Tax vs. audit is pretty much the first question that people will ask you once you start thinking about a career. The dilemma aside, it is essential for last year college students to start thinking about their career choices to land a real job and have money rolling in.
Many accounting students and young professionals are caught in the same predicament. They’re always asking themselves, “Why Tax Over Audit?” Searching for information and comparing audit vs. tax to understand the critical differences between the two better.
However, we’re here to set things straight: Tax is better than auditing. A career in tax is way more lucrative than auditing. The field itself has a lot to offer, including a heavy dose of intellectual stimulation, variety, and plenty of responsibility. Suppose you love working with others, the challenge of problem-solving, and a dynamic working environment. In that case, a career in tax is everything you need.
Even with all the facts listed, some of you might still be on the fence about tax vs. audit. Thankfully, we’ve made it easier for you. Here’s a comprehensive list of 4 reasons why you must choose tax over auditing.
1. Steadiness & Diversity
Working in tax typically means less travel and re-locating required. That is not to say that you are locked in a dungeon performing returns all day and can’t move an inch. Depending on your firm, your interactions with clients will remain restricted to emails and phone calls for a while. But as you go further in your career, you will get the chance to meet all sorts of clients from numerous locations. Other than that, there are so many different types of taxing positions available compared to audit. For instance, you can read about a tax manager career path for better understanding or become a compliance officer – whatever piques your interests. Moreover, you will have a dedicated workspace with plenty of diversity and steadiness. It’s safe to say that working in tax can be a rewarding and challenging career.
In auditing, you will never be able to work at a steady pace. You might even become overwhelmed due to the amount of responsibility that’ll be put on your shoulders on the very first day of your job. What’s more, you won’t be able to dive deeper into what your client needs as you do in tax. Also, there’s a lot of lonely traveling involved in an audit career. Often, the only people you will know will be the people on your team – no outsiders. It is not applicable, especially if your motive is to build networks and meet new people.
2. Tax will always be in Demand.
There has been much discussion about how IT will influence the accounting job field. Some even claim that certain occupations will become obsolete. For one thing, technology is assisting in the automation of menial and manual tasks such as bookkeeping. Even in auditing, testing samples have become more automated, which was previously assigned to juniors. In this regard, because these roles are no longer required, there may be fewer hiring in the future.
Even in the field of taxation, compliance is becoming more automated. However, there are grey areas in the Income Tax Act that require human expertise to interpret and apply based on each customer’s unique facts. Tax accountants will always be needed as long as the government makes changes to the tax law. There have been constant updates to taxes and benefits that require interpretation, particularly in the current situation of the coronavirus pandemic.
3. Offering Value to Clients
When it comes to financial statements, the purpose of an auditor is to ensure that they are rational and not necessarily precise. You can picture how much work the auditors would have to do if they had to authorize the accuracy of every invoice. Instead, one could argue that their entire breakdown is based on “materiality.” That means, do we need to test something based on whether it is below or above a specific starting point? If the value is less than the fixed point, it is said to be “entirely irrelevant.” $1M can be considered material or immaterial, depending on the company’s size. If a certain threshold is exceeded, testing on a sample of random or high-ticket items can be performed. Finally, financial statements ought to follow reporting guidelines such as GAAP and IFRS. Your familiarity with these guidelines can define your auditing career.
In terms of taxes, thorough know-how of the Income Tax Act is essential. When understanding the Income Tax Act, there is no black and white area. Instead, a final number on your client’s tax return defines whether they are in a loss, payable, or refund position. Clients are generally eager to seek guidance and consider your input as a tax manager or consultant because taxes can be one of a business’s most significant expenses.
4. Work
The work that auditors do demands a lot of evidence and critical thinking. In addition, professionals need to have a skeptical mindset and guarantee that the funds are not materially misstated. If you screw up in between, you might have to pay your client more than anticipated. Hence, there’s a lot of risk in the field of auditing.
In terms of tax, the work is research-based. There are way fewer gray areas in tax because regulation typically guides the overall accounting process. The tax accountant acts as a messenger between the client and the law. In short, if Mr. and Mrs. James report two children as dependents, the tax accountant is not going to their house to confirm the existence of those kids. Primarily, tax accounting reduces the client’s tax obligation – within the boundaries of the law.
Conclusion
By now, it’s plain to see that a livelihood in tax is the way to go. Ultimately, the career path you choose should be the best fit for you. Just remember not to rush into your decision. What’s important is you do your research and plan your next move accordingly. On the other hand, if you still feel undecided, apply for an internship. Internships can help you learn the nitty-gritty of both disciplines. Most firms will offer internship experience on an audit or tax basis, which will provide enough immersion in either path. So try that out and discover your calling. Then, find an organization that will best equip you to enjoy your work and applaud your approach.
