State, county and municipal government (“SCM”) accounting (“Government Accounting”) can easily frustrate many advanced accounting students. It has its own peciarities and rules that sometimes leaves students somewhat perplexed. For example, it can be somewhat disconcerting to hear a municipality can “run two sets of books” and have two sets of financial statements. Just to demonstrate how different and specialized Government Accounting can be from other financial accounting, the State of New Jersey has a separate accounting license called the Registered Municipal Accountant (“RMA”) for those who wish to practice accounting in this area. There is a seperate examination for this license and you can’t perform an audit of a municipality in New Jersey unless you are an RMA. Nonetheless, Government Accounting is essential knowledge for those studying accounting. Even informed business people regularly underestimate the importance of SCMs have to the United States economy and consequently the opportunity for employment there.
Lets take a look at some statistics about the SCM sector compared to the private sector. First, lets look at the importance of SCM to the investment banking community. Non-financial (not including debt issued by financial institutions) corporate debt amounted to $6.1 trillion at the end of 2017. Some statistics suggest the value of the equity market is about three times that amount. To put some perspective to these numbers, the gross domestic product of the United States for 2016 was approximately $18.5 trillion according to the Bureau of Economic Analysis. SCM debt outstanding at the same time amounted to $3.9 trillion according to the Municipal Securities Rule Making Board (“MSRB”). SCM debt therefore accounted for a whopping 39% of the total debt securities outstanding. Even if you were to consider the equity markets, SCM debt still constituted about 17.6% of all outstanding investment securities.
Next, lets look at the importance of SCM to employment in the United States. State and local governments in the United States employed 14.4 million full-time and 4.9 million people part-time the last time these statistics were prepared by the Census Bureau. According to the the Bureau of Labor Statistics, there were 125 million employed people in the United States in 2018. SCM employment therefore was about 15.4% of the total private sector employment.
It should be no surprise there are employment opportunities in Government Accounting due to the sheer scale of SCM operations. How many potential employers are there in this sector? The Census Bureau reports there are approximately 89,000 local governments requiring accounting services in the United States. These services include basic accounting, auditing, investment banking, etc. There is no shortage of opportunities in this market for accounting careers, both with SCM units and in companies supporting SCM operations. It should not be overlooked in any job search. In keeping with these fact, Surgent CPA Review notes 5-15% of the FAR section of the CPA exam is devoted to state and municipal accounting. Don’t let a possible career path slip away from you!