A Certified Public Accountant (CPA) is an accountant who meets the requirements of state licensing. Although requirements vary by state, they typically include minimum education and experience requirements (usually a bachelor's degree in accounting) plus passing the CPA exam. Every year, CPAs must also complete 40 hours of continuing vocational training. Many people regard the CPA credential as representing an accountant's commitment to meeting high standards.
In the state in which they wish to practice, CPAs have met rigorous testing and strict licensing standards. CPA applicants must complete 150 hours of job-training education, including specific hours in top-level accounting, auditing, and core business classes.
After graduation and a year of experience under the supervision of a CPA, candidates must pass a comprehensive test of business, tax, auditing, and general accounting skills.In order to keep up-to-date information on issues and changes in the accounting world, CPAs must take continuing education classes throughout their career after becoming licensed. Many businesses that are required to have a financial statement audit or review will need a CPA to perform these services and issue the required reports.
Therefore, CPAs are deemed to be fiduciaries with a legal duty and power to act on behalf of their clients and in the best interest. Non-CPA accountants are not regarded as their clients ' fiduciaries. Accountants without a CPA certification may prepare a proper tax return, but a CPA offers distinct advantages to clients that non-CPAs cannot provide.
First, as a result of the comprehensive CPA certification process and continuing education standards, most CPAs are more experienced in tax codes. Another important factor is that when audit support is required, CPAs are eligible to represent clients before the IRS, whereas a non-CPA accountant is not.
There are four parts of the Uniform CPA Test, governed by the American Institute of CPAs (AICPA): Compliance, Financial Accounting and Reporting, Business Environment and Principles, and Auditing and Certification. The total time of the test is 14 hours. According to the AICPA, fewer than 50% of exam-takers complete a portion of the test on the first attempt.
Accounting is essentially business and financial transactions tracking and reporting. Anyone who performs this role may call themselves an accountant, even without an accounting degree, although an accountant usually has an accounting degree. According to the Pennsylvania Institute of Certified Public Accountants, non-certified accountants often perform tasks such as bookkeeping, general business accounts, and simple tax-related matters. However, a wide range of services can be provided by all accountants with the appropriate training and experience.
Three key forms of financial statements are prepared by accountants: audited, checked, and compiled. Only a CPA may file an audited financial statement or a revised financial statement, though a summarized financial statement can be prepared by any accountant. While most small businesses may never need a financial statement that is audited or checked, they must submit audited reports by public companies. If people or companies decide to go with a CPA vs. an accountant, this is one of the most important considerations they take into consideration.