What Is a Certified Public Accountant (CPA)?

What Is a Certified Public Accountant (CPA)?

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What Is a Certified Public Accountant (CPA)?

An authorized public accountant (CPA) is a designation supplied to licensed accounting professionals. The CPA license is supplied by the Board of Accountancy for every state. The American Institute of Certified Public Accountants (AICPA) offers sources on acquiring the license. The CPA designation helps implement skilled requirements within the accounting business.

Other international locations have certifications equal to the CPA designation, notably, the chartered accountant (CA) designation.

Key Takeaways

  • The licensed public accountant (CPA) is knowledgeable designation given to certified accountants.
  • To grow to be a CPA, you should go a rigorous examination, often called the Uniform CPA Exam.
  • Certified public accountants should meet schooling, work, and examination necessities—together with holding a bachelor’s diploma in enterprise administration, finance, or accounting, and finishing 150 hours of schooling. 
  • Other necessities for the CPA designation embody having two or extra years of public accounting.
  • CPAs typically maintain varied positions in public and company accounting, in addition to government positions, such because the controller or chief monetary officer (CFO). 

Understanding a Certified Public Accountant (CPA)

Not all accountants are CPAs. Those who earn the CPA credential distinguish themselves by signaling dedication, data, and talent. CPAs are concerned with accounting duties akin to producing reviews that precisely mirror the enterprise dealings of the businesses and people for which they work. They are additionally concerned in tax reporting and submitting for each people and companies. A CPA can assist folks and corporations select the very best plan of action by way of minimizing taxes and maximizing profitability.

Obtaining the licensed public accountant (CPA) designation requires a bachelor’s diploma in enterprise administration, finance, or accounting. Individuals are additionally required to finish 150 hours of schooling and don’t have any fewer than two years of public accounting expertise. To obtain the CPA designation, a candidate additionally should go the Uniform CPA Exam.

Additionally, preserving the CPA designation requires finishing a selected variety of persevering with schooling hours yearly.

The CPA Exam

The CPA examination has 276 multiple-choice questions, 28 task-based simulations, and three writing parts. These are divided into 4 most important sections: 

  • Auditing and Attestation (AUD)
  • Financial Accounting and Reporting (FAR)
  • Regulation (REG)
  • Business Environment and Concepts (BEC)

Multiple-choice questions rely for 50% of the whole rating and tasked-based simulations rely for the opposite 50%. You should rating at the very least 75% to go every part.

Candidates have 4 hours to finish every part, with a complete examination time of 16 hours. Each part is taken individually, and candidates can select the order by which they take them. Candidates should go all 4 sections of the examination inside 18 months. The starting of the 18-month timeframe varies by jurisdiction.

The CPA designation is particular to the nation by which the examination is taken, although it’s a well-known program that’s provided in lots of international locations world wide. International equivalency exams are additionally provided in order that CPAs can work in international locations apart from the one by which they have been licensed. 

Certified Public Accountant (CPA) Career Paths

CPAs have a variety of profession choices out there, both in public accounting (that’s, working for an accounting agency) or company accounting (working inside an organization), or in authorities service. Individuals with the CPA designation also can transfer into government positions akin to controllers or chief monetary officers (CFOs).

Those incomes the CPA typically find yourself as an accountant of some kind. That is, they put collectively, keep, and assessment monetary statements and associated transactions for corporations. Many CPAs file tax kinds or returns for people and companies. CPAs can carry out and log out on audits.

Though recognized for his or her function in earnings tax preparation, CPAs can specialise in many different areas, akin to auditing, bookkeeping, forensic accounting, managerial accounting, and even facets of data expertise (IT).

The CPA designation isn’t required to work in company accounting or for personal corporations. However, public accountants⁠—that are people working for a agency, akin to Deloitte or Ernst & Young, that gives accounting and tax-related companies to companies—should maintain a CPA designation.

Certified Public Accountant (CPA) Ethics

Certified public accountants are topic to a code of ethics. The APCIA requires that every one CPA designation holders adhere to the Code of Professional Conduct, which lays out the moral requirements CPAs should adhere to.

The Enron scandal is an instance of CPAs not adhering to such a code. Arthur Andersen firm executives and CPAs have been charged with unlawful and unethical accounting practices. Federal and state legal guidelines require CPAs to take care of independence when performing audits and critiques. While consulting at Enron, Arthur Andersen CPAs didn’t keep independence and carried out each consulting companies and auditing companies, which violates the CPA code of ethics.

The CPA designation has grow to be extra vital after the Sarbanes-Oxley (SOX) Act of 2002, which was handed partly in response to company monetary scandals just like the Enron affair.

To give your self the very best probability attainable when taking the examination, taking one of many greatest CPA prep programs is perhaps value contemplating.

History of the Certified Public Accountant (CPA)

In 1887, 31 accountants created the American Association of Public Accountants (AAPA) to outline ethical requirements for the accounting business and U.S. auditing requirements for native, state, and federal governments, personal corporations, and nonprofits. Renamed a number of occasions over time, the group has been often called the American Institute of Certified Public Accountants (AICPA) since 1957. The first CPAs acquired licenses in 1896.

In 1934, the Securities and Exchange Commission (SEC) required all publicly traded corporations to file periodic monetary reviews endorsed by members of the accounting business. The AICPA established accounting requirements till 1973 when the Financial Accounting Standards Board (FASB) was launched to set requirements for personal corporations.

The accounting business thrived within the late Nineties as a result of giant accounting corporations increasing their companies to incorporate varied types of consulting. The Enron scandal in 2001 resulted in main modifications within the accounting business, together with the truth that Arthur Andersen, one of many nation’s high accounting corporations, went out of enterprise. Under the Sarbanes-Oxley Act, which was handed in 2002, accountants have been topic to more durable restrictions about their consulting assignments.

What Are the Responsibilities of a CPA?

Depending on their specific function, a CPA could also be concerned in a number of facets of the accounting career. CPAs can specialise in areas like forensic accounting, private monetary planning, and taxation. In addition, CPAs should full persevering with schooling necessities and uphold a typical of ethics.

What Can CPAs Do that Accountants Cannot?

CPA is a credential earned by accountants. As such, CPAs are sometimes accountants that carry out the identical duties and capabilities as an accountant with out the designation. CPAs, nonetheless, are granted sure roles that solely they’ll carry out. These embody performing audits of public U.S. corporations and making ready audited monetary statements for an organization, akin to a stability sheet or an earnings assertion.

Which Is Better: an MBA or CPA?

The MBA is an instructional masters diploma in enterprise administration. If you have an interest in beginning or working a enterprise, the MBA is a complete diploma that could be higher for you. The CPA is knowledgeable designation earned by accountants. If you’re a “numbers individual” or solely within the accounting career, the CPA could also be higher for you.

Is Becoming a CPA Worth It?

Earning the CPA credential is a giant time dedication, and the examination course of is tough. Still, these with a CPA earn 25% extra, on common, than non-CPA accountants. Also, accountants with a CPA certification are likely to advance to positions of extra duty inside one to 2 years and sometimes are promoted to senior-level jobs inside just a few years after that.



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() What Is a Certified Public Accountant (CPA)? An authorized public accountant (CPA) is a designation supplied to licensed accounting professionals. The CPA license is supplied by the Board of Accountancy for every state. The American Institute of Certified Public Accountants (AICPA) offers sources on acquiring the license. The CPA designation helps implement skilled requirements…