While the role of CPAs and accountants are often interchanged, they actually have several differences.
For starters, it’s important to emphasize that all CPAs are accountants, but not all accountants are CPAs. Accountants have a bachelor’s degree in accounting, while a Certified Public Accountant (CPA) is an accountant who passed the CPA exam and has met certain state and education licensing requirements.
While the requirements may vary according to state, there are some duties that can only be performed by CPAs and not regular accountants. In this article, we will dive deeper into the role of CPAs and their differences with accountants.
What are the roles of a CPA?
CPAs are highly respected accounting specialists with additional credentials and expertise compared to regular accountants. The CPA examination consists of four sections namely, Regulations, Financial Accounting, Reporting Business Environment, and Auditing. Getting this certification is regarded as a symbol of commitment to high standards.
In many US states, only licensed CPAs can provide financial statement advice. Aside from analyzing and reporting financial data, some of the other duties of a CPA include:
- Developing and optimizing accounting procedures including monitoring and reporting
- Creating and keeping track of budgets
- Ensuring accurate reporting through internal audits
- Preparation and generation of reports for tax and government audit purposes
- Preparation of financial statements to be presented to the management or Board of Directors
- Review and recommendations for compensation, benefits, assets, and spending within the business
- Management of accounts payables and accounts receivables
- Staying up to date with the changes in the financial industry and laws and regulations to tweak policies and procedures accordingly
While CPAs can fulfill all the responsibilities above, they shouldn’t offer auditing and consulting services to the same client as it would create a conflict of interest.
CPAs vs Accountants
Some of the key distinctions in the duties and responsibilities of CPAs and accountants include:
CPAs have passed the exam and strict requirements for licensing in the state where they want to practice. CPA candidates need to complete specific number of hours in upper-level accounting, auditing, and business core courses.
After they graduated and a year of experience under the supervision of a CPA, they must pass a comprehensive exam on general accounting, business, tax, and auditing. Even if they already get their license, they should continue to stay updated on the latest changes and news in the accounting industry.
Only CPAs can perform a financial statement audit or review and prepare the required reports. They are considered fiduciaries with a legal duty and power to act on behalf of, and in the best interest, of their client. CPAs arfe expected to meet strict state requirements and follow a code of ethics to maintain high standards.
Regular accountants can prepare tax returns, but a CPA provides certain advantages. One, CPAs are more knowledgeable in tax codes because of their continuing education and the rigorous CPA exam that covers this area. Additionally, CPAs are eligible to represent their clients before the IRS for audits, while non-CPAs are not.
Do I Need a CPA for my Business?
Both accountants and CPAs can be valuable assets to businesses of all sizes. Some use accountants for their day-to-day financial operations, while CPAs are used for tax preparation, audits, and consulting.
If you’re finding it difficult to decide whether you need to hire a CPA or a regular accountant for your business, here are some instances wherein a CPA can best help you:
- You taxes are complex. If your business has a complicated tax return, you can benefit from the expertise and in-depth knowledge of a CPA.
- You are just starting your business. A CPA can help you get started on the right foot by helping you see the big picture or providing advice on how to structure their business.
- You are being audited. CPAs can support you throughout the whole audit process and represent you in front of the IRS.
- You own a public corporation. Public corporations are required to have audited financial statements prepared by a CPA.
It is important to note that tasks such as management accounting, creating budgets, keeping track of business performance metrics, and financial statement analysis can be performed by regular accountants and CPAs. However, many clients who want to ensure that they’re getting top quality advice and services that meet the highest industry standards prefer hiring CPAs.
Best CPA Accounting Firm in Princeton
If you think a CPA can be a valuable resource for your business, the next step is finding the most reliable professionals to work with. Lear & Pannepacker, LLP is the best CPA accounting firm in Princeton, NJ. They can provide everything from accounting, bookkeeping, and tax support to audit & assurance, business advisory, and CFO services.
So if you’re ready to take the first step in growing your business and hitting your financial goals, get in touch with us today!
You may be interested in: Becoming a CPA: How to Choose the Right Program