Understanding the Difference Between Public and Non-Profit Accounting

Accounting is a truly diverse career path when you consider the extensive array of companies, organizations, individuals and government agencies that require some form of accounting services, whether that entails determining profit, filing personal income taxes or tracking charitable donations. That leaves accounting graduates a whole host of options to consider when they’re deciding on which type of accounting work is right for them.

What Are Public Accountants?

Probably the most recognized accountant role is that of the Certified Public Accountant (CPA) who assists individuals and small businesses with tax preparation. Although preparing taxes may be the most commonly understood role of a CPA, there are many other advisory, consulting and planning roles they can fulfill.

As some of the most knowledgeable tax law professionals in the nation, CPAs can be an invaluable asset in estate and tax planning matters, working with estate planning attorneys and other professionals to help clients minimize their tax liability and ensure assets are protected.

Many large corporations employ private accountants internally who analyze and manage massive amounts of financial information. But many medium and small businesses find it more cost-effective to hire external help from a public accounting firm to assist with things like payroll, benefits, business valuation, mergers and acquisitions, obtaining funding, budgeting and guidance regarding business startup and incorporation.

How Does One Become a CPA?

Each state has their own CPA exam requirements. Most states require certificate holders to meet a certain number of accounting semester hours, a minimum of 150 in many states and, in some cases, require those pursuing certification to have obtained an undergraduate degree.

The CPA exam is no laughing matter. Just sitting for the exam often costs approximately $900 and as of 2014 it was estimated that only about half of those who attempted the exam passed. Many people choose to invest in a CPA test review course before taking the certification exam.

What Is Non-Profit Accounting?

Oftentimes you’ll see government and non-profit accountants lumped together in one group, as they have similar skillsets in organizations that share some common characteristics. For example, all types of government organizations – from local municipal government organizations to large cities, states and the federal governments – require accountants to monitor tax revenue, expenditures, funding, government contracts and much more.

Non-profit accountants often work for religious or charitable organizations, hospitals and other health care organizations. You can see how an accountant at a school district may face the same challenges as a non-profit accountant at a hospital, where limited tax, fundraising or donation revenue must be carefully tracked and maximized for optimal organizational performance.

Similar to the International Public Sector Accounting Standards organization that sets public accounting standards, the Governmental Accounting Standards Board has established generally accepted accounting principles (GAAP) for state and local government entities.

Many accountants who work in the non-profit or governmental sectors also obtain CPAs, but there is no required equivalent certification specifically for non-profit or government accountants.

Not Sure Which Path Is Right for You?

Advisors at Upper Iowa University are always happy to discuss future career options with current and prospective students. Also remember that everyone needs accountants, so the diversity of future options for accounting students compares favorably to many other areas of study. If you are interested in pursuing a career in accounting and have yet to enroll, we encourage you to apply today!