A lot of people think that CPA’s and accountants are the same. Most even use these terms interchangeably. However, a CPA and an accountant are different. It is important to know how to differentiate one from the other, especially if you are working with them.
To make things easy, you have to remember that a CPA is an accountant too. However, not all accountants can be or are CPA’s. CPA’s are accountants with a higher status, at least in the judging eyes of the corporate world.
A CPA is an acronym for certified public accountant. In order to be a CPA, you need to have an extensive training and education. You also need to pass the CPA exam that tests your accounting proficiency. This is required in order to be a licensed practitioner. Auditing, practicing the field, and continuing education are most imperative if you want to maintain that license you’ve worked hard for. Note however that there are some states that require CPAs to have worked in a public accounting firm for at least two years in order to practice the profession.
Licensed CPA’s also enjoy the perks of being able to open their own accounting firm or stand as a partner in a prestigious firm. They are able to climb the corporate ladder more quickly than their non-certified counterparts and usually hold senior finance roles, like Chief Financial Officer and financial controllers after several years of practice. Overall, becoming a CPA also opens you to innumerable career options that’ll give you a fatter paycheck. This is one of the reasons why many accountants want to become CPA’s.
Accountants, on the other hand, are also called non-certified accountants. There are states that don’t have any educational requirement for accountants. However, most will ask for a certain number of study hours for those who want to prepare taxes. Most of the time, accountants are asked to pursue a continuing education every year.
Part of the job of accountants, whether CPA’s or non-certified, is to provide financial statements. These are then reviewed, audited, and compiled. Only CPA’s can review and audit financial statements. The review process requires the CPA to verify the information in the statement. He/she will have to thoroughly describe the review and its findings. To audit the statement, the CPA has to test and examine the financial records of a company fairly.
Hiring a CPA most often requires higher fees, since they have higher standards and follow stricter codes when it comes to auditing and providing other services. This is why many people hire non-certified accountants, especially when preparing easy financial statements. However, if you want your financial statements to be audited and reviewed, hiring a CPA is the only option.
Now that you know the difference between the two, you’ll certainly see how much more in-demand CPA’s are. So, if you are an aspiring accountant, make sure you include passing the CPA exams in your list of “must-accomplish” in the future.