Certified Public Accountant
Overview
A Certified Public Accountant (CPA) is a professional designation given by the AICPA to individuals who pass the Uniform CPA Examination and meet the education and experience requirements. The CPA designation helps enforce professional standards in the accounting industry. Other countries have certifications equivalent to the CPA.
Requirements
To become a CPA, a candidate must meet educational, examination, and experience requirements. The specific requirements can vary by state due to the state-based nature of the licensure. However, the three Es—Education, Examination, and Experience—are generally required.
Education
The educational requirement for CPA candidates is a bachelor's degree in accounting or a related field. Some states require a specific number of semester hours in accounting and business courses. In addition, many states require candidates to have completed 150 semester hours of college education—an additional 30 hours beyond the usual four-year bachelor's degree.
Examination
The Uniform CPA Examination is a computer-based test comprised of four sections: Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). The exam is designed to assess the knowledge and skills entry-level CPAs need to practice public accountancy.
Experience
Most states require CPA candidates to have a certain amount of professional experience in public accounting. The experience requirement typically ranges from one to two years.
Roles and Responsibilities
CPAs perform a variety of roles in different areas of accounting. These areas include public accounting, corporate accounting, internal auditing, and tax accounting.
Public Accounting
In public accounting, CPAs may work for firms ranging from small, local accounting practices to large, international organizations. Public accountants perform a broad range of accounting, auditing, tax, and consulting tasks for their clients, who may be corporations, governments, nonprofit organizations, or individuals.
Corporate Accounting
Corporate accountants, also known as private or managerial accountants, work for individual companies and are responsible for internal financial documentation, including budgeting, performance evaluation, cost management, and asset management.
Internal Auditing
Internal auditors verify the accuracy of an organization's internal records and check for mismanagement, waste, or fraud. Internal auditing is an area of accounting that focuses on ensuring an organization's governance, risk management, and control processes are operating effectively.
Tax Accounting
Tax accountants prepare corporate and personal income tax statements and formulate tax strategies. Tax strategies may involve issues such as financial choice, how to best treat a merger or acquisition, deferral of taxes, when to expense items, and the like.
Ethics
CPAs are expected to adhere to a set of professional ethics. The AICPA, state boards, and other professional organizations maintain and enforce these ethical standards. Violations of these ethical standards, including dishonesty, fraud, or deceit, can result in penalties such as censure, suspension, or revocation of an accountant's CPA license.