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What is a CPA, Their Value & What Do They Do?

What is a CPA, Their Value & What Do They Do?

Certified Public Accountants (CPAs) are on the cutting edge of accounting. Whether you keep records in a small office or review IRS files, accounting is a broad field with many professions. CPAs are accountants who have passed the private CPA exam and public licensing requirements. If you need someone to take care of your money, a CPA is someone you go to. Here are some vital things you need to know about the CPA.

Some CPAs also serve as financial advisors.

 

What is a CPA?

The Chartered Accountant is accredited for finance and accounting professionals. A Chartered Accountant is not synonymous with an accountant. Rather, the credentials are a Chartered Accountant's authority to file public and government documents, such as audits and tax returns. This accreditation has two concurrent components. The CPA is both:

  • A professional accreditation issued by the American Institute of Certified Public Accountants (AICPA);

  • Each state issues a professional license.

The American Institute of Certified Public Accountants (AICPA) writes and distributes the CPA exam. Although all states use this exam as part of their local licensing requirements to become a CPA, each state has its licensing requirements. These typically involve a combination of state residency, education and training requirements, and/or minimum accounting experience.

For instance, to receive a CPA license in Massachusetts, you must (in addition to passing the CPA exam) have:

• A Bachelor's degree;

• At least 150 credit hours accumulated through relevant education;

• A minimum of 30 semester hours of undergraduate study or 18 hours of postgraduate study in financial accounting, auditing, taxation, and management accounting;

• At least 24 semester hours of university studies or 18 hours of postgraduate study in economics courses (excluding accounting courses);

• One year of experience in a corporation or three years in a civil society certified by a chartered CPA. Proficiency in providing services or advice using accounting attestation, compilation, management consulting, financial advice, taxation, and advice.

Readers should note that some media reports that the AICPA requires 150 credit hours of relevant education to pass the CPA exam. Not true. The AICPA advocates that this is what a candidate will need to pass the exam, but individual states impose actual requirements for the CPA application.

Each jurisdiction also requires CPAs to complete several continuing education hours. This is typically measured every two years, and each state has its requirements.


CPA Exam Cost

Depending on the state hosting the exam, exam courses can cost between $1,300 and $3,400. The registration fee alone is between $75 and $300.

While the price for each of the four exam stages varies by state, most states charge $120 per session. Tuition for each section can be $75 or $300 for all four, depending on how many sections you think you can complete in six months. Registering for a single exam will cost $252 but will give you more time to complete all four sections.

The CPA ethics exam also charges a fee of $150 to $200, while licensing fees range from $50 to $500 per state. Because most states require 40 hours of continuing education each year, the hourly cost can range from $20 to $125.

The average cost of taking the CPA examination is around $3,000. However, this does not include the cost of retaking the exam, renewing training courses, or the $336.55 exam fee if you are an international candidate.


Accountants vs. Other tax specialists

To fully understand the value of a CPA, you need to know that accounting contains many different skill levels. The field has three categories of professionals:

Certified Public Accountants (CPA)

A CPA is an accountant authorized by the state to present public financial statements. Some examples are:

  • Audited financial statements required by law, such as those required by a company when seeking buyers or investors;

  • Financial statements issued to government regulators such as the SEC or IRS;

  • An income tax return is filed on behalf of the client.

Only a CPA can file taxes on behalf of his client. This is not something a general accountant would normally do. In addition, a CPA generally offers the same range of services as a general accountant.

This is why the government requires state accredited CPAs. Any organization or individual can seek financial advice, but accountants must sometimes file statements that third parties depend on. When a company is looking for investors, they need to know the company's financial situation. The CPA licensing scheme ensures that the accountant preparing for this audit owes loyalty to more than just their employer. They will conduct an honest audit to maintain their license.


Bookkeepers/Office Managers

A bookkeeper manages the financial records of an individual or an organization. Records purchases, sales, debts, payments received, and other obligations. They are also accountable for keeping track of the organization's cash reserves and making and receiving payments.

A bookkeeper is responsible for cash. His work does not deal with legal issues or complex financial arrangements.

While education and experience will help someone do this better, anyone can be a bookkeeper. 


General Accountants

A CPA and an accountant are not necessarily the same. Accountants in general often deal with advanced financial issues for their clients. These may include financial statements and outlooks, regulatory compliance advice, and financial forecasts. An accountant often helps clients manage their records, which also helps the organization or individual understand their cash flow and overall financial condition.

A general accountant often prepares taxes. This is one of its most common functions. However, except in exceptional circumstances, a general accountant cannot file their clients' taxes for them. A general accountant can only deal with internal advice for a client. They cannot conduct public audits, handle government business, or provide financial records to regulators.

Although it may differ in your specific jurisdiction, there is no legal requirement to work as a general accountant. These professionals will almost always have a bachelor's degree, usually in accounting or a related field.


Final Results

Although organizations may hire general accountants as part of their internal staff, most use CPAs when hiring external accountants. Indeed, CPAs can offer a full range of services, whereas a general accountant will eventually run into legal limits on their authority.

Additionally, the CPA designation shows a degree of qualification and training beyond what a general accountant has attained.


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