Are you considering a career as an accountant or cost accountant? Are you passionate about figures and helping business and private entities structure their financial costs?
If you are, we’ve got you covered with some facts about the business and related financial industries. Here’s everything you need to know about the much sought after career of a cost accountant.
According to the U.S. Bureau of Labor Statistics (BLS), an expected growth of 5% from 2019 and 2029 is predicted in both business and financial operations occupations. An estimated 476,200 new jobs are expected in these industries, making them the occupations with the fastest growth overall.
The duties of a cost accountant differ from that of a chartered accountant in that they focus primarily on the cost aspects of a business, including cost management, financial reporting, and organizational management. Chartered accountants deal specifically with accounting, taxation, audits, and law.
The demand for accountants is unusually high due to a growing economy. There’s a need for more workers in accounting and auditing jobs. This means that job sustainability in this field is promising.
Duties and salaries of cost accountants
Cost accountants are also called corporate, managerial, industrial, or private accountants. A cost accountant is primarily responsible for recording, analyzing, and reporting on a company’s cost of production or service delivery. Additionally, cost accountants must:
- Analyze financial statements to ensure accuracy and compliance with regulations
- Organize and maintain the company’s financial records
- Check financial operations for risk factors and report these to business owners
- Discuss best practices with clients that affect financial risks, in addition to the economic efficiency of the business
- Address cost reduction issues, improved revenue, and profit margins
- Ensure the accuracy of a company’s financial records
- Guarantee that taxes are paid correctly and on time.
A cost accountant’s salary currently averages $57,028. However, it can range from $44,000 to $77,000 depending on the company that employs you and the state in which you work. Any additional qualifications you hold influence your pay, as well.
Where do cost accountants work?
Cost accountants can work in several different settings. These include:
- Accounting firms
- Private consulting practices
- Government agencies
- In-house at financial and trade organizations
At accounting firms and private practices, these professionals typically perform management and cost analysis tasks for third parties. In government positions, they may focus more on auditing policies and regulations. At trade and financial organizations, duties usually include developing and analyzing the company’s operational budgets.
Advantageous skills for cost accountants
Although educational requirements are essential, having the following skills is advantageous when reaching out to potential employers.
Critical thinking skills
It’s a necessity for accountants to be able to identify issues such as fraudulent documents and tax discrepancies. Critical thinking skills are necessary for these types of scenarios.
Exceptional communication skills
Accountants must be able to discuss issues with clients and stakeholders. Besides having incredible verbal communication skills, they must also host financial meetings and explain written reports to clients.
Attention to detail
Accountants must be detail-oriented when compiling, analyzing, and presenting complex information.
Strong organizational skills
Possessing strong organizational skills is vital to the cost accountant and to the organizations they work for. Note that cost accountants may work with multiple companies.
Additionally, mathematical and social skills are both valuable to accountants, as they interact with both numbers and people on a daily basis.
Requirements to become a cost accountant
The minimum educational requirement for becoming a cost accountant is an associate degree. However, some employers only hire applicants with a bachelor’s degree. Your degree should be in accounting or a related financial field to get started. Choosing an accredited college or university will ensure your education counts toward any future certifications you wish to pursue.
Prerequisites for an associate or bachelor’s degree in accounting
Students who want to pursue an accounting degree, or one specifically in cost accounting, should have at least earned a high school diploma or a General Educational Development (GED) test qualification. The admission requirements at colleges and universities vary from institution to institution. Some require a grade point average (GPA) of 2.5 or higher while others prefer a stellar college admission test score.
An associate degree typically takes 2 years to complete if you study full time. The bachelor’s degree usually takes 4 years to complete, or 120 total credit hours. Students can complete their specialization for a bachelor’s or master’s degree by pursuing forensic accounting, tax accounting, or internal auditing. Not all universities or colleges offer these specialization programs. The American Institute of Certified Public Accountants (AICPA) provides several certificate programs in addition to the national certified public accountant program. This is also referred to as a CPA qualification for short, which is uniform across all states.
While universities typically offer full-time bachelor’s programs, candidates who prefer not to study full time can opt for a hybrid approach or fully online programs. These options are beneficial to working students or those who live far from their universities.
Associate degree coursework
When obtaining your associate degree in accounting, you’ll learn the basics of becoming an account. Topics include:
- The generally accepted accounting practices (GAAP) used for processing, reporting, and making decisions about financial data
- Precision and details in tax filing and account management
- How to manage records and prepare financial statements
- Accounting ethics
- Introduction to business law
Bachelor’s degree coursework
Coursework for a bachelor’s degree in accounting is similar to that in an associate’s degree. However, you’ll see twice as much material as in an associate program. You’ll cover topics like:
- Business and finance law
- Financial and managerial accounting
- Profit planning and control
- Forensic and auditing practices
- Analysis of financial statements
- Accounting for nonprofits and healthcare institutions
- Federal taxation and reporting
- Software proficiency
- Accounting-related computer programming
If your school offers a cost accounting concentration, that’s the best route to take to prepare you for work in this field. You can expect it to include the following coursework:
- Financial management
- Corporate finance
- Introduction to strategic management
- Production and operations
- Application of statistics to management decisions
If your college or university doesn’t offer a cost accountant concentration, you may choose another accounting specialization:
- Mergers and acquisitions
- Forensic auditing
- Financial accounting
- Information systems
Cost of an undergraduate degree
According to a 2020 report, most full-time undergraduate students are recipients of grant aid that helps pay for college tuition.
The report detailed the following average tuition and fees for 2020-21 for full-time students:
- $10,560 in public, 4-year in-state institutions
- $27,020 in public, 4-year out-of-state institutions
- $3,770 in public, 2-year in-district institutions
- $37,650 in private, nonprofit 4-year institutions
According to Student Financial Aid Statistics 2021, the federal and state governments make programs available to students that assist them with the cost of college education. Private companies offer scholarships, work-study opportunities, and grants to potential students. Below are additional sources of financial aid for interested candidates:
- Grants and student loans are the most common sources of financial aid
- Military families enjoy low interest or no interest grants
- State agencies offer former foster care youth financial aid programs
- Private organizations and clubs offer scholarships to individuals
Students should be aware that scholarships and grants don’t need to be repaid.
You can find out more about financial support for students and apply for federal student aid on the federal government website.
Licensing or certification
There are no certifications or licenses required to practice as a cost accountant. However, professionals who want to improve their job prospects or gain more clients can choose to become CPAs. To obtain this credential, accountants must pass their state’s national exams and meet state requirements.
A CPA candidate must complete an additional 30 hours more than the 150 hours required to earn a 4-year bachelor’s degree. Some schools offer a 5-year combined bachelor’s and master’s degree program, although a master’s degree is not a requirement to become certified.
The National Association of State Boards Accountancy (NASBA) provides resources needed to receive and maintain the CPA qualification. The CPA exam is a 16-hour extended computer test comprising of the following 4 sections:
- Auditing and attestation (AUD)
- Business environment and concepts (BEC)
- Financial accounting and reporting (FAR)
- Regulation (REG)
The AICPA makes the exam blueprint available to candidates. Exam questions consist of various formats such as multiple choice and essays, as well as simulations.
Starting a cost accountant practice
If you’re interested in starting your own practice, there are several aspects you need to contemplate. First, it can be very time-consuming and costly to start a business. You’ll need to consider:
- State requirements regarding your professional qualifications
- Legal issues surrounding the services you plan to offer
- Zoning rules
- Revenue goals
- Location of your practice
- Whether you plan to work alone or hire employees
Because of the high overhead costs of starting a business, many professionals start part-time. They take on some private clients after hours at their day job. As the client base increases, they consider expanding to full-time, renting office space, and hiring employees.
The majority of people start close to the bottom and work their way up in an organization. In similar fashion, cost accountants can rise within the ranks or explore the following career options:
These professionals earn an average salary of $76,540 helping private and public organizations to structure and plan their finances. A bachelor’s degree is essential as an entry level requirement.
Employees in this position earn an average salary of $65,250. Their duties include analyzing and collecting data to predict the money, time, labor, and materials required to produce a product or provide a service.
Candidates who are seeking to further their studies can pursue a master’s degree in accounting. Master’s degrees in accounting programs require advanced coursework to be taken in accounting theory and practice.
Programs may also offer specializations in financial analysis, compliance, taxation, and forensic accounting. The length of time to complete a degree usually depends on the program selected, although students generally complete the 30-36 credit degrees in 12-18 months.
Prospective students can opt for a Master’s in Accounting, a Master of Professional Accountancy, a Master of Accountancy (MAcc), or an MBA in accounting.