Is a CPA the Same as an Accountant? There Is a Difference.
A CPA is not the same as an accountant. Typically, an accountant has achieved a bachelor’s degree in accounting. A CPA, or Certified Public Accountant, is a designation earned after completing specific educational and work requirements, and passing an exam.
These requirements are specific to each state. This means a CPA is likely to be more knowledgeable in the field of accounting than someone who has not earned the designation. A CPA is also allowed to perform certain duties that regular accountants are not permitted to do.
Here’s What We’ll Cover
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What Does a CPA Do?
Certified Public Accountants analyze and report on financial data. Their duties can be broken down as follows:
- Establish, update or maintain a company’s accounting policies and procedures, including bookkeeping methods, monitoring and reporting.
- Oversee or participate in the creation of budgets.
- Oversee internal audits (to ensure accuracy of reporting).
- Prepare and generate reports for government audits or for tax purposes.
- Prepare and present financial statements to the company’s management or Board of Directors.
- Review and provide consultation on compensation, benefits, assets and spending of company money.
- Manage Accounts Payable and Accounts Receivable.
- Stay up to date on changes in the finance industry and government regulation. Ensure the company updates policies or procedures to conform.
Although the above lists a number of duties of a CPA, it is important to note that CPAs should not offer services where they both audit and consult for the same business, in order to avoid conflicts of interest.
The CPA, or Certified Public Accountant, is not an international designation, it is American only. For instance, in Canada a “CPA” designation exists, but it stands for “Chartered Professional Accountant”.
Is a CPA Better Than an Accountant?
A CPA is better qualified than an accountant to perform accounting duties, and recognized by the government as someone who is credible and an expert in the field. Individuals who have received a CPA designation are trained in generally accepted accounting principles and best practices (including online tools). Typically, they are also much better paid.
A Certified Public Accountant is allowed to perform certain duties that regular accountants are not permitted to do, such as preparing an audited financial statement, or acting as a taxpayer or company representative in discussion with IRS Revenue Officers or Counsel. An accountant without the CPA designation cannot do any of these things.
What Percentage of Accountants Are CPAs?
According to the Accounting Institute for Success, in 2016 approximately 50% of accountants in the United States were CPAs. The Institute believes the growth rate of CPAs, which they calculate at 1%, is too low.
The Bureau of Labor Statistics (BLS) projects the employment of accountants (not CPA specific) to grow 10% from 2016 - 2026. Since the average growth rate for all occupations is 7%, this figure is considered to be excellent. The reason for this higher number is that as the economy grows, the demand for accountants will increase.
What Is the Average Salary of a CPA?
According to the Journal of Accountancy, the average salary of a CPA in the United States in 2017 was $119,000. This figure does not include bonuses or other benefits.
The Journal notes that:
- CPAs with less than one-year experience earn an average of $66,000 per year.
- CPAs with 20 years experience earn $152,000 in salary per year.
Can You Get a CPA Without an Accounting Degree?
Although every state has different qualifications for certification, all of them require a degree with a certain number of hours dedicated to the study of accounting. Some states specifically do require a degree in accounting. Along with the education and work experience, an exam is also required.
The CPA exam is administered in four parts, broken down as follows:
- Auditing & Attestation
- Financial Accounting & Reporting (this is generally considered to be the hardest part of the exam)
- Business Environment & Concepts
Those writing the exam have 18 months to complete all 4 parts. The exam is considered difficult and applicants must score at least 75% in every part.
CPAs must complete continuing education every year after receiving their designation, in order to keep it.
Usually an exam is the last step in the process of receiving a CPA, however there are a handful of States, like Alabama, that allow a candidate to find and obtain the necessary work experience after completing the exam. In those cases, the candidate receives a certificate, and not the CPA designation, until the required work experience has been completed.
There are some states where candidates must be a United States citizen in order to take the exam, or a resident of the state, or both. Many require candidates to have a social security number.
How Long Does It Take to Become a CPA?
The length of time it takes to become a CPA will depend on the personal situation of the candidate, their level of education, the state they live in and the state’s qualifications. The difference between state requirements for obtaining the CPA designation can be considerable, for instance some states only require one year of work experience while others require two.
Considering the average length of time it takes to achieve the required degree and work experience, it will likely take on average six years to achieve the CPA designation, if starting from scratch.