So, you’ve decided your nonprofit needs an accountant. That sounds simple enough, but once you start digging into the many different types of accounting professionals, you will find people with various levels of education with different areas of specialized knowledge. Below are some of the most common accounting certifications and fields of experience to help you determine which accountant is right for your organization.
Degrees & Certifications
Accountants with an associate degree have typically taken a two-year program through a college or university. Some professionals begin with an associate degree to determine if they are interested in continuing a career in accounting – so they may not stick around for the long run if they decide the accounting field isn’t for them. On the other hand, hiring an accountant with an associate degree is often less expensive than hiring one with higher-level skills. An accountant with an associate degree should have enough basic accounting knowledge to perform entry-level duties, such as accounts payable, accounts receivable, payroll assistance, and general bookkeeping. Most of their work will likely be focused on recording transactions and data entry, with little or no financial analysis.
A bachelor’s degree prepares an accountant for a wider range and higher level of jobs in the financial world, and it is required to obtain additional professional certifications, such as a CPA. After graduating with a bachelor’s degree, most students begin their careers in accounting (private or public), financial analysis, auditing, or tax preparation. Those who have earned a bachelor’s degree have more specialized accounting knowledge, such as data analysis, interpreting reports, and budget management.
Master’s Degree and Professional Certifications
A master’s degree helps prepare accountants to become a CPA (Certified Public Accountant), CMA (Certified Management Accountant) or CFA (Certified Financial Analyst). While a master’s degree is not required to obtain these certifications, it does offer both the additional preparation and the necessary credit hours to sit for these exams. The requirements for maintaining a professional certification license vary by state, but all CPAs must complete a certain number of continuing education hours each year to stay up-to-date on the latest accounting principles and legislation. Together, a master’s degree and professional certification qualifies accountants to move into more advanced roles or into upper level management. An accountant with a master’s degree and/or additional certification will have advanced knowledge in accounting, analysis, information technology, and financial operations.
Areas of Specialization
Now that we have explored the various levels of education applicable to an accounting career, let’s take a look at the different specialties and fields of experience that your accountant might have.
A public accountant serves a broad range of clients, from businesses to individuals. Some public accountants specialize in tax preparation, while others focus on business or personal finance management. Public accountants frequently perform services such as preparing financial statements and tax returns; auditing financial information for accuracy; and developing budgets, compensation plans, and estate plans. They may or may not have experience working with nonprofit organizations.
Private / Management Accounting
Private accountants work in the finance department of one particular organization. Private accountants can gain strong expertise within an industry, because all of their work focuses on a single entity instead of many different clients. However, this can also lead to gaps in their knowledge of areas outside of their industry. Duties of private accountants often include creating and analyzing financial statements, creating budgets and forecasts, and assessing internal controls. Management accounting is a specific type of private accounting, which provides information and analysis to help managers make decisions. For example, a management accountant might help develop a strategic plan or new market strategy for a company. If your nonprofit is hiring for a permanent in-house position, you might want to seek someone with a history of private accounting in an industry that’s similar to your own mission.
Internal & External Auditing
Internal auditors are employees who work to determine if there is any misrepresentation of assets or mismanagement of funds by assessing their organization’s financial records and internal controls. External auditors are not employees of the organization they are hired to audit. External auditors are independent parties that come into an organization to assess their financial records and determine compliance with regulations and with GAAP (Generally Accepted Accounting Principles). Nonprofits frequently undergo external audits as a condition of their funding – or simply out of a sense of fiscal responsibility to their donors. External auditors can also provide lower-cost financial statement reviews if a full audit is not necessary.
This is a specialized area of accounting because governmental agencies follow principles set by the GASB (Governmental Accounting Standards Board) and can look quite different from management or public accounting. Governmental accountants need to possess expertise in government contract regulations, fund accounting and long-term debt services.
A career in nonprofit accounting is less clearly defined than other career paths, so it can be difficult to find an accountant who specializes in nonprofit organizations. The complexity and uniqueness of nonprofit finances – combined with a scarcity of resources and a strong need for cost efficiency – can be intimidating to many accountants who are not used to working in the nonprofit field. Fortunately, nonprofit accountants tend to be passionate about the organizations they serve, and their specialized knowledge can be a valuable tool for any nonprofit organization.
As you can see, there are many different types of accountants. With a better understanding of the education, certifications, and sectors that an accounting professional may have experience with, you can select a firm or individual that fits your nonprofit accounting needs.