A Big 4 audit vs tax thread, with a (hopefully) unique twist

Art.Vandelay's picture
Rank: Gorilla | 730

I'm an intern this summer with a Big 4 firm in audit. Started the first few days of June. I basically chose audit because of better exit opps (into something perhaps less strictly accounting), team environment, and everyone seemingly hating tax. This was all before I had taken a tax or auditing class. Now I've taken one audit and two tax.

Additional note that is very critical to my thoughts here, I am very strongly attracted to entrepreneurship. My family had a small business growing up, and I'd love to not only be a small business owner myself, but to help other ones. This, along with enjoying my tax classes, have made me strongly consider starting my own accounting/tax practice in the future, a thought that was always merely in the back of my head. I'm not sure if the tax classes will be anything like the work done, but I enjoyed them for what its worth. The thought of working for just myself and family and helping others doing the same is extremely appealing, even though I know first hand it is not without its challenges.

A few weeks into my internship, my thoughts are these: the traveling to clients is quite annoying when living in a big city where traffic and urban living make it extremely annoying and time consuming to drive places, expensive to park, etc. This makes the idea of just going to office (10 min train ride to the office vs 1 hr+ drive to the suburbs) extremely appealing, not to mention not having the hassles of owning a car in a major city. Secondly, I'm not sure if its just summer time slowness or these particular clients, but as far as the team environment goes, its been either me and one other associate/senior or me and two others. Maybe I'm naive for thinking it would be different, but theres not a whole lot of communicating about the work we're doing and more just 2-3 people in a room at the same time.

Now, I know if I do decide to start my own practice, obviously the Tax experience would serve me slightly better. But I also would imagine the type of work is probably very, very dissimilar from F500 companies to small businesses and individuals so I'm not sure exactly how much better Tax would be over audit. But, if I'm only staying for a few years, I'm sure having the B4 audit experience wouldn't exactly be a hindrance and then I'd have more exit opps for a back up plan if I decide against my own practice (although that seems unlikely).

Basically, I'm not sure if I have a precise question or more just thoughts that I'd like feedback on from you more experienced folks, but if I had to pick questions they'd be something like: In my situation, where I'm strongly considering starting my own practice, am I much better served doing B4 Tax instead of Audit? Or are both of them so different from small business tax and accounting that I might as well stick with audit for the back up plan exit opps? I'm a little nervous about the idea of switching to Tax because I know much less about the work environment (such as typical hours, when busy season is, etc), so if anyone had first hand info on that I'd love it. I'd hate to switch to Tax only to have even worse hours than audit does lol. Also, if I do decide to try for this switch, should I do it before/during/after receiving my (presumed) FT offer?

The lack of travel for Tax in this city is a biiiig plus to me, but I'm willing to do what is overall best for my career outlook, which will likely be self employment but could be a more "typical" exit opp. I like to have options because life is unpredictable, but I also like to set a goal and put everything towards it, which makes me want to go full steam ahead into tax and not look back. But again, life is unpredictable.

Thanks for any help guys!

Comments (19)

Jul 7, 2014

Well that was a lot to read, so i will try my best to answer based on my experience at a Big 4 (in Canada, I would be considered a Senior Auditor, not sure there are different titles elsewhere).

Team environment: So you stated that the team environment in a audit room is usually around 2-3 people (Staff 1(you), Staff 2, Audit Senior). On a good day, manager, senior manager and may be the partner shows up, but for the most part it'll be the field team of 3. I agree from experience that there is little communication between the team in terms of testing beyond telling you what to do regardless of time.

In tax, it will not be any better because communication between you (tax analyst) and senior tax analyst will be something like this.

"This is the return for one of our clients, do it please!" said the senior

"OK, sounds interesting" said the analyst...

This was my experience in the tax department during tax season. In conclusion, team environment will be the same if not worse than audit. In my office, the audit department is very frat like, we all know each other and hang out with each other while the tax team is little more isolated from each other.

Travel: Honestly, I love the travel from client to client, but I guess it's a little different for me because parking at the client is free and if its not free, it should be expensed to the audit mandate. Don't want to jump to conclusions, but I think you should ask your senior/ manager if you can expense parking because I have never heard of the audit team required to pay for parking at the client place.

Exit Opp: In audit, if you want to stick to a "traditional" and "easy way" out, you'll probably transition to a account manager at one of your audit clients once you got your letters. Starting your own business would be another option, with their own risks, and is more typical with audit experience than with tax experience.

Starting your own practice with tax experience is done generally by individuals who are already senior managers in the tax department and have an extensive network to actually get mandates. Other options would be joining the tax department in a F500 or other companies and joining the CRA (Canadian version of the IRS).

I hope I answered some of your questions, if not, ask on buddy!

Jul 10, 2014

Thanks for taking the time to read and reply. I had sort of given up on this thread lol.

First I should clarify, the parking thing I was talking about was at home, not the client. What I meant was tax would allow me to rely entirely on PT, while audit would require a car and all the costs that come with it.

Also, could you clarify a little as to the last two paragraphs. You stated that an audit person opening their own practice is more typical than a tax person doing so. I'm confused on why this would be.

The thing is, the idea of working for someone else is much less appealing on the outside than working for myself. I know the sky is the limit when you work for yourself, no one (besides clients, but that's different) to tell you what to do and if you can take off earlier on Tuesdays for juniors soccer practice, work from home sometimes, etc. That said, I also know it's hard work, and while again the sky is the limit, a VP or even controller can clear 200k total comp. Idk how realistic it is to get that as a self employed CPA without constantly (not just at first) working 60-70+ hour weeks. Additionally, working for someone else can have me making more than enough money when I'm around 30 and ready to settle down, whereas if I start a business I'll be focused on that at that age. Self employment is certainly not the "easy" route.

My concern was I'm making myself think I HAVE to decide before the end of my internship what my career path will be so I know whether or not to switch to tax for FT. But I guess I could probably start in audit and reassess in a few years, even moving to a smaller firm to do tax work eventually to gain the experience for an accounting and tax practice. Those are my thoughts.

Jul 10, 2014

This'll probably not even be considered, but:

If the endgoal is to start your own practice a few years down the road, it may be beneficial to consider smaller firms that allow you to do both Tax and Audit before committing to one or the other.

The growth path is pretty much the same in regional firms, and you still have clients that want to hire accountants from public. Really all you're giving up is 3k or so starting salary for going to a smaller firm, and some potential to work for F100 level companies. But even if you did go Big 4 -> F100, they'd most likely pigeon hole the hell out of you into internal audit or controlling or something since they can find better finance people, and you don't seem interested in auditing your way into your 50s. Plenty of people move from a smaller firm to Big 4 as well.

I know it seems like youd be shooting yourself in the foot by doing it, but finding a regional firm that has it's incoming staff do both audit and tax for 1-2 years would probably take the stress of this decision off your mind.

Jul 10, 2014

I have considered that, but I'm moving across the country and my big 4 offer is my ticket. Small firms can't help me out with hiring far away. But it's a definite consideration after a little while.

Jul 10, 2014

Yeah, I was going to add "...As long as you're OK where you're at" but left it out to not clutter my post.

It's still possible to find a larger regional firm that can give you that freedom of location with the perks stated before, especially if you go to a reputable accounting school, but that would be much harder.

Tax is a bit easier to learn on your own, I'd think. You'll end up looking through tax code anyway even if you do "graduate" from Big 4 tax. The audit experience, however, probably gives you more options, so if you have to choose I'd go that route.

I'm by no means saying tax is easy, but it's something you can learn in your room looking at books for a few weeks. The intangibles you're presumably supposed to gain through Big 4 audit, not so much.

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Jul 10, 2014

I would never start my own practice.

Jul 10, 2014

Why is that? Just curious. Obviously I'm not decided here lol

Jul 27, 2014

@"Art.Vandelay" I had to temporarily take over management and run a business (long story), if I ever get a divorce I wouldn't even wish the experience on her it's that bad. And that business made money, god help anyone who is just getting by. The bottom line is, every business is a shit-load of work. All of the overhead goes onto you, you go home at night or for the weekend and your costs still continue on in an endless and steady mind numbing march.

Look at @"Dingdong08" 's post below and imagine where you are going to fit into that. Now do the math on all of your overhead from having an ad on google to paying fees for your water heater to be inspected and figure out how much business you have to generate just to break-even let alone pay yourself a decent salary. Not to mention having to pay any employees. Let's just assume you were able to successfully get started and all of that jazz, in 10 years would your business be making more than you would be at EY? Turbotax is already a nail in the coffin to your business, but do you think in 10 years you still won't be squeezed out of the market?

If you had all that it takes to successfully wheel and deal for funding, new business, skills to see it through and everything you need to get your own practice underway. Those are the same skills, qualities and work ethic required to make partner at a Big4. The odds are probably higher (still low) to make partner than to successfully run your own practice for 15 years or more. I know a partner and he's making over 400k/yr, how successful would your business have to be to make that?

If that isn't compelling, here's another point. Let's just say EY goes out of business (no idea how that would happen), or for some reason you get fired, your resume would still make you highly employable within that industry at a different firm. Because it doesn't matter who you work for. Imagine your resume after 8-10 years running your own practice.

To make something you have to be something. It is 10x easier to take an established business to another level than it is to start your own and merely survive. Just look at how much Carnegie paid Schwab back in the day and that should tell you all you need to know about whether it is better to become vital to something established or go out on your own.

Jul 10, 2014

I would never start my own practice.

I'm not an accountant so take this with a grain of salt, but I'd imagine building an accounting practice from scratch would be exceedingly difficult, especially when you're young. I never want to dissuade someone from entrepreneurship but I'd give a lot of consideration into how you're going to get clients. The problem that I see is that if the general public just wants to get their taxes done, which is the majority of people because their financial lives and tax returns aren't very complex, you can use software yourself (Quickbooks, TurboTax, etc) or you can take them to H&R Block and get them done for cheap. On the other side you'll have business owners and HNW's who have more complex tax returns and I'd assume it would be common for them to have their own accountants (personally I do, and I just kind of inherited him because years ago when my tax returns got to the point of complex with multiple pass through entities one of my partners at the time used his firm so I just started using his CPA firm- I think about 15 CPA's + support staff). He and his firm are also my firm's accountants so it's pretty seamless between business and personal finances. I think these types of clients are going to be tough to land when you're a 27 year old with a shingle hung out. I'd also imagine these are the clients where you make money because all in we pay a lot to him annually, and if we're acquiring a company and don't need a Big 4 brand name on audit's or other due diligence, we use him because he's less expensive and very high quality. He's also a very good and business minded accountant: it seems like every smaller CPA firm says that they're also consultants but he is. But I digress: he didn't start his firm up, he inherited it from his father. He's grown in greatly but he had that base of clients to begin with, he started in a Big 4 (he's 50 something and I forget if it was Big 8 or even 10 back then) to learn, worked at a corporate job for a bit then went back to take over the family business.

Perhaps you'd have luck in finding a smaller operator out there who has a few CPA's working for him that's getting towards retirement who doesn't have kids who want to be in the business that you could work something out to eventually buy him/her out?

Jul 10, 2014

Another thing to think about - in tax you will lack client interaction (moreso than audit), which I think is pretty beneficial for development. Also consider that there are alternatives to opening a tax shop if you are planning on entrepreneurship.

Jul 10, 2014

I think I can share some insight into what it's like building your own tax practice. (not first hand but parent build a firm)

You will work your ass off getting your company off the ground. You can consider franchises too and build, sell and buy an independent firm. Once you have the company established it can be very good. My parent's company produces around 600K revenue, which may not sound like much but about half is take home.

The work itself can be both mind-numbingly boring or pretty interesting. There is a heap of client interaction. For example I had a meeting with a client who owned shares in a private company, owned a self managed super fund, was involved in a partnership and also had his own company. He got burnt by his previous accountant that caused him to have a huge tax bill, basically it was my job to restructure how everything interrelated and how revenues and expenses were recorded to minimise the tax bill whilst staying within the law, and that's how people don't just look it up.

Although most clients are pretty small, we do have some larger ones with brand names you'd recognise (we work for the australian franchise of a few american companys) and that can be pretty cool.

while taxation is the bread and butter of the business, we've expanded into financial planning, mortgage brokering and few other areas. So there is always something else you can do and it is a great platform.

If you are looking to run your own accounting practice I should say get experience in a smaller public practice shop. Reason being this is essentially what your business will be plus you'll get a much, much broader skill set. We're actually recruiting now and we've had quite a lot of interest from people previously at big 4's, the main reason they're moving is for broader experience.

Basically your own firm can be fantastic, hours and pay once established, for hours I mean like 9-5 most days occasionally later in busy times (end of quarters, especially eofy) but also able to take days off almost whenever here and there and leave early. BUT you will work your ass off to get there first.

Jul 24, 2014

Forgot to reply to your post! Thanks for taking the time to share your experience. Gaining experience at a smaller firm is definitely on the radar, but as I said I have to at least start at my current Big 4 in order to get the location I desire. Would you say in your experience and learning from your parent that someone starting in big 4 audit (as opposed to tax) is at any sort of disadvantage? I ultimately want that back up that a few years of big 4 audit can provide, but still will consider tax/entrepreneurship in the future.

Jul 27, 2014

No worries mate. We actually just went through a bit of recruiting (junior book keeper, experienced CPA/CA) and the main things we looked for in the accountant were:
- experience obviously, for us audit only experience would have been bit of a disadvantage but we really needed someone who could hit the ground running and be able to do company, individual, SMSF etc
- Well spoken, absolutely amazed me how poorly people came across on the phone and in person
- Fit. This was probably the biggest thing, if we believed someone with audit only experience was the best fit, they'd get the job over someone with tax experience

We had a few people with big 4 experience apply and our main concern was that they'd be happy in a smaller shop servicing mostly mum and dad type businesses. If you can explain why you wanted the move, it wasn't an issue (IE I want a broader experience and more exposure to different aspects as opposed to my current role at 'big 4' where I feel I am becoming pigeonholed)

Ultimately big 4 audit wouldn't really put you at much of a disadvantage, we'd assume you knew a lot already and could learn the rest quick enough (we were just really pushed for time and don't have the time to train 2 new staff at once). It basically comes down to fit, I narrowed down a few hundred resumes down to around 20 phone interviews then 5 face to face interviews, all had great experience and fit was the deciding factor. (They also asked the least for salary but we would have paid them more if they asked, but that's another lesson WSO can help with)

Jul 27, 2014