Accounting is a function critical to all companies whether private or public, since it is how a company consistently records, reports and analyzes its financial transactions. Accounting at private companies serves a different role than at public companies, since a private company must only keep its relatively few owners and investors informed. Public companies, however, must provide financial statements and information to their investors, potential investors and reporting agencies.

Private Company Accounting

Generally, the role of an accountant in a private company is to track historical operational and financial numbers, compile them and roll them into financial statements. Accounting and purchasing are often closely tied at smaller companies, since purchasing decisions and ordering impact a number of financial statement items. Because many small companies rely on owner contributions, owner-guaranteed business debt and cash flow generated by operations, accountants tend to focus on finding low interest debt, managing that debt and recording and managing accounts receivable.

Public Company Accounting

The role of an accountant with a public company is the same as with a private company. However, the implementation of that role differs. Public company accountants must focus on preparing quarterly and annual reports that are subject to significant inspection by large institutional investors, credit rating agencies and the Security and Exchange Commission. Executive management must defend the information accountants compile, so significant time is spent collecting, recording and monitoring internal financial systems.

Private vs. Public Accountants

Those involved in accounting at a private company tend to be more knowledgeable about the company's overall financial and operational position than do their public company counterparts. This is because of the focus on internal management and the smaller size inherent with smaller companies. Very few small private companies have audited financial statements, whereas all public companies do. Accountants in private companies generally focus on creating accurate annual tax returns, while public company accountants work closely with external auditors to prepare audited quarterly and annual financial statements.

Private vs. Public Companies

Private company accountants often focus on identifying all possible tax deductions in order for their owners or the company to pay the minimum possible tax. Public company accountants help identify ways to minimize expenses to help drive greater profitability. At both, accountants who are more directly involved in assessing the impact of accounting and financial decisions will have a broader, more strategic view of the business than those focused solely on reporting and compiling.These individuals may become chief financial officers at public companies and small companies large enough to support the position.