Public Accounting: Should You Work For A National
Or Local Firm?
By David Satava
Each year approximately 26 percent of the over 50,000 accounting
graduates receiving bachelor degrees enter public accounting (AICPA 1994).
One of the most important decisions individuals entering public accounting
will make is determining whether to work for a local or national accounting
firm. This is an important decision since, according to the 1994 AICPA
study, national accounting firms experience nearly twice the annual employee
turnover as compared with local firms (20% and 11%, respectively).
This article reviews the working environment and corporate culture of
local and national accounting firms in order to help graduates make an
informed decision when choosing a full-time public accounting job. Understanding
the working environment of local and national firms is important since
recent studies indicate it has a significant effect on employee tenure.
Thus, in order to maximize one's career success, it is important to objectively
evaluate and match one's personality, abilities, and professional aspirations
with that of the working environment and corporate culture of a firm.
The factors of a working environment that should be understood before
accepting a job include such issues as hours worked per week, competition
for promotion, evaluation process, variety and scope of work, growth opportunities
training, and jog satisfaction. As we will see, not only are there differences
in working environments between local and national firms, there are even
significant differences between offices of the same national firm. A proper
understanding of these factors should assist public accountants and increase
the opportunities for job satisfaction and promotion.
Overview Of National Versus Local Firm
Local accounting offices are typically owned and managed by one or two
CPAs, along with several staff accountants, and usually operate in an
informal manner. Frequently, staff accountants work alone, starting and
completing assignments with little or no direct supervision. Local staff
accountants, for the most part, perform their work in the accounting office
rather than at the client's office. They generally talk to and coordinate
their work with the owner of the business.
Staff accountants of local firms are constantly involved with many of
the routine accounting issues faced by clients such as auditing, write-up
work, payroll, tax, and management advisory services. It is common for
staff members to obtain a significant overview and understanding of the
daily accounting activities affecting a business. Thus, a person who prefers
to work alone and in a quiet setting can be quite successful and satisfied
working at a local accounting office, since the primary source of evaluation
comes from successfully completing technical assignments.
National accounting offices are composed of a large number of partners,
managers, seniors, staff accountants and support, and typically operate
in a more structured manner. Staff accountants traditionally work as a
member of a team and complete highly structured and repetitive tasks for
very large, corporate clients. Due to the nature of accounting work, staff
members perform highly specialized tasks which give them very little opportunity
to understand a firm's entire operation. A large portion of the work is
conducted at the client's facility where is frequent interaction with
fellow and client staff members.
These staff accountants generally have little contact with top management
and direct most of their questions to the accountant in charge. Staff
members of national firms are evaluated on their technical competence
as well as how they work within a team. Later on, they are evaluated on
how well they supervise and direct a group project. Staff members are
selected for teams as needed, with teams being formed for the sole responsibility
of completing a task. After the task is completed, the team typically
disbands and each individual moves onto other group projects.
Best And Brightest
Being the best and the brightest does not insure job success in public
accounting. Traditionally, national firms hire the top 10 percent of accounting
graduates (Scarbrough 1993). Yet ironically, national accounting firms
experience nearly twice the employee turnover as the local firms. One
reason for this is that competition for promotion at the national accounting
offices is often stressful. Star accounting students quickly go from being
the rare, exceptional student at school to being an average commodity
on the job. Fellow staff members frequently view each other as competition
for promotion and may not help one another.
Promotion is somewhat limited within local firms. While many local firms
use the same titles as the national firms (staff, senior, manger, and
partner), what promotion that occurs is generally based on totally different
criteria. At the local level, promotion is an informal process and typically
based on a person's technical competence. That is not the case with respect
to the national firms. While early CPA job success with national firms
is primarily dependent upon the individual's technical competence, advancement
does not occur without the development of management skills.
If a staff accountant wants to become a senior at a national firm by the
end of the second year, that individual must learn how to supervise and
direct the work of other, less experienced individuals. Seniors are expected
to maintain a high degree of technical competence while they develop the
ability to supervise, motivate, and direct the work of younger staff members.
This may be a major hurdle for individuals who prefer to work alone and
in a quiet setting. Furthermore, seniors must quickly learn how to interact
with highly successful and demanding managers and partners.
In order to become a manager or partner, it becomes increasingly important
for CPAs to learn more sophisticated management skills such as communicating,
organizing, motivating, and directing the efforts of larger and more numerous
teams of staff and senior accountants. By the time a person is considered
for partner, his or her primary responsibilities, in order of importance,
are that of client development, staff supervision, and, finally, technical
accounting activities. Thus, while technical ability is the most important
skill needed at the start of a career, it is not the most important skill
needed to become a manager or partner of a national accounting firm.
Hours And Hours
While most people are familiar with the long hours CPAs work during tax
season, many are not aware of the currently long hours worked year-round
at national accounting offices. Scarbrough (1993) found that the longer
a person is employed by a national firm, the more one is expected to increase
his or her commitment, hence hours on the job. Frequently, by the fourth
year, CPAs of national accounting firms are working 50- to 60-hour weeks
for much of the year.
The number of hours worked continues to increase for those hoping to become
a manager or partner. One national recruiter, when asked what it took
to succeed at her firm, said, "we have found that people who like
to spend time with their families don't do well here." The prospects
are not really that bleak. There is another side to this issue that needs
to be understood. My recent study of 439 CPAs across the country found
that partners were significantly more satisfied and more committed to
their jobs than were managers, seniors, and staff members. Why is this?
The primary reason partners are more satisfied and committed to their
jobs, despite the long hours, is that, as one moves up the CPA hierarchy
in national firms, the variety of jobs become more interesting and professionally
more satisfying. Also, partners have more flexibility in choosing when
they work and continually select the type of work that gives them the
most satisfaction. As one recruiter said, many individuals leave the national
firms just before the work really becomes more interesting and more satisfying.
What are the chances of becoming a partner with an accounting firm? According
to Source Finance (1995), a personnel placement and recruiting firm, only
about two percent of all persons entering CPA firms ever become a partner
in public accounting firms. Thus, 98 percent of all accounting majors
entering the public accounting profession will never reach that plateau
and will consequently change to another area of accounting or business.
Regardless of the type of firm (local or national) accounting majors start
working for, they need to be aware of the effect that organizational or
corporate culture has on job tenure. Organizational culture essentially
describes how a firm operates and what values are considered to be the
most important within the firm. Typically, corporate culture can be broken
down into three overall dimensions.
First, there are the firms primarily concerned with the work and tasks
to be performed and operated in a highly analytical, detail-oriented,
predictable, rule-based, careful, and conservative manner. Second, there
are the firms placing a high value on interpersonal relationships and
concerned with teamwork, respect, fairness, and tolerance for other people.
Third, there are the firms placing great emphasis on individual behavior,
high personal expectations, aggressiveness, and individual achievement.
Sheridan (1992) studied the organizational culture of public accounting
firms as it affects employee turnover. He found that the corporate culture
of a firm significantly affects job turnover. His study found that professionals
hired by accounting firms emphasizing interpersonal relationship values
stayed on the job 14 months longer than professionals hired by firms emphasizing
the work and task to be performed. Thus, firms that place a high value
on the welfare of their employees tended to have lower staff turnover.
Training And Evaluation
Obtaining training in public accounting is very important. It is so important
that state accounting societies do not permit one to become a licensed
CPA without adequate and verifiable, real world public accounting experience.
Without a doubt, the national accounting firms have a better and more
structured training program for their young staff members than the typical
local firm. National firms provide a great deal more feedback and direct
supervision than local firms. The traditional training at the local level,
at best, is both informal and infrequent.
Staff members of local firms are frequently expected to learn by doing
and generally receive very little direction or support. Most national
accounting firms evaluate each employee after every major job assignment.
Thus, at the end of each review period, a staff member has been evaluated
by a wide variety of individuals. Frequent evaluations help serious-minded
individuals learn and understand the important values of their respected
firm much faster than the informal process practiced by most local firms.
To Specialize Or Not To Specialize
One advantage of working for a local accounting office is the wide variety
of accounting work performed for clients. Staff accountants are exposed
to all facets of the accounting process from basic bookkeeping to the
complete preparation of financial statements, as well as personal and
corporate tax returns. Accountants of local firms frequently obtain a
fuller and broader understanding of the accounting issues relating to
small- or medium-sized businesses. This type of experience may also be
helpful for individuals whose ultimate goal is starting their own CPA
Very early on in his or her career, the national accountant will have
to make two career choices. First, a staff member must decide between
auditing, tax, or management advisory services (MAS). Once decided, it
is unlikely that he or she will be exposed to or permitted to work in
the other areas of accounting. Secondly, because clients of national accounting
firms are large, CPAs have to specialize by industry and frequently have
little voice in determining the industry they will work.
Thus, at the national firm, success may be determined by random assignment
out of the job pool into a growth or lack of growth industry. The longer
a staff member stays with a particular industry, the more he or she will
be identified with that same industry. Therefore, this double selection
process makes it more difficult for an accountant to obtain and understand
how a business operates on a day-to-day basis.
Not All National Offices Are Alike
National accounting offices are not all run in the same manner; rather,
each office develops a personality of its own. The reason for this is
that each national office specializes in different aspects of accounting
(auditing, tax, or MAS). Furthermore, each office may also specialize
in different industries, which may require handling clients differently
from one office to the next. National firms may operate in very large
metropolitan areas, as well as in many smaller cities. Thus, when evaluating
a national accounting firm, it is important to find out more about how
a particular office conducts business.
After an individual has decided to go into public accounting, he or she
must determine whether to work for a local or national accounting firm.
the consequences of such a choice can have a dramatic effect on his or
her career and should be made with as much objective information as is
possible. Working for a national firm is not for everybody and neither
is working for a local firm.
Individuals must take great care when they look into a mirror and decide
what they really want from a public accounting career. Very early on,
successful CPAs learn how to manage their career based on their individual
needs, aspirations, and the opportunities available. The key to managing
a career, designed for increased job success and job satisfaction, is
to properly match personality, ability and goals with that of a firm.
AICPA Academic & Career Development, "The Supply of Accounting
Graduates And the Demand For Public Accounting Recruits-1994," 1994.
Scarbrough, D. Paul, "Psychological Types and Job Satisfaction of
Accountants," Journal Of Psychological Type, Spring 1993, pp. 3-10.
Sheridan, John, Organizational Culture and Employee Retention. Academy
O Management Journal, 1992, pp. 1036-1056.
Source Finance, Accounting and Finance Salary Survey. 1995.
David Satava, DBA and CPA, is an assistant professor at the University