CPA vs Accountant - Is a CPA the Same as an Accountant?

Illumeo Customer Success's Profile

An accountant is not the same as a Certified Public Accountant. A bachelor's degree in accounting is common for accountants. A CPA, or Certified Public Accountant, is a professional certification that can be obtained after meeting certain educational and work criteria and passing an exam.

Each state has its own set of criteria. As a result, a CPA is more likely to be competent in the subject of accounting than someone who does not hold the qualification. A CPA can also accomplish things that conventional accountants can't.

What Does CPA Stand for?

CPA is the abbreviation for Certified Public Accountant. In contrast to standard accountants, a certified public accountant (CPA) has additional certifications and competence.

CPAs have completed the CPA test as well as particular schooling and license criteria. As a result, they are highly regarded accounting experts.

How do you become a CPA?

You need to pass through the following steps to become a CPA:

  1. Get your bachelor's degree.

  2. Consider pursuing a master's degree.

  3. Complete CPA Certification

  4. Obtain a license

  5. Continue Lifelong Learning

What Is a CPA License and Its Requirements?

To be eligible for a CPA certificate and license (i.e., permission to practice), all CPA applicants must pass the Uniform CPA Examination. While the test is the same regardless of where it is taken, each state/jurisdiction has its own set of educational and experience criteria that people must satisfy.

To be eligible to become a CPA in most states/jurisdictions, you must have a bachelor's degree. In terms of qualifications, most states and jurisdictions demand at least two years of public accounting experience. The type of experience and level of experience needed differs by state, so candidates should double-check these criteria before starting their preliminary job search. Candidates for CPA licensure in some states will additionally be required to complete an ethics course or pass an ethics exam. Candidates may apply for CPA licensing through the state's Board of Accountancy if they have completed all of the state's prerequisites.

Most states require CPAs to complete continuing professional education (CPE) courses and engage in professional development programs to keep their licenses current. The policies and guidelines will differ from state to state. CPAs must meet their state's Board of Accountancy's CE requirements, which often entails attending workshops and seminars.

What Is the Time Commitment to Become a CPA?

The time it takes to become a CPA will vary depending on the candidate's personal circumstances, degree of education, the state they live in, and the prerequisites of the state. The criteria for acquiring the CPA qualification vary greatly by state; for example, some jurisdictions need only one year of work experience while others demand two.

Given the typical amount of time it takes to obtain the qualifying degree and job experience, obtaining the CPA qualification will certainly take six years if beginning from scratch.

What Does a CPA Do?

Financial data is analyzed and reported by Certified Public Accountants. Following are the major responsibilities of a CPA:

  • Prepare Audited Financial Statements for Review

You don't need a CPA to run financial accounts anymore, thanks to the widespread usage of accounting software. However, while you may be able to run the reports, are you aware of what they are telling you? A CPA's duty is to do just that.

When you need to have audited financial statements created or reports filed with the Securities and Exchange Commission (SEC), which is a requirement for all publicly held firms, a CPA can be a helpful resource for fledgling firms in terms of clarifying financial statements and what they signify now and in the future.

  • Taxes

Taxes can be prepared by almost anyone. When it comes to doing business taxes for the first time, however, many small business owners find themselves in a dilemma. When it comes to tax preparation, a CPA is the best person to choose since they are knowledgeable about complicated tax rules that other accountants are not.

  • Legal Representation Before the Internal Revenue Service

A CPA may represent you in front of the IRS in the case of an audit, in addition to their deep understanding of tax rules and what you can and cannot legitimately deduct. While an accountant may prepare your corporate tax return, only a certified public accountant (CPA) can defend it if the IRS or your state tax authorities have issues or concerns. Don't underestimate the significance of this if you are ever audited by the IRS or your state tax authorities.

  • Corporate Audits

CPAs do the majority of audits, while accountants can occasionally perform in-house audits. External audits or auditing of public firms, on the other hand, are always done by a CPA.

Other tasks performed by CPAs are:

  • Establish, revise, or maintain accounting rules and processes, such as bookkeeping techniques, monitoring, and reporting, for a company.

  • Creating or supervising budgets.

  • Creating and preparing reports for taxation and government audits.

  • Preparation and presentation of financial statements to the management and board of directors.

  • Account payables and receivables management.

  • Maintaining awareness of changes in the financial industry and government legislation, as well as modifying policies and processes to reflect these changes.

While the above list of tasks for a Certified Public Accountant is comprehensive, it is crucial to remember that CPAs should not provide auditing and consulting services to the same company, as this would constitute a conflict of interest.

CPA vs Accountant

The fundamental distinction between Accountants and CPAs is that Accountants record and report the financial affairs of businesses in a form that reflects their financial status, whereas CPAs are certified by the AICPA (American Institute of Certified Public Accountants) after passing the CPA exam.

Accountants and CPAs have a few fundamental differences in their responsibilities:

  1. Licensing

CPAs must pass rigorous exams and meet stringent standards for licensure in the state where they plan to practice. Candidates for the CPA must take 150 hours of college coursework, with particular hours in upper-level accounting, auditing, and business foundation courses required.

Candidates must pass a thorough test of business, tax, auditing, and general accounting competencies after graduation and a year of work under the supervision of a CPA.

CPAs must attend continuing education programs throughout their careers after getting licensed in order to stay current on challenges and developments in the accounting profession.

  1. Fiduciary Obligations

Many organizations that are obliged to have a financial statement audit or review will hire the help of a CPA to perform the job and produce the relevant reports.

Furthermore, CPAs are regarded as fiduciaries, with the legal responsibility and authority to act on behalf of and in the best interests of their clients. Accountants who aren't CPAs aren't considered fiduciaries to their clients.

  1. Taxes and Regulations

Although accountants without a CPA qualification can file a compliant tax return, CPAs provide customers with significant benefits that non-CPAs cannot.

First, as a result of the difficult CPA licensure exams and ongoing education requirements, many CPAs are better informed about tax regulations. Another important consideration is that CPAs are qualified to represent clients before the IRS if audit support is necessary, but non-CPA accountants are not.

  1. State Requirements and Codes of Ethics

You'll need more than simply a license to work as a CPA. CPAs are also required to follow a strong code of ethics and conform to greater standards than accountants.

Is a CPA Better Than an Accountant?

While an accountant may be able to meet your basic needs, the government regards a CPA as a credible specialist in accounting and a more competent professional to execute accounting obligations than an accountant.

Which is best will depend on your priorities, time constraints, and budget. You will follow worldwide laws, principles, and standards if you pick CPA. Passing the CPA test is more challenging than passing any other accountancy credential.

A Certified Public Accountant can accomplish tasks that conventional accountants cannot, such as compiling an audited financial statement or serving as a taxpayer or firm representative in discussions with IRS Revenue Officers or Counsel. None of these things are possible for an accountant who does not hold the CPA qualification.

With the help of an accountant, many small firms can efficiently manage their financial operations. A CPA, on the other hand, may be a useful resource for other elements of your organization, such as financial statement analysis, internal and external audits, and tax planning.