/24/12

Audit is a much more gruelling experience - your hours in tax will be significantly better and you won't have to be on the road all week. Partner-track in audit is slightly easier, as there are more of them. That said, they're both extremely difficult - less than 1% of first-year auditors/tax guys would ever make it up (normally by self-selection).

Tax can potentially be more lucrative than audit, especially in private practice or if you develop a speciality in something like M&A or cross-border taxation. However, realize that your exit opportunities will be severely limited in tax. Once tax, always tax - it's not a transferable skill.

Audit (while bashed on this site) gives you a solid foundation in accounting, grunt work and client interaction (which the tax guys get much less of). It can give you the necessary background to get into corporate controller (leaving as a manager/senior manager) or even CFO (senior manager/partner). It can also be used to get into the hallowed halls of IBD or equity research (though it's an extremely difficult path).

2/24/12

I'm starting a MAcc in August and picking tax. My primary reasons are less client interaction, no travel, and not having to potentially deal with fratty "I didn't make it into banking" types, which exist in audit. The last one obviously is something that not everyone will have an issue with, or may even enjoy, but I'd be worried about it in NC with plentiful UNC and sub-par Duke and UVA grads running around. The tax courses I took in undergrad were much more academically rigorous than my audit course, but that's not saying anything at all. The only appealing part of audit for me that I'm going to miss out on are the easy transition to Controller roles. If it weren't for that, tax would be a no-brainer for me.

The hours, pay, and promotion paths are very similar. Odds of making partner are basically zero in either practice.

2/25/12
obscenity:

I'm starting a MAcc in August and picking tax. My primary reasons are less client interaction, no travel, and not having to potentially deal with fratty "I didn't make it into banking" types, which exist in audit. The last one obviously is something that not everyone will have an issue with, or may even enjoy, but I'd be worried about it in NC with plentiful UNC and sub-par Duke and UVA grads running around. The tax courses I took in undergrad were much more academically rigorous than my audit course, but that's not saying anything at all. The only appealing part of audit for me that I'm going to miss out on are the easy transition to Controller roles. If it weren't for that, tax would be a no-brainer for me.

The hours, pay, and promotion paths are very similar. Odds of making partner are basically zero in either practice.

Haha, I might fit under your last reason not to go audit. Never wanted to do banking but I was in a fraternity. Not stereotypically so, though.

Thanks for the replies. I didn't really think the tax code would be changed, just ended up netflixing a documentary about the tax code and they all seem convinced change was on the horizon.

I am looking for client interaction. I don't mind the hours, I'd rather be too busy than what I am now (teaching about 10 hours a week). My cousin started out with Price-Waterhouse before the Coopers merger and she had a great experience. Don't mind the travel now while I'm still reasonably young. It seems like many auditors leave to work for clients. I assume those roles have more standard hours/travel.

Any chances of doing a few years at Big 4 audit-> top MBA-> management consulting?

Thanks again for the input.

2/25/12

Top MBA will be very very tough as an auditor, but it depends on your experience and progression. The only successful attempts at a top program I've seen coming out of audit were at the manager+ level, where you can point to some real leadership experience. This will take 4-5 years to attain.

2/27/12

I agree that a Top MBA will be very very tough to get, but I've seen it done at levels below manager. You don't need to be a manager to get leadership experience; you'll get plenty of it as a senior. The tough part is standing out as an auditor compared to other candidates.

2/27/12

I wouldn't base your choice on your college classes. Public accounting is not at all the same as your classes were. Tax planning work sounds interesting in class, but the reality is that you will not be doing any of that work. You will be reviewing work done by a data entry firm in India to make sure your client doesn't have to pay taxes on his 2B fortune. Have you ever read the IRS Code?? If not then give it a glance before you think about doing tax.

Audit (the one i picked) is mindless work. Best way to get through this is to not believe the firm BS about value added or client service. Just make the budget . Your clients hate you cause you are a cost to them and make them do more work. For a couple months out of the year you will hate your life because the pay doesn't justify busy season. However the rest of the year it is pretty easy and the pay is decent. Also the firms never fire people just show up and make your budgets.

2/27/12

Interesting discussion. Quick question, a bit off topic. Can you work in audit at the big 4 with a finance degree?

2/28/12
Anglein:

Interesting discussion. Quick question, a bit off topic. Can you work in audit at the big 4 with a finance degree?

You need to have fulfilled your minimum courses for the CA/CPA. If you've done that with your finance degree, then yes.

2/28/12

I'd go with tax because I find it more interesting. The tax code is always changing every year so that is something you always have to be on top of. I think, in the long run, tax accountants get paid more as well. You can get your LLM and become a tax laywer as well. Or you can set up your own CPA practice and do individual/small business tax.

2/28/12

@Sovjet Thanks for the response.

2/29/12

Thanks for the replies everyone. I appreciate it.

My UG track would have been good for consulting/IB had I been at a target, but water under the bridge. Is it unrealistic/idealistic to expect audit to be a crash course in how business happens in the real world (not in textbooks)? I know my accounting courses will help me a lot no matter where I go in business, I just hate to see the top business school pigeon hole everyone into certain categories. Is a 720+ from audit simply not going to cut it as much as a 680+ from another more "valued" industry? I missed out on recruiting at my undergrad, but counted my losses and trying to position myself favorably and make some lemonade out of lemons. I definitely wouldn't mind audit -> CFO for a private company, but I really do have a thirst for success and being the best I can be.

Is the prestige/hype all worth it, or will I be much happier if I just tune it all out now? My cousin did big-4 to private and has had a very comfortable life, especially given cost-of-living. Still though, websites like this really do cast a doubt over everything.

2/29/12
tedrd.88:

Thanks for the replies everyone. I appreciate it.

My UG track would have been good for consulting/IB had I been at a target, but water under the bridge. Is it unrealistic/idealistic to expect audit to be a crash course in how business happens in the real world (not in textbooks)? I know my accounting courses will help me a lot no matter where I go in business, I just hate to see the top business school pigeon hole everyone into certain categories. Is a 720+ from audit simply not going to cut it as much as a 680+ from another more "valued" industry? I missed out on recruiting at my undergrad, but counted my losses and trying to position myself favorably and make some lemonade out of lemons. I definitely wouldn't mind audit -> CFO for a private company, but I really do have a thirst for success and being the best I can be.

Is the prestige/hype all worth it, or will I be much happier if I just tune it all out now? My cousin did big-4 to private and has had a very comfortable life, especially given cost-of-living. Still though, websites like this really do cast a doubt over everything.

Big 4 audit for a few years to Industry is one of the most stable and secure ways to get into the upper middle class and live a nice lifestyle. Most of your clients will have armies of people who left the Big 4. They work 40-45hrs a week and pull in nice salaries. Its not rainmaker money, but you have time to enjoy your life.

3/1/12
Cardinal:

Big 4 audit for a few years to Industry is one of the most stable and secure ways to get into the upper middle class and live a nice lifestyle. Most of your clients will have armies of people who left the Big 4. They work 40-45hrs a week and pull in nice salaries. Its not rainmaker money, but you have time to enjoy your life.

This is so true. It's pretty easy to pull in $70-$80K in industry after 2 or 3 years of audit experience. On an hourly basis, you're waking way more than an analyst, especially if bonuses continue to go to shits the next couple of year. Even if you're making $130K a year, it's not exactly a huge lifestyle change. Besides 1/3 of that comes at the end of the year - the rest of the year you're just as broke as an accountant but working twice as much.

Best Response
3/1/12

tedrd.88, I felt compelled to respond to your post because I've been on both sides of the fence (audit and IB). I started in Big 4 audit out of undergrad and eventually lateraled into IB after about a year and a half. I could write for days about this, but I'll just leave you with these few points:

1. There are no guarantees in life. If someone was successful, it was because that person was fucking legit, not because he/she was in IB or had a Harvard MBA.
2. The chase for money/prestige is a race you'll never win, so why the hurry?
3. People aren't impressed by the fact you work in IB nearly as much as you think they are. Most people actually don't give a rats ass. Your family/friends won't care because you're not spending time with them and girls want to fuck the musician more than the IB analyst. No girl gets wet over the fact you're working at GS. Besides, if you don't have game, you don't have game.

We all get caught up in the "rat race" some point in our lives, but most of us eventually realize there's so much more to life than "trying to be the best" all the time. The truth is most analysts that are actually in IB are just waiting to get the fuck out so they can actually have their life back. I know I'll never look back on my life and say wow I lived a good life cause I closed that one fucking deal!! Don't get me wrong, I'm happy that I made the switch. But the grass is always greener on the other side if you don't learn to be content with your current situation.

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3/1/12

unless there is something specifically pulling you towards tax, i would go with audit. it will give you the most options down the road and the broadest experience. in either case, work hard your first year and if you are unhappy with your decision, request a transfer to a different group. you might have to push hard to get it done, but the big 4 firms are very accomodating in terms of changing groups and even office location.

to provide a real example, a person i worked with who has 2.5 years of audit experience, is leaving public for an $80k + bonus position in industry. not in an expensive market. to some that might be peanuts, but all things considered, very good for a 25-26 year old person.

i know several big 4 audit/tax/advisory people who have left for top mba programs and law schools. for law schools the work experience reallly won't mean too much, but it could be something that tips the scale in your favor. for mba programs, the sweet spot is going to be in the top 8-15 range, but it really depends on the other portions of your app.

8/25/12

If you are looking to get an idea of what it is like to work in audit at a Big 4, this post may help. It's a glance into what it is like to work a day in a life of an auditor.
http://www.stockkevin.com/2010/05/day-in-life-of-a...

8/25/12

Audit

8/25/12

If you are looking to go into F500 management, audit is a far better option.

8/25/12

If you want to get into big time business consulting - go with big 4 firm. If you are seriously looking a tax, go with Big 4/CPA and start networking now to begin the foundation for a sucessful tax/financial planning practice (and network with attorneys/insurance agents/etc). You may consider getting your CFP as well. However, if you are dead set on Fortune 500 CFO, stay in audit (shoot for Chief Investment Officer position first) and get your CPA/CFA.

8/25/12

I think it all depends on what you want to do,

you get more industry exposure in audit, and I think the accounting knowledge serves better for someone who wants to potentially break into IB.

Im in the same boat as you, I hope to hop into IB after B school some day, Ill be starting with Audit

*btw r u talking a about a big 4?

8/25/12
J15:

I think it all depends on what you want to do,

you get more industry exposure in audit, and I think the accounting knowledge serves better for someone who wants to potentially break into IB.

Im in the same boat as you, I hope to hop into IB after B school some day, Ill be starting with Audit

*btw r u talking a about a big 4?

Unfortunately, I didn't get a Big 4 offer as my gpa was pretty low. Therefore, I'm thinking about starting at a smaller firm for a year, getting a Macc from a good school, work for 3 more years at the Big 4 (if I get in) and then apply to b-school, and then maybe get into consulting. Will not getting into the big 4 = career death at this point?

8/25/12

F500/Consulting - Audit is probably better
Start your own shop - Go tax

I was a former Big 4 auditor who became an IB Associate after business school. The accounting does help. Get your CPA while you're at it.

8/25/12

thefugees-
i wouldn't say its CAREER DEATH, people on this board like to emphasize name brand firms.. schools... one advantage of the big 4 is the exposure to the big clients, but it doesn't mean smaller firms offer nothing valuable. just work hard and you'll get to where ever you wish to be.

Kjl-
Do you mind shading a little more light on your path from accounting--> B school--->IB?
i'm planning to follow the same path as you, any advices will be greatly appreciated! thankx!

8/25/12

J15,

I'm not sure if I have anything interesting to offer other than the typical course of action (audit, got CPA, applied to schools, obtained a summer associate and came back full time). I'd be more than happy to address any specific questions that you might have. Feel free to send me a message if you'd like.

8/25/12

I'm an auditor at one of the big 4 accounting firms and I would like to get into IB, do you necessarily have to start out as a 1st yr analyst? I'm a bit confused as to what my options are.

8/25/12

Transferring from an auditor to an investment banker is a long way man since you dont have the applicable finance skills. I'd say try get into the transaction service team at big 4 first and learn something towards M&A, valuation, modeling etc.. you probably gonna start out as a 1st yr analyst if you can make it to IBD.

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8/25/12

Audit is probably the better move as it provides an accountant with a far wider range of exit opportunities. Either way you're looking at having to get an MBA to break into High Finance, so I wouldn't worry too much about Audit v Tax in relation to that.

Tax does generally pay a slightly higher starting salary at the BIG4 firms, although it's neglibigle in the long run.

8/25/12

Long term prospects for what? Audit is better for a corporate/financial setting, while it's probably more likely that you can become entrepreneurial and start your own practice with tax.

8/25/12

you should go into the accounting that requires the least logic since you posted your accounting career question on the investment banking board?

8/25/12

^Lol. I actually think most firms will allow you to do a rotation in the different departments. Tax to me is much more appealing than audit if you wanted a career in accounting.

8/25/12

I don't think there's really an "ideal" path, as it will vary person to person. Personally, I went with tax because of the law aspect (Poly Sci undergrad) and because I felt tax offered a bit more "out-of-the-box" thinking. Tax also gives you an opportunity to specialize in a particular tax area (SALT, federal, corporate, partnership, ect.) which if you're thinking of staying long-term. Audit in all honesty isn't a bad field to get into. For Big 4 it's the main revenue driver compared to other lines of service, you work with top clients (F500 companies), and get great in depth knowledge on a company's financials which can be helpful moving into other roles. If you're contemplating the "tax vs. audit" dilemma, I would say get a feel of what you think you'd like to do more and just do that. If you're looking to say long-term in a Big 4 firm then tax or audit are going to get you to the end: becoming a partner. If you're looking to jump out 2-5 years into the job, audit will probably give you a wider variety of roles to jump into compared to tax. Then again, tax roles can pay very well, depending on your specialty. I know a guy who does only fiduciary returns (gifts/estate), and charges about $350 an hour for his work, and he's only "works" about 6 months out of the year. Hope that helps.

8/25/12

Tax and Audit are both pretty good career tracks at the Big 4. Audit is definitely more broad, but that results in a wider range of potential exit opportunities as well. You work a lot with understanding the client financial reporting process, how the organization makes money and how they record it. Public companies, you will also work a lot with controls testing. Auditing you will definitely spend a lot of time writing and documenting your understanding and your testwork.
Tax, as mentioned above, is much more specialized, which has pros and cons. You are definitely more valuable and much less replaceable once you have specialized knowledge. However, you are valued for that knowledge, and therefore trying to make a transition out of that becomes harder. If you are switching to something you don't have a specialization in, you become much less valuable. For this reason, it seems like once you start in tax, you're exit opportunities are much more limited to basically tax departments at other companies, and other tax related positions. Tax actually has a higher salary though.

8/25/12

Could always start your own accounting firm as well. I know that can pay very well. From what I understand itd probably be easier to establish one that focused on tax

8/25/12

Can't really go wrong with either. I think the pros and cons of each with respect to exit ops are pretty much covered by the comments above. Go with what you prefer since you are the one who has to do the jobe, no sense in going into tax when you enjoy audit or vice versa.

8/25/12

This reply may be late - but if you still want some pointers:

I'm an international tax attorney, Big 4 alum. Based on my experience the responders to your post are correct. Your observation is correct as well: law and quantitative skills.

Tax is broken into "compliance" and "consulting." Compliance is putting big numbers in small boxes a/k/a filling out tax forms. It's where the tax law rubber hits the road....and you will want to shoot yourself in the face if placed in a compliance role. But you will be required to do some time in compliance to pay the proverbial dues. If you do not have a JD the Big 4 will place you into compliance rather than consulting.

"Consulting" is the practice of tax law - if you have a JD the Big 4 will attempt to leverage your JD in a consulting role.

Avoid State and Local Tax (SALT) and anything to do with personal taxes.

Do you have a JD or are you in law school?

Hope this helps!

8/25/12

I think it's important to consider what you're looking to do upon exit. If you're on WSO, you probably want a buy side job or to go IB or something, so think about what each path will give you in terms of experience. Thinking about it, these things come to mind..

Tax -
PRO - You know taxes, and, depending on exposure, might have some experience with M&A, LBO, etc. Tax is law, so you're getting experience in that arena as well. Everyone loves paying less taxes legally, so if you have good recommendations and you're creative with tax strategy, I imagine any investment institution needs guys on the deal team with tax knowledge to go over different approaches. Also, treatment of taxes with regards to MACRS GDS or ADS can impact the bottom line significantly in both the short and long term, so working with portfolio companies isn't out of the question. Lastly, if you can speak up during negotiations with valuable input on how different financing packages will impact the tax liability of each party involved (without being a bag of wind), you'll stand out over people who aren't familiar with the code.

CON - You only know tax, so if you're not in love with it and not excelling, you might be stuck. Also, if the government ever decides to simplify the tax code (lol), you become less valuable. There also are certainly situations where your ideal job requires a JD, which is an extra year over an MBA (opportunity costs magnified, etc).

Audit -
PRO - you're getting significant glimpses into the books of all kinds of companies and you're digging way down into contra-contra asset accounts and the like, so you know what a complex BS looks like and can read it without your eyes crossing. You're also getting exposure to companies across the spectrum of success, so if you can notice patterns within certain less obvious accounts - ie you can argue an investment outside of cash flows and EBITDA - you will be improving your ability to analyze investment opportunities, which translates across the industry. Audit also seems to have the widest variety of exits because it's sort of an MBA in financial statement analysis and presentation, rather than a more narrow focus on the tax code.

CON - you're getting paid less to start, which maybe doesn't matter as much, but its a consideration. From everyone I know in Audit - you're a commodity. The SEC requires public audits so your presence is somewhat of an extension of Uncle Sam. Also, audit is due diligence and doesn't offer any room for creativity. Even managers are limited in that their creativity amounts to breaking up the work. If you want to audit financial statements and make suggestions, you're imagining consulting.

8/25/12
VanWilder:

Also, audit is due diligence and doesn't offer any room for creativity. Even managers are limited in that their creativity amounts to breaking up the work.

I agree with all of it except this point. Highly skilled auditors can muster quite a bit of creativity when needed to sweep something under the rug which isn't wrong persay but is definitely up to interpretation. Their handiwork goes completely unnoticed by the general population and is a work of art unto itself. Someone would never even know that they needed to get a broom because the person swept so thoroughly.

8/25/12
8/25/12
8/25/12
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