CPA vs Accountant
CPA Exam Basics
Your 1-stop-shop to CPA requirements, exam content & structure, plus tips to pass!
CPA vs Accountant is an unending debate that has been going on for years now. "CPA" is the designation given to individuals who pass the CPA Exam administered by the American Institute of Certified Public Accountants (AICPA®). Whereas accountants record, maintain, and report a company's financial affairs in order to show its clear financial position.
To become a Certified Public Accountant (CPA), you need to complete educational requirements, work in the accounting field, and pass the CPA Exam. On the contrary, accountants only need to earn a bachelor’s degree in accounting before starting their career. Simply put, a CPA is likely to have greater accounting knowledge than those without the designation, and to be capable of performing duties that regular accountants cannot.
What Exactly Are Accountants and CPAs?
CPAs are essentially licensed accountants who offer assistance to companies and businesses in the areas of expense and investment management, as well as financial planning. Additionally, they are able to provide more advanced taxation and auditing services than unlicensed accountants. CPAs are in demand in larger global ventures like the Big Four, MNCs, and the public sector, making it a one-stop license for a myriad of opportunities.
A CPA’s primary responsibilities consist of:
- Auditing public organizations
- Filing and signing state, federal, and local tax returns
- Filing SEC reports
- Managing clients' budgets, accounting, and cash flow
- Representing clients in tax matters
- Risk and business management consulting
- Representing customers throughout audits
- Assisting clients in lowering their tax obligations
Accountants record and report financial transactions, and complete tasks such as bookkeeping, assisting with tax-related matters, and general accounting duties. They analyze financial reports, records, budgets, and tax returns to provide a broader view of a company's financial situation. Their responsibilities vary greatly by industry and employer; however, the usual duties of an accountant are as follows:
- Reconciling credit and bank accounts
- Analyzing income statement variances
- Aiding management in budget planning
- Keeping records of financial transactions
- Providing financial advice
- Ensuring compliance with federal tax regulations
- Enhancing accounting practices
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What Is The Difference Between a CPA and an Accountant?
Despite the fact that CPAs and accountants work in the same industry, there are significant differences between them in many aspects, from educational requirements to skill sets. Let's examine how distinguishable their jobs are!
Licensure, Education, and Training
There are significant differences between an accountant and a CPA:
- No license is required to become an accountant, whereas a license is a must to become a professional CPA.
- Applying for the CPA Exam requires a bachelor's degree with a major in finance and accounting.
- CPA professionals must pass the CPA Exam and meet stringent licensing requirements in the state where they intend to practice.
- The CPA license is given out by the 55 State Boards of Accountancy in the US.
- Each state and jurisdiction within the United States has its own CPA Exam and licensing requirements.
- The application process for the CPA Exam is entirely dependent on the state in which you intend to obtain your CPA license.
- If you are applying to any U.S. state, you will do so through CPAES (CPA Examination Services), a division of NASBA that provides a comprehensive array of CPA Exam-related services to state boards of accountancy. The CPAES consists of application processing, evaluation of credentials, and score reporting.
In some states, in order to take the exam, you must be a citizen of the United States, a resident of the state, or both. However, International CPA candidates may be exempt from such requirements if they are non-US citizens. CPA candidates are required to complete 150 hours of university coursework, including specific hours of advanced accounting, auditing, and business core courses.
The minimum educational requirement for accountants is a bachelor's degree in finance, business management, accounting, or a related field. That being said, many employers prefer accountants with master's degrees. Training to become an accountant typically begins with an internship program and on-the-job training. To advance their careers, accountants may obtain the following additional credentials:
- Chartered Financial Analyst (CFA)
- Certified Management Accountant (CMA)
- Certified Internal Auditor (CIA)
- Certified Fraud Examiner (CFE)
Code of Ethics and Requirements
Since there is no specific governing body for accountants, they do not have a specific code of ethics to follow. On the other hand, CPAs are members of the American Institute of Certified Public Accountants and must adhere to the AICPA's established ethical principles and professional standards. The Code of Ethics includes the following five categories:
- Responsibilities: CPAs are held accountable for providing exceptional professional services.
- Public benefit: Every action of a CPA must serve the public interest.
- Integrity: CPAs are required to adhere to the ethical standard and conduct themselves accordingly.
- Objectivity and autonomy: CPAs are required to maintain objectivity and avoid conflicts of interest.
- Due care: In order to perform to the best of their abilities, CPAs must pursue continuing education, guidance, and evaluations.
In addition to possessing a license, CPAs are expected to adhere to a strict code of ethics and meet the high standards of their profession. Accountants are not required to adhere to a particular code of ethics because there is no centralized body that governs the profession.
Exam and Licensing Cost
CPA courses and certifications are more expensive than accountancy courses and certifications. The CPA Exam has multiple levels of fee requirements, such as:
- CPA Exam Application Fee ($30 to $200)
- Examination Fee (around $950)
- CPA Exam Review Course Cost ($1,200 and $3,600)
- Rescheduling Fee (date change fees and prometric fees)
- CPA Exam Retake Fee/CPA Exam Registration Fee ($50 to $200)
- International CPA Exam Fees ($371.55 per CPA Exam section)
- CPA Exam Cancellation Fees and getting a refund (not refundable if Notice To Schedule or NTS expires)
Once you have passed the exam, you will have to pay a few more fees to obtain the license. The fee structure is listed below:
- CPA Ethics Exam Fee ($150 and $250)
- CPA Licensing Fee ($100 and $500)
- CPE Costs ($0 and $300)
CPA vs Accountant Salary
CPAs earn significantly more than non-CPA accountants. Without bonuses, a CPA's annual salary averages $119,000. CPAs with less than one year of experience earn $70,000 annually, while those with more than 20 years of experience earn $150,000. In fact, according to the Bureau of Labor Statistics, CPAs earn 10% to 25% more than non-certified accountants. However, salaries of CPAs and non-certified accountants vary by industry. They can be higher than average in industries experiencing a lot of growth, such as financial technology or software.
Accountants must possess a wide range of skills to be successful in any business environment. After obtaining a bachelor's degree, they must ensure they are competent in financial data management, advice and analysis, reporting compliance, and financial report writing.
CPAs acquire a skill set that enhances their accounting abilities and positions them among the most qualified and knowledgeable accountants. CPAs are required to have competencies in accounting and business concepts, research, analytics, problem-solving, communication, project management, and ethical standards.
Accountants and certified public accountants are tasked with assisting individuals and businesses with their finances, as well as clients with staying on track and informed about the financial status of their business or personal assets. Nevertheless, despite some similarities, these positions have distinct functions and many unique responsibilities.
All CPAs Are Accountants, but Not Every Accountant Is a CPA
In a number of states, anyone can call themselves an "accountant." However, all states require CPA candidates to pass the Uniform CPA Examination in addition to meeting education, experience, and ethical requirements. State boards of accountancy only then grant individuals licenses to practice.
Taxes and Regulation
Accounting professionals are permitted to prepare tax returns, although they may have less knowledge of tax codes than a CPA. CPAs can represent clients before the IRS and sign tax returns in the event of a tax audit, while accountants have no credibility with the Internal Revenue Service (IRS).
A fiduciary is a person or entity with legal authority to act on behalf of another. Bankers, financial advisors, and board members may be included. CPAs are considered to have the legal responsibility and authority to act in the best interests of their clients. Even if they adhere to specific ethical standards, accountants who do not hold a CPA license are not considered fiduciaries for their clients.
Is a CPA Better Than an Accountant?
Yes. CPAs are a little more qualified than accountants to accomplish accounting tasks, and are recognized as credible experts in the field. CPA-designated professionals are trained in generally accepted accounting principles (GAAP) and best practices.
Should I Hire an Accountant or a CPA for My Business?
The decision to hire an accountant or CPA is determined solely by your business’ needs and financial situation. If you recently opened a small business, you may choose to handle the accounting on your own. As your business expands, though, you will require the services of a financial advisor and tax planner. While a professional accountant will assist you with bookkeeping and payment management, a CPA will assist you with your business’ growth, as well.
When to Hire a CPA and an Accountant?
It is recommended that you consult a CPA before establishing a business. It will aid in putting things into perspective. You will need an accountant to maintain financial records, manage payments, and plan your taxes.
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