Are you thinking about hiring an accountant and unsure if you should choose to work with a Certified Public Accountant?
Certified Public Accountants (CPAs) rank among the most highly-regarded professionals in the accounting world. Accounting encompasses a broad range of jobs, from bookkeeping in a small company to preparing tax returns for individuals and handling complicated tax disputes with the Internal Revenue Service (IRS). And many professionals who have earned their CPA designation work as financial advisors and in other roles where they can offer expert tax planning services to their clients.
In this article, we’ll discuss what a Certified Public Accountant is, the education and experience required to become a CPA and offer insights to help you make a more informed hiring decision.
What is a Certified Public Accountant (CPA)?
A Certified Public Accountant (CPA) is an accountant who has completed rigorous educational prerequisites, met on-the-job training requirements, passed the CPA exam, and has been licensed by the Board of Accountancy in their state.
Due to their expanded level of expertise, a CPA may perform many functional roles, including working as tax accountants, business advisors, tax consultants, financial planners, corporate accountants and executives, and conducting audits.
According to the National Association of State Boards of Accountancy (NASBA), over 660,000 accountants have earned the CPA certification.
CPAs are trusted by businesses, governments, and individuals to maintain and review financial accounts, in addition to varying responsibilities throughout public organizations and private businesses. The CPA license isn’t necessary for private accountants but is required for public accountants who operate alone or for firms that offer accounting services to others.
What’s the Difference Between a CPA and an Accountant?
So CPAs and accountants work in the same financial space. But what’s the difference between a CPA and a non-CPA accountant?
Regarding accounting obligations, a CPA is more qualified than an accountant and is regarded as an expert by the government and private industry. A CPA is an accountant who has completed specialized training in widely recognized principles and practices of accounting.
A certified public accountant is authorized to carry out specific responsibilities non-CPAs aren’t permitted to carry out. These responsibilities include preparing audited financial statements and the representation of a taxpayer or company in discussions with revenue officers or counsel of the Internal Revenue Service.
Are You Looking for a Financial Advisor who is also a CPA?
You’ll find a growing number of financial advisors on Wealthtender who have earned their Certified Public Accountant designation. Click a pin on the map below to view the profile of individual financial advisors who hold the CPA designation.
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What is a Personal Financial Specialist (CPA / PFS)?
The Personal Financial Specialist (PFS) is a designation for licensed Certified Public Accountants (CPAs) who wish to provide financial planning services to their clients. Designed by the American Institute of Certified Public Accountants (AICPA), the PFS allows CPAs to go beyond their traditional duties and help others plan for their futures.
Essentially, a PFS is a CPA with training and work experience in the financial planning industry. They have the expertise it takes to help clients holistically with a number of financial matters including retirement, investments, risk management, estate planning, and taxes.
What Does it Take to Earn the CPA Designation?
CPAs must complete specific education and pass a state CPA test to practice. Regulations and qualifications vary from state to state.
However, most state boards of accounting demand 150 semester hours of education in addition to a conventional four-year bachelor’s degree. Financial reporting, taxation, auditing, and other non-accounting business disciplines require advanced courses in certain states.
A bachelor’s degree in accounting, business, or finance is often necessary for people who want to become CPAs. Many students obtain a master’s degree in business administration or a five-year accounting curriculum in their pursuit of becoming CPA-certified. As a result, even for occupations that don’t include auditing, having a Certified Public Accountant (CPA) certificate is seen as a significant step forward in the accounting sector.
To become a Certified Public Accountant, there are three major requirements you need to complete: 1) Obtain the necessary education and training, 2) Get sufficient experience, and 3) Pass an exam.
CPA Training and Education Requirements
Completing a study program in accounting or a similar field that satisfies the educational standards set out by the relevant state board of accountancy is a necessary prerequisite to earning the Certified Public Account designation. A bachelor’s degree in accounting is often required. However, a master’s degree in accounting or another business field may also be used to meet this requirement if a sufficient number of accounting courses are completed.
A CPA candidate must complete 150 semester hours of coursework to qualify in many states. This is a higher number of credit hours than is generally needed to get a bachelor’s degree and is a significant factor to consider. Because of this, many people who want to become certified public accountants first have to obtain a bachelor’s degree from an accredited institution.
Industry Experience Requirements for the CPA Designation
According to the American Institute of CPAs, most states require at least two years of public accounting experience and many also accept non-public accounting experience. In addition, some states have a “one-tier” system, whereby candidates must pass the CPA exam and fulfill the experience requirements to obtain both the certificate and license.
Others have a “two-tier” system in which candidates can obtain the certificate upon passing the exam, then they must fulfill the experience requirements to obtain the license to practice in public accounting.
CPA Licensing Exam
To earn the Certified Public Accountant designation, an individual must complete the CPA exam with a passing grade on each of the four sections. Subject to time constraints, a test taker who gets a passing grade on less than all course parts does not have to retake those portions. Exams for these areas must be retaken if the time limit is exceeded.
Many undergraduate university accounting programs now include the necessary CPA coursework so that students can take the four-part exam upon graduation. However, while there is only one CPA exam, education and experience requirements for taking the exam vary from state to state, as do certification maintenance requirements.
How Does the Future Look for Certified Public Accountants?
The projections made by the Bureau of Labor Statistics (BLS) indicate that the number of jobs available for accountants and auditors will increase by seven percent between 2020 and 2030. Due to a lack of available personnel with the necessary skills, unemployment rates in the accounting and finance industries are currently lower than the national average.
Those having the qualifications necessary to work as certified public accountants (CPAs) are in even more demand than before, as public accounting companies and other organizations are hiring at all levels. A significant portion of the activity is concentrated on adding specialists to jobs in the audit and tax space. Still, businesses are also searching for experience in risk and compliance management and mergers and acquisitions.
When Should You Hire a Certified Public Accountant?
CPAs offer valuable services to individuals in a number of circumstances. Below are a few examples of situations when a Certified Public Accountant can play an important role in tax planning and important financial decisions.
- Before starting a business
- Dealing with the IRS
- Investing in complex securities
- You earn income from foreign sources
- Your taxes are complicated
- During the sale of a business
What Do Certified Public Accountants Have To Say About Hiring a CPA?
Philip Weiss, CFA, CPA
“The CPA is a designation that is only earned by those who meet education requirements, gain work experience, and apply to take and pass the CPA exam. Each state sets its own education criteria for the CPA credential. But most states require aspiring CPAs to earn 150 credits. That’s about 30 credits beyond a typical bachelor’s degree program.
A CPA with tax expertise can help you proactively save money on taxes and makes sure you’re not missing any planning opportunities. A CPA can help you pick the retirement account that best suits your retirement needs and also help you optimize withdrawals from your retirement accounts.
It’s great to have someone who is knowledgeable, but even better is that CPAs are considered fiduciaries with a legal duty and power to act on behalf of, and in the best interest of, their clients.”
FAQs
How can I confirm the financial professional I’m working with holds the Certified Public Accountant designation?
To confirm that a CPA has an active license, you may contact the State Board of Accountancy where the individual obtained his or her license. You can also use the NASBA CPA Verify tool, but this resource doesn’t cover every state.
What if I have a complaint about the Personal Financial Specialist I’m working with?
Contact the AICPA at (888) 777-7077 or send a letter of complaint to:
AICPA
220 Leigh Farm Road
Durham, NC 27707
Attn: Professional Ethics Division
Where can I learn more about other professional designations held by financial advisors and coaches?
Refer to this list of popular financial certifications prepared by Wealthtender to help you learn more about each designation. You’ll find a brief description of each certification, plus links to in-depth articles if you want to learn more about a particular designation.
About the Author
About the Author
Brian Thorp
Brian is CEO and founder of Wealthtender and Editor-in-Chief. He and his wife live in Austin, Texas. With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress. Learn More about Brian