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Want to go into advisory / management consulting. Which is a better stepping stone? Audit or Tax?

Hi. I'm an accounting fresh graduate who is currently trying to complete ACCA. I would like to go into advisory or management consulting but lately there are no responses from Big4 and other consulting firms. Therefore, I might have to start my career in either external audit or tax. Which of these two would be a good stepping stone to help me carve a career in consulting?

#consulting #accounting #career #business #tax


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John’s Answer

I'll echo that you should do what you are interested in. Management Consulting (and Advisory in general) is a broad bucket of different subject experts, many of whom got their experience working in a different practice originally. My current group includes a lot of ex-Audit, Tax, and IT professionals working consulting on improvement opportunities for our clients' end-to-end processes. I do a lot of process consulting work in the Finance and Accounting space, so I get to use my audit background a lot. That being said, Tax pieces roll up in that area too, and I envy some of my ex-Tax colleagues who have better understandings of corporate tax requirements from their experiences in Tax.

John recommends the following next steps:

Do a rotation or internship with either (or both) groups!
Research consulting opportunities with the Audit and Tax groups (most Big 4 have certain consulting practices that roll up under these lines of service)

Thank you very much for your advice. Wish you all the best in your future endeavours. Josh P.

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Eric’s Answer

I would generally probably say audit but it depends a little bit on where you are in tax. Someone preparing corporate or individual tax returns may not be as well equipped as someone who works with clients on transfer pricing solutions, for example.

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Kathy’s Answer

The simple answer is that you should select the area that interests you the most! Generally, in order to do consulting you need to have some experience in the area on which you are consulting. Get the best experience you can get actually doing audit, tax, bank finance or whatever you might like, and I'm confident that you will get another great job in 5 years or so doing consulting on ways your clients can improve their business based on your knowledge and expertise.

Kathy recommends the following next steps:

Do what you like/love
Get as much experience over a few different industries
Move on to consulting if that's still what you want to do!

Thank you very much for your advice. Wish you all the best in your future endeavours! Josh P.

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Devin’s Answer

Hi Josh!

I'm currently a junior at the University of Northern Iowa, pursuing my Masters in Accounting and my CPA. As a college student, I've had a lot of exposure to what firms are looking for in both incoming employees and students.

The biggest thing for consulting and advisory is that you must have a large variety of knowledge about the inner workings and businesses and different business models. Consulting and advisory takes a large amount of "general" (for lack of a better term) knowledge in order to assist your client and advise them. With this being said, it is extremely hard to get into consulting and advisory right off the bat; instead, many firms are searching for qualified individuals who have been well-rounded in things such as audit, tax, and technology and have experience under their belts.

I'm also interested in topics such as advisory and consultation, specifically forensic auditing and business valuation. I recently had an interview where I expressed that I was interested that specific market and some of the managers at that said firm gave me some advice and some of the best courses of action to get to the positions that I'm seeking.

The best thing for you to do is get experience doing a large variety of things, but also put yourself out there and see what the firms are looking for.

Best,
Devin

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Amin’s Answer

I currently work for a large accounting advisory firm of about 500 people. Accounting advisory firms typically hire people who were Big 4 auditors. Audit compared to tax gives much broader experience which lines up better with the diverse types of projects you may be working on. It could be anything from helping with technical accounting(i.e. write memos supporting a position) to filling in the role of a controller/CFO to helping companies with process improvement, controls. Some of my colleagues also help on the technology side as well (e.g., accounting system implementation). My opinion is that audit background provides a much broader background. Also, you you'll be interacting with the client significantly and need to be comfortable talking, have good social skills. This is a big part of the audit training when you are in public accounting/ Big 4 where you'll be interacting significantly with the client. I don't think the interaction with the client is as extensive on the tax side(could be wrong).

Amin recommends the following next steps:

I would suggest you start out in public accounting(try 2nd tier firms if Big 4 is not initially attainable)
Try to get into a Big 4 firm at some point and gain some experience there as it will help you out significantly in the future to have this on the resume
If accounting advisory is your goal, I would suggest you pick audit rather than tax as it is broader and gives you more diverse experience. I would say 98% of people at accounting advisory firms have an audit background rather than tax

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Jake’s Answer

You should pick whatever interests you. You never know where your career will take you. While management consulting may be your ultimate goal, you may find another area that interests you as well.

This is some great insight, way to go, Jake Brian Fine, CPA

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James’s Answer

I would personally say going into External Audit would be the better route due to the following reasons:

1. External audit gives you direct client-facing roles and this forms a better part of what is required in consulting (speaking with management - CEO, COOs etc.). Based on personal experience and from some of my personal colleagues, tax at the lower levels don't interact face to face with clients as much and therefore you'll be limited in that regard for "client-facing experience"

2. A lot of firms (even some smaller boutique/mid-sized firms) have an advisory service line and it would make for a comfortable transition given you take the initiative to network with associates/managers in the consulting group. I would say give yourself at least 2 years of practical experience in the audit line of service before contemplating switching to build up your rep. During that time you should be initiating conversations to make the transition happen a lot more smoothly (i.e. they'll know who you are)

3. Exposure to project management skills are more transparent to attain in audit than in tax - especially in your second year. Hopefully when you become an experience associate or a senior you have the opportunity to lead an engagement (setting up client/partner kick-off meetings, leading these meetings, coordinating and delegation of work between staff, coaching, audit task management) and overall pushing the audit through. This requires a lot more work than it sounds and having the ability to satisfy all stakeholders is an invaluable skill (managing up and down). I would definitely seek out for these opportunities and be able to exemplify this in your transition to consulting

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Dana’s Answer

Definitely audit - it allows you to see the inner-workings of many different clients across all business processes. Assuming this is what you eventually want to advise on.

Not only do you perform process walkthroughs on each cycle (Treasury, Payroll, Stock-based Comp) as a part of every financial statement/integrated audit (to gain the understanding) you then audit each of the relevant ones in detail (to ensure it is correct/compliant with accounting standards).

This will allow you to really learn from the successes/mistakes of other companies - see good practices and bad. No other position will give you this window into confidential info to show you what works and what doesn't - the best way to provide value to advisory clients. You'll develop a preference for certain ERP's, best practices, controls, etc.

I don't have any insight on PwC's recruiting process for advisory, as I believe it requires a few years of experience. But I do know that PwC allows you to move around laterally within the firm to whatever interests you. Audit not for you? Move to tax, recruiting, internal support services, or advisory. All you have to do is ask your coaching network for help and when the opportunity arises they can advocate for you.

Best of luck!
Dana - Senior Associate, PwC

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Lauren’s Answer

Both of these options are great ways to start your career. However, my recommendation would be to try to get into advisory or (a subset of advisory) management consulting out of school. These positions are highly competitive (as are tax and audit) so your best bet is to maintain a high GPA, seek opportunities to learn about consulting or the areas in which you want to consult in the form of internships and externships, and use your school's career center to network with alumni who are working in this field.

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Kori’s Answer

I think Tax is a great place to start out but it is definitely a preference thing. I am currently a Tax intern and I get to be involved in not only tax compliance but also provisions which is also a form of Audit work, so I think I am getting well-rounded experience in tax.

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Kristine’s Answer

Go with what you enjoy the most. External audit and tax are very different. I often found people either had a passion for one vs. another. I went the external audit route after college and started my career at a Big 6 firm (there were 6 at the time :). I felt audit was a great way to give yourself an overall view into how companies work and how to deal with clients. You get increased responsibility in a fairly fast pace, so you are able to grow quickly. I felt like the skills/insights I obtained during my 4 years in audit are still useful in my career now, 25 years later! Good luck!

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Brian’s Answer

This is a great question. To be honest, I don't think it matters. Ultimately if you work hard and take interest in whichever side you start with, I think you are starting your career on the right foot. As cliche as it sounds, follow your gut and make the most of the opportunities that are presented your way!

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Michael’s Answer

Tax and audit can be pretty different. I have a similar goal as your and was lucky enough to have an internship in Tax and then in Audit with the same accounting firm. I personally would say audit, as it gives you broader range of experiences and industries to work in while tax is a little more specialized as your scope is preparing tax returns/provisions. Picking between the two though also comes down to your personality, whether you like the routine of having a set desk and similar projects (tax) or if you like changing environments and regularly working in new teams and with new clients.

Don't get too hung on which path you start out as you can always change roles, more important is to identify the skills you want to develop and consider the connections to be made. Long term goals my also change as you get more involved in your career.

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I-Wei’s Answer

Both external audit or tax are great stepping stones. For my own experience, I started in public accounting firm doing external audits and some tax work, but I enjoyed doing external audits more so that was my focus. I carried the skills I learned from performing external audits till today. As my career moved on, I left public accounting firm and joined a private company where I have worked in various areas such as Internal Audit, Finance, Accounting and now Tax. All the experience that I accumulated from the past helped me get to where I'm in my career. I would say it depends on your preference, and if you have tried one and didn't like it then move on to try another one because again, I think either way would be great stepping stones. Best luck to you!

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Brenden’s Answer

Both external audit and tax are great ways to start your career, It really comes down to preference. I can only give advice on external audit as my I have not experienced tax. But I know that a large part of consulting is based on interacting with clients and understanding the industry. External audit is a great way to learn how to build these client relationships as most of the work during busy season is at client sites. Additionally, you can start to learn different industries depending on the clients you are assigned.

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Zed’s Answer

I would say audit as it is a transferable skill that can be adapted easily to various sectors. You will also have a very good view of the workings and could have a consultative career

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Zed’s Answer

I would say audit as it is a transferable skill that can be adapted easily to various sectors. You will also have a very good view of the workings and could have a consultative career

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Lina’s Answer

Hi Josh,

I'll voice a similar opinion to those voiced above me.

As someone who works in advisory at one of the Big4, I highly suggest Audit over Tax. Many of my colleagues had transferred internally from our assurance (audit) group, compared to relatively small portion of colleagues who had transferred from our tax group. As audit is more broad and allows you to see the inner workings of a company, it's extremely valuable in a deals/advisory context. In advisory, we face a number of projects that span across industries, and to have someone who had a background in a specific industry from audit is helpful. Tax is a bit more specialized and can't be applied as well, as Big4 favors the auditors in transferring a little bit more because of that reason. However, not to say that it is impossible to move into advisory/MC if you decide to start with Tax!

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Vito’s Answer

I know at PwC we have a group called Deals, Capital Market and Accounting Services (https://www.pwc.com/m1/en/services/assurance/capital-markets.html) that has recently moved into our Advisory (consulting) practice. I have a friend in this who started out in audit, then switched over. He leverages his skills from his days in audit to do accounting consulting. Just some food for thought and direct application!

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Yanying’s Answer

If you are considering between Audit and Tax prior jumping into Management Consulting, I would first ask you, what appeals more to you: Audit or Tax? Are you interested in learning about Tax code, doing research on IRS regulations, figuring out all the taxable items and deductibles? If yes, that might be something you want to head into. Audit is more client facing as compared to tax and it requires you to have a solid understanding of US GAAP and/or IFRS. If you enjoy working with multiple stakeholders (internal and external), multi-tasking, doing analysis, applying your accounting knowledge etc, then audit might be a better choice.

Another thing to be mindful about is that Audit can open more doors of opportunities as compared to Tax. You can jump between industry easily and can jump into internal audit, financial reporting, revenue accounting, AR/AP, financial advisory etc. With tax knowledge, your choices are narrower.

Either of them, it's a great start of your career if you don't truly know what you want to do in life or if you don't have any work experience. I hope that gives you some ideas about what audit/tax is. Personally, I would opt for Audit as it's more client facing and it will build your skill sets for consulting/advisory roles.

Yanying recommends the following next steps:

Ask yourself that what interests you most?
What type of personality do you have? Are you very active and like to talk to people or you prefer to sit in the office and work alone?

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Michael’s Answer

Tax and audit can be pretty different. I have a similar goal as your and was lucky enough to have an internship in Tax and then in Audit with the same accounting firm. I personally would say audit, as it gives you broader range of experiences and industries to work in while tax is a little more specialized as your scope is preparing tax returns/provisions. Picking between the two though also comes down to your personality, whether you like the routine of having a set desk and similar projects (tax) or if you like changing environments and regularly working in new teams and with new clients.

Don't get too hung on which path you start out as you can always change roles, more important is to identify the skills you want to develop and consider the connections to be made. Long term goals my also change as you get more involved in your career.

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