A Certified Public Accountant (CPA) is an accountant who has met state licensing requirements. Although requirements vary by state, they typically include minimum education (usually a bachelor’s degree in accounting) and experience requirements, plus passing the CPA exam.
CPAs also have to complete 40 hours of continuing professional education every year. The CPA credential is considered by many people to represent the commitment of an accountant to meeting high standards.
The Uniform CPA Examination, administered by the American Institute of CPAs (AICPA), has four sections: Regulation, Financial Accounting and Reporting, Business Environment and Concepts, and Auditing and Attestation. Total testing time is 14 hours. Less than 50 percent of exam-takers pass a section of the exam on the first try, according to the AICPA.
Accounting is basically the recording and reporting of business and financial transactions. Anyone who does that function can call themselves an accountant, even without a degree in accounting, although typically an accountant does have an accounting-related degree.
Often, non-certified accountants perform tasks such as bookkeeping, maintaining general business accounts, and taking care of simple tax-related matters, according to the Pennsylvania Institute of Certified Public Accountants. However, all accountants with the appropriate training and experience can perform a wide range of services.
Accountants prepare three main types of financial statements: audited, reviewed, and compiled. Only a CPA can prepare an audited financial statement or a reviewed financial statement, although any accountant can prepare a compiled financial statement. While most small businesses may never require an audited or reviewed financial statement, public companies must produce audited statements. When individuals or business make the decision between going with a CPA vs. an accountant, this is one of the biggest considerations they take into account.
CPAs earn 10 to 15 percent more money than non-CPAs and have better job security, according to the Oklahoma Society of CPAs.