What is a CPA?
A Certified Public Accountant (CPA) is an accounting professional who has successfully achieved the highest degree of professional qualification in accounting. CPAs have achieved this qualification by completing a rigorous exam process that tests their knowledge and understanding to ensure they meet all the requirements for certification. The certification includes the following:
- Completing educational courses related to financial, managerial, auditing, and taxation accounting.
- Gaining relevant experience.
- Taking examinations with the appropriate governing board.
CPAs are held to high ethical standards enforced by state regulations, assuring the public that services will be conducted professionally and ethically. Due to this status, organizations often rely on their expertise with audits, taxes, and business matters. They provide essential tax advice to private individuals and businesses, from preparing documents to filing taxes. Many organizations seek a CPA's help in safeguarding confidential financial information, developing budgeting plans, improving performance metrics, investing wisely, and helping avoid potential legal repercussions concerning finances.
History of the CPA Profession
The profession of Certified Public Accountant (CPA) has a long and impressive history. The first known accountants appeared as early as 3000 BC in Mesopotamia, where accountants were responsible for keeping records of trading activities. In ancient Greece and Rome, bookkeepers and auditors were appointed to oversee the accounts of government departments. During medieval times, accounting was primarily reserved for members of the clergy.
Modern accounting practices began to develop in the 19th century when accountants started to work in private industry and public service. In 1887, William Welch Deloitte opened the first professional accounting firm in London, quickly establishing itself as a field leader. The development of certified public accountant qualifications began soon after and was formalized with the founding of the American Institute of Certified Public Accountants (AICPA) in 1887. The AICPA established professional standards, ethics, and the CPA examination, which is still used today.
Since then, the profession of CPA has continued to grow and develop as more small businesses seek their expertise in tax planning and auditing. Today, Certified Public Accountants (CPAs) are invaluable resources to organizations of all sizes. They provide financial planning, budgeting, taxation advice, audit and assurance services, and more.
What Does a Certified Public Accountant Do?
The primary responsibilities of a Certified Public Accountant (CPA) in business and industry are to ensure the accuracy and validity of financial information. They often act as a business consultant and advisor, offering guidance on financial matters such as proper accounting methods, taxation regulations, budgeting strategies, effective management of resources, and compliance with industry standards. CPAs must be mindful of every detail of their client's finances and have an intimate knowledge of the applicable laws and regulations to provide the most comprehensive advice possible. They must analyze data thoroughly and make critical decisions quickly while remaining ethical and trustworthy.
CPAs prepare reports that accurately reflect a company's finances. These reports include auditing balance sheets, income statements, profit margins, inventories, value-added taxes, cost estimates, cash flow forecasts, capitalization levels, depreciation cycles, etc. In addition to providing accurate financial statements for businesses or individuals to make informed decisions based on data analysis results or economic trends presented in these documents.
Accountants can assist companies or individuals in identifying areas where they can save money on their taxes or expenses, helping them manage their current budget in ways that will benefit them financially for years to come.
Private Accounting CPA
Private accounting, also known as industry or corporate accounting, involves the employment of accountants by a single organization to work in its internal finance department.
Certified Public Accountants (CPAs) in private accounting serve a variety of roles. Primarily, they oversee financial records and ensure accurate reporting of the organization's economic performance. CPAs must prepare complete and accurate financial statements for their clients or employers. Additionally, they must create, maintain, and review budgets while staying abreast of changes in local and federal regulations.
In addition to overseeing all bookkeeping activities, CPAs must be aware of the latest tax requirements and ensure their clients or employers comply with all relevant laws. These rules include obtaining appropriate licenses for doing business and handling filing responsibilities related to sales and income taxes.
Furthermore, CPAs can also act as consultants in strategic planning by helping their clients set realistic targets for growth. Lastly, cash management is another important responsibility that falls into their lap - from analyzing cash flow statements to monitoring accounts receivables, CPAs are expected to ensure the smooth operation of their organization's financial dealings.
Top Responsibilities for CPAs in Private Accounting
- Overseeing financial records
- Preparing financial statements
- Creating, maintaining, and reviewing budgets
- Ensuring compliance with local, state, and federal tax requirements
- Strategic planning
- Cash management
- Monitoring and improving financial management systems
Public Accounting CPA
The term "public accounting" describes the services accountants provide to multiple clients, including individuals, small businesses, and large corporations.
CPAs in public accounting are responsible for taking on a variety of tasks. Chief among those duties is preparing financial documents such as tax returns, balance sheets, and income statements, which help provide an accurate picture of a business's financial situation. In addition to document preparation, CPAs in public accounting also analyze budgets and offer financial planning services.
This analysis can help businesses find areas of improvement concerning their current spending and income. Bookkeeping services also fall under the purview of CPAs in public accounting as they maintain records tracking all purchases, investments, and expenses made by their clients.
Beyond just the maintenance or bookkeeping side, CPAs in public accounting provide consulting services to their clients meant to aid them in reaching their short-term and long-term financial goals. These consultants give advice when it comes to making investments and budgeting decisions explicitly tailored to each client's individual needs.
Lastly, CPAs offer auditing services to ensure accuracy with a client's financial documents and compliance with government regulations regarding taxes and finance. These auditors double-check that all reported figures on documents such as income statements or balance sheets are accurate and produce reliable reports that can be trusted at all costs. All these responsibilities together make up the daily work of certified public accountants.
Top Responsibilities for CPAs in public accounting
- Preparing financial documents
- Analyzing budgets
- Financial planning
- Bookkeeping
- Consulting
- Auditing
How Do I Become a CPA?
Becoming a Certified Public Accountant (CPA) is a process that varies across different states, but there are some basic requirements all CPA candidates must meet. The four prerequisites for becoming a CPA—Education, Examination, Experience, and Ethics—together form the core of the professional qualification route to the job.
Once you have completed the prerequisite educational qualifications, you must pass the Uniform Certified Public Accountant Examination (CPE). This exam, administered by the American Institute of Certified Public Accountants (AICPA), typically covers accounting principles and taxation procedures. Passing this exam is essential to becoming a licensed CPA – without it, one cannot practice public accountancy in most states.
The next step towards becoming a CPA is to have the necessary experience requirements. Depending on the state, this typically consists of two years of practical work experience in a public accounting firm or a related field such as auditing, taxation, or financial consulting. This experience allows you to gain hands-on knowledge and develop vital skills necessary for professional success.
Lastly, CPAs must sign a statement of ethics before becoming certified. This ethics code is set by the AICPA and is designed to ensure that CPAs maintain the highest levels of professional conduct in their work.
CPA Exam
The CPA Exam, or the Uniform Certified Public Accountant Examination, is administered by the National Association of State Boards of Accountancy (NASBA). It is a comprehensive assessment program to ensure that all candidates possess the necessary knowledge and skills to become practicing public accountants.
The exam consists of four different sections:
- Auditing and Attestation (AUD)
- Financial Accounting and Reporting (FAR)
- Regulation (REG)
- Business Environment and Concepts (BEC)
Each section contains multiple-choice questions, as well as written communication tasks.
The exam has a strict time limit of 14 hours, divided into four sections. The total number of test questions also varies from section to section. To pass the exam, candidates must demonstrate knowledge in all areas by obtaining a minimum score of 75 out of 100 points. The CPA Exam is offered consistently throughout the year at Prometric testing centers across the United States and territories.
CPA Educational Requirements
To become a Certified Public Accountant (CPA), candidates must possess a college degree and hold at least 150 semester credit hours in college-level accounting courses. For many candidates, this means pursuing an undergraduate degree in accounting, but depending on their circumstances or interests may choose to obtain these credits through other relevant education or training programs. The courses generally acceptable for the CPA Exam include accounting, auditing, taxation, and finance.
Professional CPA Requirements
In addition to the educational requirements for becoming a CPA, most states have additional professional criteria that must be met to be licensed. These requirements vary from state to state but typically include the following:
- Passing scores on the CPA Exam.
- Completing a specified number of credit hours in relevant accounting courses.
- Obtaining a certain amount of supervised work experience.
Most states also require CPAs to take a minimum number of continuing professional education (CPE) credits each year to maintain their license.
In most states, individuals must complete two years of practical work experience in a public accounting firm or a related field like auditing, taxation, or financial consulting. Additionally, the AICPA has established six principles for ethical conduct for CPAs, which must be adhered to maintain a CPA license. These principles are integrity, objectivity, professional competence, due care, confidentiality, and professional behavior.
Why Get Certified as a CPA?
Becoming a Certified Public Accountant (CPA) is an excellent way to advance your career in accounting and finance. With a CPA license, you can practice public accountancy in all 50 states and many other regions worldwide. As a CPA, you can gain access to exclusive job opportunities that pay higher salaries and offer more growth potential.
CPA vs. Accountant: Do They Have Different Responsibilities?
The role of a CPA and an accountant can be very similar in many respects, but some significant differences distinguish the two. Both CPAs and accountants are qualified professionals who specialize in accounting and finance, so they possess a similar base of knowledge in financial matters. The primary difference is that CPAs have passed a rigorous exam and obtained licensure. In contrast, accountants do not necessarily have to undergo this process to practice their profession.
CPAs are highly sought-after finance professionals with extensive knowledge and experience in accounting, taxation, auditing, and consulting. The state licenses them to provide various services, including preparing financial statements and tax returns, auditing financial records, providing advice on business operations and investments, and testifying in court.
Accountants also possess great expertise in accounting topics but are only sometimes licensed to provide the same services as CPAs. The scope of their responsibilities primarily depends on the type of organization or company they work for.
What Is CPA Accounting Software?
CPA accounting software solutions allow Certified Public Accountants (CPAs) to manage their client's financial information. These software programs are essential tools for CPAs and other finance professionals as they provide a fast, secure, and efficient way to process accounting data and generate reports. The software includes features such as invoicing, payroll, accounts receivable and payable, budgeting, financial reporting, and tracking of taxes. The software also allows users to securely share data with clients and other team members. CPA accounting software is a must-have tool for CPAs to streamline their processes and remain compliant with the latest industry standards.
The Best Accounting Software For CPA Firms and Accountants
CPAs and accountants require the latest accounting software to meet their ever-changing client demands. The best accounting software for CPA firms and accountants must offer various features, including invoicing, payroll, accounts receivable and payable, budgeting, financial reporting, tracking of taxes, secure data sharing, and other advanced tools.
Many accounting software providers exist, including Deltek, QuickBooks, Xero, FreshBooks, Wave Accounting, and more. These providers offer different features and pricing plans that attempt to cater to the needs of CPA firms and accountants. It's essential to compare various project accounting solutions to find the best one for your specific business and specific industry needs. For example, contractors within the construction industry require construction accounting software solutions to better enable CPAs to manage projects and track job costs.
Deltek Accounting Software
Deltek accounting software is a comprehensive accounting solution for CPA firms and accountants. The industry-specific software provides a range of features to help CPAs manage their clients' finances, including invoicing, payroll, accounts receivable and payable, budgeting, financial reporting, tracking of taxes, and secure data sharing. Deltek also has project-based tools such as business intelligence analysis and performance monitoring to help CPAs stay ahead of their competition.
How Does Deltek CPA and Accounting Software Power Project Success?
At Deltek, our mission is to deliver solutions that help our customers connect and automate the project lifecycle that fuels their business. We believe that better software means better projects. Our industry-focused expertise makes your projects successful and helps you achieve performance that maximizes productivity and revenue.