Passing the CPA exam and earning this prestigious designation signifies that an individual has a deep knowledge of accounting practices and acts with the upmost integrity.
What does a CPA stand for? CPA stands for Certified Public Accountant.
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What Does a CPA Do?
CPAs understand accounting, the language of business. This understanding enables CPAs to serve as trusted financial advisors who work with businesses, individuals, schools, and other organizations and assist them in reaching their goals and objectives.
CPAs appear throughout the business and financial world, working in public accounting, business and industry, government, not-for-profit, and education.
Every organization, regardless of size, requires the skills, knowledge, and experience provided by CPAs via public accounting firms or working directly for the entity, e.g., Controller, CFO, Senior Accountant.
Public accountants provide services to a variety of individuals or businesses and can specialize in areas like tax or forensic accounting.
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Responsibilities of a Certified Public Accountant (CPA) in Business and Industry
In general, CPAs are responsible for understanding, organizing, and reporting financial information for businesses or individuals.
Top responsibilities for CPAs in private accounting include:
- Overseeing financial records
- Preparing financial statements
- Creating, maintaining, and reviewing budgets
- Ensuring compliance with local, state, and federal tax requirements
- Strategic planning
- Cash management
- Monitoring and improving financial management systems
Top responsibilities for CPAs in public accounting include:
- Preparing financial documents
- Analyzing budgets
- Financial planning
- Bookkeeping
- Consulting
- Auditing
CPA vs. Accountant: Is There a Difference?
Yes, a CPA is a licensed accountant. So, an accountant is not always a CPA, but a CPA is an accountant.
CPAs have met licensing requirements, which include completing identified levels of education and work experience and passing the CPA exam. According to the AICPA (American Institute of Certified Public Accountants), earning the CPA designation provides professional benefits such as increased trust, opportunity, and financial reward.
CPAs are recognized as professionals who must meet higher standards which include protecting the public interest, adhering to a code of ethics, and obtaining ongoing continuing education. Accountants do not receive the same automatic recognition as professionals.
As mentioned earlier, CPAs must pass the Uniform CPA exam.
The CPA exam requires you to demonstrate mastery in the following:
- Auditing & Attestation (AUD)
- Business Environment & Concepts (BEC)
- Financial Accounting & Reporting (FAR)
- Regulation (REG)
To prepare for the CPA exam, most candidates choose to enlist the help of a CPA review course. Wiley offers the best CPA review course on the market with tools created to save you time and get you up to speed quickly.
What Can a CPA Do That an Accountant Can’t Do?
CPAs have a specialized license that allows them to perform duties that unlicensed accountants cannot. These duties include signing tax returns and auditing or reviewing financial statements.
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Are There Different Types of Certified Public Accountants?
Yes, CPAs can specialize in several different industries and services.
The AICPA recognizes some of the main specializations to be:
- Personal Financial Planning
- Information Management and Technology Assurance
- Forensic Accounting
- Valuation
- Taxes
- Audit and other Attestation Services
- Government
- Nonprofit
- Environmental Accounting
- International Accounting
- Business Environment & Concepts (BEC)
- Financial Accounting & Reporting (FAR)
- Regulation (REG)
CPA in Public Accounting Firms
CPAs in the public accounting industry work with businesses and individuals to review and prepare financial information that will be released to the public or filed with the government. They are able to provide a wide range of services, typically in three main areas.
Auditing and Assurance
The auditing and assurance area is responsible for performing audits and assurance engagements and issuing opinions because of their work.
Tax Preparation and Services
The tax preparation and services area is responsible for preparing required tax filings as well as providing tax planning and analysis services.
Consulting Services
Consulting services run the gamut from assisting clients in identifying and implementing new financial systems to helping clients understand financial statements to making recommendations regarding accounting best practices. Areas of specialization in the consulting arena include forensic accounting, financial and estate planning, and litigation services.
CPAs in Business
CPAs hold a variety of managerial and other positions, including corporate controller and even CFO or CEO.
CPAs in Government
Certified Public Accountants can work in the federal government or state and local government.
On the federal level, the AICPA says CPAs can expect to:
- Investigate white-collar crimes
- Manage financial statement audits for government agencies
- Perform research and analysis on financial management issues
On the state and local level, the AICPA says CPAs can expect to:
- Analyze a school district’s ability to remain viable
- Assess the propriety of expenditures for constructing prisons
- Review the effectiveness of the workers’ compensation system
CPAs in Not-for-Profits
CPAs in the non-profit industry oversee financial reporting and management to assure the organization’s mission and objectives are obtained. CPAs in this industry can expect to assist in tax filings, internal controls, and budget preparation as well as financial management and reporting.
CPAs in Education
CPAs in education perform financial management and reporting functions for their organizations. Some CPAs wish to teach others about accounting practices, and these professionals may also be found in the education industry.
Many of Wiley’s Instructors are university professors (and CPAs) who have a passion for preparing the next generation of accounting professionals.
Wondering what jobs you can get with a CPA license? Discover CPA jobs you didn’t know about.
Why Should I Become a CPA?
NASBA (National Association of State Boards of Accountancy) notes the five reasons to become a CPA are prestige and respect, career development, career security, job satisfaction, and money and benefits.
- Prestige and Respect. CPA licensure brings a certain level of admiration that comes from peers and clients. CPAs are seen as an elite group in the industry and are given more weight, trust, and respect when compared to standard accountants.
- Career Development. The possibilities are endless for CPAs with opportunities in technology, artificial intelligence, cybersecurity, healthcare, energy, sports and entertainment, government, and more. Every industry has a need for CPAs!
- Career Security. CPAs are in high demand. And while accountants might be a dime a dozen, qualified and experienced CPAs can be few and far between (especially in certain industries where there’s a need for greater specialization). This leads to greater job stability and more leverage in the job search and negotiations.
- Job Satisfaction. CPAs experience a high level of job satisfaction because they are making a difference. They have a wide variety of career paths available to them and they have the chance to positively impact the lives of individuals, businesses, or causes they work with.
- Money and Benefits. While entry-level CPAs don’t see a huge pay bump over standard accountants (on average), the salary potential is far greater. Junior-level CPAs with one to three years of experience should expect to earn anywhere from $52,000 to $87,000. After four to six years of experience, average salaries hit the $66,000 to $110,000 range. And as a CPA’s career grows, it’s possible to earn $150,000 or more.
What Is a CPA License?
A CPA license is a designation awarded by the state board of accountancy to accounting professionals who have completed a rigorous exam process as well as completed a minimum level of education and work experience.
Earning the CPA designation is a high achievement that signifies having a deep understanding of accounting practices and an adherence to the highest level of standards.
How Do I Become a CPA?
Becoming a CPA involves understanding and meeting the requirements, studying for the CPA exam, taking the exam, and passing the ethics exam (if applicable).
1. Understand the Requirements
The state requirements to become a CPA technically vary from state to state, though most have very similar and consistent rules in place.
Washington is a good example of standard expectations.
Their CPA requirements are as follows:
- Bachelor’s degree
- At least 24 semester units in accounting subjects
- At least 24 semester units in business subjects
- 150 semester units of education
- Pass the Uniform CPA exam
- Pass the AICPA ethics exam
- One year (minimum) of accounting or accounting-related experience verified by a CPA
2. Study for the CPA Exam
Studying for the CPA exam involves making a study plan and sticking to it. A CPA exam review course can provide a study plan and all associated study materials.
CPA candidates will want to begin studying months in advance and increase study time as exam day approaches. Planning, discipline, and balance are the keys to the CPA exam preparation process.
3. Apply/Take the CPA Exam
The CPA application is extensive and can be complicated. The first step is having completion of educational requirements verified by the state board of accountancy and then formally applying once approved.
Upon receipt of an application, the board will review and approve it, and NASBA will issue a Notice To Schedule (NTS). At this point, candidates can schedule their first section of the exam.
Upon passing each section of the exam, candidates need to get a new NTS for the following section.
Wondering what your chances are of passing the CPA exam? Get the latest pass rates for each section of the CPA exam.
4. Pass the Ethics Exam
After passing each section of the CPA exam, a CPA candidate may need to pass the AICPA ethics exam. This is a short self-study course with a take-home test. And while not mandatory in all 50 states, it’s required in most (and encouraged in all).
Frequently Asked Questions (FAQs)
What exactly is the meaning of a CPA? And what does a CPA do? Get answers to the most commonly asked questions about the CPA license.
- What exactly is the meaning of a CPA? And what does a CPA do? Get answers to the most commonly asked questions about the CPA license.
- A CPA license is a professional designation awarded by the board of accountancy for each state. A CPA license is earned by meeting specific education and work experience requirements, passing the CPA exam, and meeting any other specifications laid out by a state’s board of accountancy.
- CPA stands for Certified Public Accountant.
- State CPA requirements can be checked online.
In order to sit for the Uniform CPA exam, a person must be found eligible by one of the 55 states or jurisdictions of the United States. Each state has its own set of fees and educational requirements. Some states also require residency or citizenship.
- Yes, non-accounting majors can earn a CPA certification. However, it’s a good idea to review how to get a CPA license without an accounting degree before getting too far into the process.
