What Is a CPA & What Do They Do?

Becoming a Certified Public Accountant (CPA) gives an accountant higher standing in the eyes of business contacts, professional peers, regulators, and clients alike. This is because a CPA has met minimum education requirements, passed a rigorous four-part exam, and agreed to abide by a code of ethics.

The CPA designation continues to be the most highly-sought after and versatile credential for accountants.

Public Accounting – What Can A CPA Do That Other Accountants Cannot?

Public accounting encompasses a wide range of accounting, auditing, tax, and consulting tasks for corporations, small businesses, non-profit organizations, governments, and individuals. Any qualified public accountant can do most of these tasks; however, a CPA can do two things that an accountant without a CPA license cannot:

  1. Prepare audited or reviewed financial statements and file a report with the Securities and Exchange Commission (SEC). All public companies must file audited financial statements with the SEC.
  2. Represent clients in front of the Internal Revenue Service. (However, a non-CPA who is an attorney, enrolled agent, enrolled retirement plan agent, or enrolled actuary can also represent clients.)

Also, most states limit non-CPA ownership of CPA firms to 49 percent; although a few states (New York and Delaware are notable examples) require that CPA firms be 100 percent CPA-owned.

CPA Firms – What Does a CPA do When Working for an Accounting Firm?

CPAs at CPA firms typically work in one of three areas:

  1. Tax services: These services include preparing and filing federal, state, and local tax returns and working with organizations and individuals during the year to minimize their tax obligations. In case of an IRS audit or questions by state and local tax authorities, a CPA firm can represent their clients.
  2. Audit/assurance services: Assurance services are independent professional services that improve the quality or context of both financial and nonfinancial information for decision makers. Auditing is an objective evaluation of financial and economic information to make sure it is correct and meets criteria such as generally accepted accounting principles (GAAP).
  3. Management services: These services provide assistance with supervising and managing an organization’s or individual’s day-to-day activities and providing strategic and long-range planning. Such services may include cash management, budgeting, and financial planning; preparing financial statements; insurance coordination and risk management; investment guidance; and estate planning.

CPAs in Other Career Settings

Many businesses, especially large corporations, also look for CPAs to fill accounting positions, especially higher level and management positions. CPAs may work in areas such as financial accounting and reporting, management accounting, tax accounting, and internal auditing.

Sponsored Content

CPAs also work for government agencies, performing financial, performance, and compliance audits of government agencies and of companies who do business with the government. Another role for CPAs is with law enforcement agencies, helping to investigate financial crimes or other crimes that leave a financial trail.

CPAs may also follow career paths in non-profit organizations or academia, or they may start their own business.

CPA Specialty Fields

Some of the growing technical CPA fields include:

  • Consulting Services – CPAs work with companies to help them identify problems, find solutions, and implement changes. For example, a company’s annual tax return might be in great shape, but it needs an expert to review quarterly financials.
  • Forensic Accounting Services – CPAs may decide to train as experts in fraud detection and prevention. Those trained in forensic accounting can help an organization determine if employees are making fraudulent transactions or whether someone is embezzling money from the company.
  • International Accounting – CPAs may work outside of their home countries to assist in various tasks. Examples of these responsibilities include accounting for import and export regulations, translating financial reports so that companies understand them better, working on updating international accounting standards to better suit the needs of different cultures, and advising about financial crimes that may not be common in their home country.
  • Environmental Accounting – CPAs will help organizations calculate and manage their environmental costs, including determining whether they need an environment audit or what regulatory agencies require types of external reports.

What Types of Skills Will You Need to Become a CPA?

You’ll need to be persistent and determined, have excellent communication skills, and use the ability to think critically and problem solve. You should also be detail oriented as well as able to meet deadlines with accuracy. Other applicable strengths include:

  • Analytical research skills
  • Interpersonal skills
  • Tech savviness
  • High ethical standards
  • Marketing/client focus
  • Project management
  • A broad business perspective

More important than your grades in school or how many hours you spend at a desk is whether this type of work interests you. If you don’t mind desk work, managing others, or thinking creatively about money and taxes, then becoming a CPA might be the right career choice for you.

Sponsored Content