Updated: Jan 12, 2021
Are you interested in a career in accounting but don't know whether to choose Tax or Audit? As a Tax Manager at one of the Big 4, I've been happy with my decision to choose Tax in my 4th year of university. Like most people pursuing a career in accounting, I had also initially thought I wanted to go into Audit, but after talking to people in Tax during the networking events, it had totally transformed the way I thought about a career in Tax. Looking back, I'm glad I had made the decision right for me. Based on almost 7 years at a Big 4 accounting firm, I have compiled a list of 5 reasons why you might want to choose Tax.
1) More predictable hours & less busier than audit busy season
Don't get me wrong, Tax has busy seasons too. However, I would say based on what I hear from my Audit colleagues, their hours can be pretty intense. I've heard especially for auditing year-end financial statements, Audit teams can stay up past midnight and work into the weekends for weeks and even months on end! It all depends on the size of the clients, but since Big 4 have mostly large clients, specifically public companies, that require their financial statements to meet the most stringent regulations as it may impact other investors and lenders, the importance of auditing on a strict timeline is critical.
As for Tax, the pressure mostly has do do with tax return deadlines or even internal deadlines set by the client (that may or may not impact external stakeholders). Though, I would say that these deadlines can be more manageable since the scope of the work isn't ginormous like audit. There may be a couple of late nights of work, but from my experience, nothing that would extend to weeks or months. Shall I say, that there is better work life balance in Tax?
2) Comfort and stability of having your set work space
I will be referring to pre-Covid times since I'm not sure how the future of working in accounting in general would look like after all of this settles down. In Audit, more often than not, you work in a team environment. This is great if you like being around people all the time and if you are an extravert, but it also offers less flexibility in how you want to go about doing your work. Especially, if your whole team is expected to be working at the client site during set hours (ie. 9 to 5 or later). This may or may not take a toll on your energy levels since you might find yourself hopping around to different parts of the city or even traveling to (less glamorous) client factories or mining sites to get your work done.
As for Tax, you have the comfort of your own set desk at the office. You can even decorate your space and make it feel comfy, with your favourite mug, pictures, and an extra monitor. You also have an idea of how your day will go, such as with conmmute, lunch breaks, meetings, etc, and have a more predicable daily routine you can plan around. While you get to collaborate with your team members when needed, you will mostly work by yourself. This offers flexibility in terms of how and when you want to get your work done, especially if want to run to that yoga class after work.
3) More variety in type of work and clients
For starters, everyone needs to do their taxes, whether they are individuals or corporations. You can imagine the vast variety of work and clients you can get. Whereas for Audit, the type of clients are more limited since companies requiring Audit are usually large public companies or even medium to large private companies. The type of work that you do in Audit is usually very structured- there is not very much diversity or flexibility in how you audit financial statements in order to ensure they are reasonable for key stakeholders.
As for Tax, I don't know where to start. The most common type of work you will hear about is corporate compliance (ie. tax returns for companies, whether they are small, medium, large private companies or public companies). You can even do personal tax compliance for high net worth clients. Aside from compliance, there is tax consulting, which I believe is the "sexy" part of Tax Accounting. Basically, clients come to you for advice on how to go through unchartered waters of the Income Tax Act to ultimately help their businesses' bottom line. For example, for owner managed companies, you can start with helping the company minimize its taxes as well as how to repatriate the funds from the company to the individual shareholder in a tax efficient manner. In addition, there is also tax consulting related to M&A, where you can conduct tax due diligence, and restructuring, where you plan for the most efficient tax structure.
4) Able to quantify value to client
Auditor's work on the financial statements is to ensure it's reasonable, and not necessarily 100% correct. You can imagine how much work Auditor's would need to do if they have to confirm that every invoice is accurate. Instead, one could say their entire work is based on "materiality" - do we need to test something based on whether it is below or above a set threshold. If below the threshold, one can say its "immaterial." Based on the size of the company, $1M can be considered material or immaterial. If above a certain threshold, testing can be done on a sample on random or big ticketed items. Ultimately, the financial statements should be consisted with reporting guidelines such as IFRS and GAAP, and your familiarity with these guidelines can define your career.
As for Tax, your familiarity with the Income Tax Act is key. As a numbers person, one thing I like most about Taxes is its methodical approach. While there is not always a black and white answers when it comes to interpreting the Income Tax Act, there is a position you take when filing the client's tax return. This ultimately results in a final number on the tax return, that determines whether you are in a loss position, tax payable position, or tax refund position. For profitable companies, taxes can be quite significant and a factor that definitely impacts the bottom line. Because Taxes can be one of a business' largest expense, clients are usually keen to seek advice and value your input as a Tax consultant.
5) There will always be a demand
There is a lot of talk with how IT will impact the Accounting job field, even going as far as to say certain jobs in Accounting will become obsolete. I definitely feel the effects of how technology is affecting our services - but more in a good way. For one thing, technology is helping mundane and manual tasks become automated, such as bookkeeping. Even when it comes to Auditing, I'm seeing testing samples become more automated, which was a task that juniors had taken up and worked long hours on. In this regard, there may be less hirings in the future since these roles are no longer needed.
Even with Tax, tax compliance is already becoming more automated. However, when it comes to the Income Tax Act, there are definitely gray areas that require human expertise to interpret and apply based on each client's unique facts. Tax Accountants/Consultants will always be needed as long as there are changes being made to Tax Law by the Government. Especially in the current situation with Covid, there has been constant updates to taxes and benefits that require interpretation.
So with whether IT will make our jobs obsolete in the future? I personally don't think so. Technology will help improve how we do our work and increase efficiency, providing us with more time to solve the more complicated problems that come our way.