If you are considering a career in accounting, you may find that your professors or career counselors urge you to become certified in a special branch in the field.
Economic and technological developments in accounting have caused many smaller specializations to emerge— giving, you might say, multiple lenses through which to view financial information.
But what are those specializations? Here’s a quick breakdown:
Financial Accounting deals with business transactions and financial statements to be used by internal and external users. This is not to be confused with Fiduciary Accounting, which handles trust and/or estate accounting and receivership.
Management Accounting deals with information related to the specific needs of a corporation, as well as budgeting, performance evaluation, and asset management. Cost Accounting is a subset of management accounting, focused on the analysis of manufacturing costs to help managers project company operations.
Public Sector Accounting covers the government accountants and auditors who deal with the financial information of government agencies, private organizations, and individuals whose businesses fall under government regulations and taxation.
External Auditing is the examination of financial information by an independent party to determine compliance with generally accepted accounting principles (GAAP).
Systems Accounting involves the development, installation, and monitoring of procedures and systems in the accounting process, including business forms, personnel direction, and software management.
Tax Accounting helps clients to plan and prepare tax returns, and mainly advises clients on tax issues according to the relevant authorities.
Forensic Accounting is one of the most popular trends in accounting today, for the simple reason that it involves the exciting world of court and litigation cases. Fraud investigation, bankruptcies, and any other areas that involve legal matters all fall under forensic accounting.
That’s a lot to take in. But why does this matter to you? What are the advantages to specializing?
The first is obviously a competitive advantage in the job race. Your specific skill set will give you an additional edge over graduates who lack that certification. In a field full of bright graduates, specialization can help you get recognized by employers. Studies show that specialization increases productivity, reduces the need for continued training, and fosters independence in employees.
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For several decades there has been a trend in corporations towards seeking employees with expertise in a particular branch of their field over those with general knowledge.
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Then again, specialization can just as easily put your job in danger. Professionals who have a concentrated perspective on their discipline may not be as quick to identify patterns in the field as a whole—and may be less likely to adapt to uncertainty.
Navigating uncertainty can be a huge part of financial accounting, especially when handling the finances of a large corporation. A study performed by Professor Philip Tetlock found that in a survey of 284 professional political forecasters, experts in their field were less accurate predictors than non-experts in the same field. As Forbes writer Meghan Casserly says, “specialists … serve a very specific purpose within their particular ecosystem and are extremely adept at navigating it. However, should those conditions change—as a result of nature or, more commonly, an outside force—specialists often become extinct.”
Ultimately, if you want to specialize in accounting it’s best to also maintain a broad knowledge base and a wide set of skills. Some questions can only be answered by specialists, while other answers require the general abilities of someone who can look at the big picture.
