Last updated on July 31st, 2024 at 01:06 pm
For anyone seeking to establish a career in accounting, whether to work as an auditor or a taxation professional is a decision they often struggle with. Many people get anxious when choosing between establishing a career in auditing or taxation.
Although both may seem the same, there is a lot of difference between the two. If you, too, are stuck in between the devil and the deep blue sea, here’s some help. Irrespective of your chosen career, enrolling in ACCA courses can be the stepping stone to a successful career. In order to take a final call, we need to understand how each of the two can stand as career choices.
This article discusses in detail how an accounting professional or an aspiring certified chartered accountant (ACCA) can establish a career in auditing and taxation.
Are Auditing and Taxation the Same?
Let’s start with this basic question: “Are auditing and taxation the same?” The answer is no.
Auditing refers to the evaluation of accounts, books, and all records bearing the transactions made by an organisation. Audit helps to ensure that a company has been practising fair business.
On the other hand, taxation refers to the fiscal policy of the government, according to which individuals and companies are bound to pay a fraction of their taxable income to be used for public services. It is a way in which the government derives money from businesses or citizens carrying out profitable activities within the boundaries of the country.
An ACCA course can help you acquire specialisation in the field you want. Let us now break down both these domains as career options.
Career as an Auditor
To put it simply, auditing is the official examination of the financial records of a business, and a professional assigned to this task is an auditor. The primary task of an auditor is to pour over expense reports and financial statements to ensure a company’s adherence to the government's regulations.
As an auditor, you will have to examine an organisation's internal functions. You will be responsible for working both within the organisation and with external stakeholders, such as government agencies.
The next section talks about some of the prime responsibilities you will be entrusted with as an auditor.
Responsibilities of an Auditor
Auditing is a complex career and involves a lot of responsibilities. Some of the responsibilities of auditors are as follows:
- Auditors have to review, analyse, and evaluate all the processes, products, systems, services, and employees within an organisation.
- They have to check the accuracy and validity of any information provided by an organisation.
- They have to inspect the internal controls being used by the finance department of the organisation so that the company adheres to all the rules and regulations.
- Auditors also have to ensure that the controls are in place so that an organisation's assets can remain protected.
Key Characteristics That Are Needed in an Auditor
Some prerequisites build the foundation for an individual to become a successful auditor. Illustrated below are some of the key characteristics that are required in an auditor.
- Ethics: Having strong ethical values is of the utmost importance for an auditor. He should be honest enough to report issues whenever he comes across any. He should never be tempted to suppress anything that may lead to further investigation or tarnish his relationship with certain stakeholders.
- Interpersonal Skills: An auditor should also have strong interpersonal skills as he may require a variety of information from different sources. He should have the skill to extract information from people from different works of life.
- Communication Skills: An auditor who has good interpersonal skills, finds it easy to establish rapport with different stakeholders like directors, managers, employees, as well as external parties. This way, they can come up with more accurate findings and articulate them better both verbally and in writing.
- Professionalism: Despite having good interpersonal and communication skills, auditors should also be extremely professional in their approach. Dealing with some stakeholders may be tough sometimes. A good auditor has to know how to deal with such situations.
Instances of Some Tasks Performed by Auditors
The task of an auditor is scattered through the different areas within the financial ecosystem of an organisation. Here are a few instances that show the kind of tasks that are performed by auditors.
Internal Auditing
One of the primary tasks of auditors includes assessing the internal controls of an organisation. Auditors can be employed either as temporary or as full-time staff of an organisation, who can help in enhancing the effectiveness and efficiency by performing tasks like identifying frauds and performing periodic assessments, and reporting the same to the management and other higher authorities.
Organisations that are smaller can get their auditing tasks accomplished by external auditors. Such external auditors assess the financial statements and operational systems of their clients based on the predetermined scope of project and engagement costs.
Inventory Management Systems
Auditors are also entrusted with the task of assessing the inventory management system and the current inventory count of an organisation. It often happens that obsolete inventory is counted as a regular finished item. This provides a misleading picture by overstating a company’s assets.
An auditor has to assess and understand the primary cause of overstatement and take the necessary measures to curb the problem.
Auditing the Mechanisms of IT Financial Reporting
An auditor also has to gauge the reliability of an organisation’s accounting system. For this purpose, auditors have to assess whether the numbers that are processed by the accounting or IT software are accurate and reliable.
If there is an error in the data processed by these systems, the same will be reflected in the balance sheet or income statement. Such minor distortions lead to big mistakes, causing the entire functioning of the company to collapse.
Taxes: An Unavoidable Part of Our Lives
In most of the modern economies, tax is an important revenue generation source for the government. The citizens of a country have to pay taxes that pay for the expenses to be made by the government.
Therefore, tax is an important aspect of a nation’s economy that determines its stability and growth. The government plans its expenditure based on the amount of tax collected.
Taxation is also an important career aspect among students who are pursuing a degree in accounting. Students desirous to establish a career as a taxation professional can work in a number of sectors like income tax, marketing, banking, fintech, and so on.
Let us now understand how taxation opens up a plethora of job opportunities for those who want to work in the field of public accounting.
Pursuing a Career in Taxation
Every fiscal year begins with the hurry of having to file taxes. While some try to understand the amendments made in the tax regime, others try to file taxes in a way so that they can save some money.
Organisations carry out financial transactions on a large scale. Due to this reason, they hire taxation professionals who can help them with the documentation and other work, while adhering to the regulations and not missing out on the deadline.
If you have good problem-solving abilities and you are fond of challenges in your career, pursuing a career in taxation might be an excellent opportunity for you.
Career Options in the Field of Taxation
Taxation is a complex task and requires a number of individuals working at taking care of different segments. Listed below are some of the roles that may serve as lucrative career options for those who are willing to make a career in taxation.
Tax Preparer
A tax preparer is a professional who is entrusted with the task of managing an individual’s or an organisation’s income returns. This professional also has to advise clients regarding changes in tax regulations, revealing tax liabilities, and locating legal exclusions in order to minimise the tax requirements.
A tax preparer has to gather important financial records like income statements and pay stubs, and keep a record of the data thus gathered into a database.
Tax Associate
A tax associate is responsible for analysing the financial documents in order to make sure that they align with the tax laws and IRS standards and meet the state and federal obligations. This professional has to interact with the clients and obtain all necessary information.
A tax associate may also have to conduct tax-related research, implement strategies for tax reduction, review the tax information of the clients, and respond to their queries. Tax associates may work on a short-term basis.
Tax Accountant
Tax accountants are taxation professionals who help companies, as well as individuals, file tax returns accurately while also ensuring that they meet the legal standard. They put their knowledge and expertise to use to help their clients boost their savings and keep penalties at bay.
When it is not time for taxes, tax accountants help their clients prepare a financial plan in such a manner that their financial goals can be achieved. They also maintain steady communication with the clients and keep them updated about their return information.
Tax accountants find their way into insurance companies, financial services firms, and also government agencies.
Tax Collector
Tax collectors are employees who are entrusted with the task of collecting taxes from businesses and individuals. They have to keep track of the incomes and financial transactions carried out by taxpayers, collect payments, issue tax bills, and so on. They may also have to prosecute taxpayers who have failed to pay taxes.
Income Tax Officer
This is a highly sought-after and prestigious position and, at the same time, comes with a lot of responsibilities. When an individual files his ITR, it is the task of income tax officers to scrutinise all the financial papers, liabilities, and assets to make sure that the income stated by him is true.
This is usually a centralised post. An income tax officer is in charge of monitoring the taxes and administering the taxation measures as laid down by the Indian Parliament.
There are a number of courses available online that can help you acquire specialisation in the field you want. Write an ACCA exam online and earn a certificate to validate your knowledge.
Is Auditing Fulfilling as a Career?
From tallying the financial statements to ensuring compliance with the rules and regulations laid down by the government, the role of an auditor is extremely important. Anyone who is interested in the field of finance can pursue a career in auditing.
To become an auditor, one should have a bachelor's degree in Accounting. However, companies usually prefer candidates who have a higher educational qualification like a master’s degree in Accounting or an MBA.
Once you acquire the right set of skills and specialisation required to become an auditor, you will be able to work in a number of areas such as with the government, with public sector undertakings, with finance and insurance organisations, and so on.
If you want to start working as an auditor, you can enrol in one of the ACCA online courses and upskill yourself.
Why Pursue a Career in Taxation?
By now, you must have gained a clear idea about how tax professionals play an important role in ensuring the smooth functioning of a business. Alongside that, there are some other reasons that can convince you why taxation is a great career option. They are as mentioned below:
- Challenging, but has ample scope for growth: Taxation is a challenging career option. Anyone who is good with number-crunching and has good problem-solving skills can pursue a career as a taxation professional.
Taxation professionals meet new challenges often; they have to remain updated on the ever-changing rules and regulations. They also meet new people with new requirements every day.
All of these enhance one’s problem-solving abilities and boost his confidence, thereby preparing him for bigger and better roles.
- Dynamic: An individual skilled in working with taxes can work in a number of industries. Taxation professionals help businesses manage money and advise them on how to improve. Therefore, starting from retail to entertainment, all industries require taxation experts.
- Always in demand: Unlike many other career options, a career in taxation is recession-proof. No matter what the downturns or economic conditions of a business are, filing taxes is a must. Staying informed on taxes and filing taxes on time while adhering to the rules and regulations saves businesses and individuals from being overexposed to tax obligations. So, a taxation professional is not likely to be exposed to the risk of being laid off.
Factors to Consider While Choosing Between Auditing and Taxation
Now that we know that auditing and taxation are not the same, let us have a look at some of the factors that one needs to consider before opting for either of the two as career options.
- Know what you are passionate about: This is the most important thing to do when choosing any career. Although both taxation and auditing will allow you the privilege to work in the field of public accounting, both, as career options, have their own set of pros and cons. Determine what you will be interested in.
The best way to do this is to get internships in both tax and audit. Testing both waters will help you understand better what you are cut out to specialise in.
- Choosing a career path that suits your lifestyle: While auditors have to travel a lot, taxation professionals have to deal with tremendous pressure between the months of January and April. It is important to have complete knowledge about all the ins and outs of both career paths before opting for one of them.
Apart from that, compensation also serves as an important deciding factor in helping individuals choose between the two.
Summing Up
Owing to the strict government regulations, auditing and taxation are highly responsible jobs that have to be performed with the utmost care and honesty. To take up such roles, you need to equip yourself with the right set of skills and knowledge to be eligible to pursue a career in auditing and taxation.
Association of Chartered Certified Accountants, UK in collaboration with Imarticus Learning brings to you an excellent opportunity to establish a fulfilling career in the field of public accounting.
The ACCA program imparts knowledge to learners about fields like accounting, management, finance, auditing, taxation, investment banking, forensic audit, and many more. The program is accepted in 180 countries and, therefore, offers exciting opportunities to learners all across the globe.
Visit their website to learn more.
