Sole proprietors, partnerships, and corporations often require outside accounting services to complete tax filings, compute financial statements, and prepare budgets. And that’s where CPA’s come in. Certified public accountants are one of the most important people in financial services. Having one of them in your team will help you with your business growth. This blog covers what a certified public accountant is and what are their responsibilities.
What is a Certified Public Accountant (CPA)?
A CPA or a Certified Public Accountant is a professional whose sole job is to look after the financial affairs of an individual, an organization, or a company. They are the ones who keep an eye on the finances of a company and ensure that the organization is not doing anything illegal.
CPAs are licensed by state boards of accountancy and are regulated by state laws. The CPA credential is awarded to those who pass the Uniform CPA Examination, which is administered by the American Institute of Certified Public Accountants (AICPA).
The CPA designation is the highest standard of competence in the field of accounting and means that a CPA is committed to the highest ethical standards and public service. CPAs provide a wide range of services, including auditing, taxation, financial planning, consulting, and forensic accounting. They work for public accounting firms, corporations, governments, and not-for-profit organizations.
Role of a CPA
The role of a CPA is to provide objective assurance that an organization’s financial statements are free from material misstatement. This role includes expressing an opinion on whether the financial statements are prepared following Generally Accepted Accounting Principles (GAAP). In addition to financial statement audits, CPAs also perform operational audits and compliance audits.
CPAs are in High Demand
According to the U.S. Bureau of Labor Statistics, employment of accountants and auditors is projected to grow 11 percent from 2019 to 2029, much faster than the average for all occupations. This growth will result in about 773,800 new jobs🧑💻.
What Does a CPA Do?
The main responsibility of a CPA is to go over a client’s financial records to make sure they are accurate and compliant. If everything looks good, the CPA will then issue a professional opinion letter vouching for the legitimacy of the statements. A cheaper alternative to an audit is called a review, and some clients may prefer this option.
They can help with tax planning, preparation, and filing, as well as represent taxpayers before the IRS. CPAs can also assist with estate and gift tax planning, and guide tax-advantaged investment opportunities. In addition, they can help businesses with tax compliance issues, such as payroll taxes and sales taxes.
CPAs are not just accountants; they are also financial planners. They help their clients plan for their financial future by creating a budget, setting financial goals, and investing their money wisely. CPAs also helped their clients save money by finding ways to reduce their taxes.
Creating, Maintaining, and Reviewing Budgets
They create budgets for businesses and organizations, maintain them regularly, and review them to ensure accuracy and compliance. Maintaining a budget is an ongoing process, and CPAs can help businesses to stay on track by monitoring spending and making adjustments as needed.
CPA’s provide a wide range of consulting services to businesses of all sizes. They can help with financial planning, tax preparation, and legal matters. A CPA can also provide advice on how to start and run a business. They can help with bookkeeping, accounting, and financial reporting.
CPAs keep track of the financial transactions made by the business or individual and prepare financial statements and reports.
CPAs also provide cash flow forecasting and analysis and help businesses develop strategies to improve their cash flow. In addition, CPAs can provide advice on how to best use the business’s available cash to meet its short-term and long-term financial goals.
The Different Types of CPAs
There are four main types of CPAs: Public accounting, management accounting, government accounting, and internal auditing. Each type of CPA has its own set of responsibilities and duties.
- Public accounting is the type of CPA most people think of when they think of the profession. Public accountants work for accounting firms and provide services such as auditing, taxation, and financial consulting to their clients.
- Management accounting CPA works within a company to help manage its finances. Management accountants may provide services such as financial planning, cost analysis, and budgeting.
- Government accounting CPA works for governmental agencies at the local, state, or federal level. Government accountants may provide services such as auditing, financial reporting, and tax compliance.
- Internal auditing CPA works within a company to ensure that its financial statements are accurate and in compliance with regulations. Internal auditors may also help design and implement internal controls to prevent fraud and waste.
How to Become a CPA
To become a CPA, one must fulfill the following criteria:
- Earn a bachelor’s degree in accounting from an accredited college or university
- Pass the Uniform CPA Examination, which is administered by the American Institute of Certified Public Accountants (AICPA).
- Obtain a license from their state board of accountancy.
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FAQS on What is CPA?
Is there any difference between a CPA and an accountant?
A CPA is a licensed professional who has met certain educational and experience requirements set forth by their state’s Board of Accountancy. Accountants, on the other hand, are not required to be licensed. However, many accountants choose to become certified by completing voluntary certification programs such as the Certified Management Accountant (CMA) or Certified Internal Auditor (CIA) programs. While CPAs and accountants both prepare financial statements and provide advice on financial matters, only CPAs are licensed to provide attest services, such as auditing financial statements.
What kinds of career opportunities are available to CPAs?
Every industry needs a CPA, ranging from private to forensic organizations. CPAs have the opportunities to work as tax advisors, consultants, auditors, controllers, CFOs, and many more either for an accounting firm or in a corporate setting. They can work in public, corporate, education, not-for-profit, or in the government sector.
How many years does it take to be a CPA?
Most states require CPAs to complete 150 semester hours of college coursework before taking the CPA exam, and many CPAs complete an additional year or two of professional experience before becoming certified. Therefore, most people take at least four or five years to become a CPA.
Is CPA a certificate or a degree?
The CPA credential is considered a professional degree, as it requires the completion of a rigorous education and examination process. The CPA credential is also considered a mark of distinction, as it is only awarded to those who meet the highest standards of competence and ethics.