In the most general sense, a CPA, or Certified Public Accountant, is an individual who has met certain requirements in education, experience and examination. CPAs are certified to provide a broad range of financial advisory and external accounting services for their clients. Some services provided by public accountants include assurance (audit), tax compliance and advisory, mergers and acquisitions due diligence, and estate and financial planning.
In order to complete the CPA certification process, public accountants must pass the CPA exam and work in public accounting for at least one or two years. CPAs are not only required to pass a professional exam, but they must also meet continuing professional education (CPE) requirements on an annual basis to maintain their license.
Because accounting rules and regulations are continually evolving and changing, CPAs are required to take 120 hours of continuing education courses every three years.
Roles of a CPA
CPAs can perform many different roles. Those who choose to specialize in auditing will provide assurance for users of financial statements. Although CPAs are engaged by their clients to perform auditing services, the first responsibility of an accountant in public practice is to the public.
Investors, banks and regulatory agencies are among the list of parties who are generally the users of a company’s financial statements. The work of the auditor, or CPA, is to guarantee that the financial statements are free of “material misstatements,” or significant misrepresentations.
Because the public relies on the work performed by a CPA, it is very important that CPAs maintain independence from the company they are auditing. For example, a public accountant cannot audit a company for which any of his family members are employed in a top position.
CPAs also cannot make decisions for management, nor can they accept gifts from clients. Basically, a CPA cannot do anything that might appear by the public to impair his or her judgment.
Another area of specialization for CPAs is tax compliance and consulting. Those who choose this area are required to maintain knowledge about the most current tax rules and regulations. CPAs can perform both corporate and individual tax compliance for their clients.
A CPA can also function as a trusted business advisor or consultant. Companies will often elicit the services of a CPA for general business consulting, or for the implementation of new processes or systems. CPAs who act in an advisory role must also be mindful of rules related to independence.
Because they are required to maintain certain measures of independence from those clients in both fact and appearance, CPAs providing consultation services must be sure to maintain certain independence like auditors.
Additional Career Options
Although a large number of CPAs work in public accounting, there are other career options in the profession as well. Many CPAs work as private or industry accountants and perform internal accounting tasks, services and functions for a company.
A private accountant may act as an internal auditor and review and verify the company’s financial results, policies and internal controls. He or she may also work as a staff accountant and perform typical internal accounting duties. Other CPAs choose to use their knowledge and work as a professor at a university. Many CPAs have become entrepreneurs and use their accounting and financial knowledge to start and run their own business.
Zeshawn is a doctoral student in the Accounting & Management Department at the Harvard Business School. His research uses archival and field methods and covers managerial accounting topics including employee and organizational incentives, cost management and profitability analysis...
