Accounting Finance

Accountant vs. CPA: The 5 Main Differences

Certified Public Accountants

Even though the terms “accountant” and “Certified Public Accountant” are often used interchangeably, these positions are not entirely the same. All Certified Public Accountants (CPAs) have experience as accountants, but they are also recognized as being experts in their field. In other words, not all accountants have the qualifications to become a CPA. The following are five of the main differences between an accountant and a Certified Public Accountant.

Education Requirements

Even though the terms “accountant” and “Certified Public Accountant” are often used interchangeably, these positions are not entirely the same. All Certified Public Accountants (CPAs) have experience as accountants, but they are also recognized as being experts in their field. In other words, not all accountants have the qualifications to become a CPA. The following are five of the main differences between an accountant and a Certified Public Accountant.

Education Requirements

An accountant usually has an associate’s or bachelor’s degree in accounting, but a college degree is not required for this position. For example, many people take on roles as accounts receivable clerks or collections specialists with only a high school diploma. These types of jobs may allow employees to gain enough experience in accounting to enter the field without the need for higher education. Employers will often overlook the lack of a formal degree when the candidate has experience as a reputable accountant.

A Certified Public Accountant (CPA) typically has a bachelor’s or master’s degree. Many states require 150 semester hours of accounting and business-specific coursework, as well as two years of public accounting experience. CPAs must also complete 80 hours of continuing professional education every two years to renew their license. This program is designed to help CPAs improve or maintain their professional competence.

Licensure

While accountants do not need any particular license to perform accounting services, CPAs are required to obtain a license in the state where they practice. To qualify for licensure in any state, they must first pass the Uniform CPA exam, which is administered by the American Institute of CPAs (AICPA). The exam tests for knowledge in four main areas: regulation, financial accounting and reporting, business environment and concepts, and auditing and attestation. This exam, which is the same in every state, is known for being very difficult. In fact, less than 50 percent of individuals pass the Uniform CPA exam on their first attempt.

Responsibilities

Accountants typically specialize in a particular area or business sector, and their roles will vary across different industries. The responsibilities of an accounting professional often extend far beyond filing taxes. Among their daily bookkeeping tasks, accountants may be in charge of budgeting, financial planning, or preparing compiled financial statements.

CPAs are qualified to do everything an accountant can do, but are also hired for more in-depth purposes. For example, a CPA may be in charge of preparing compiled financial statements, but is also qualified to prepare audited or reviewed financial statements. CPAs are regarded as trusted advisors who help their clients plan and meet their business goals while also assisting in other financial matters.

Tax Knowledge

Both accountants and CPAs prepare tax forms. However, CPAs are generally more knowledgeable on current tax codes due to their continuing education. In the event of a tax audit, CPAs are authorized to represent clients before the IRS. An accountant who is not a CPA can only represent a taxpayer if he or she is an attorney or a federally-authorized tax practitioner known as an enrolled agent (EA).

Fiduciary Duty

Accountants are expected to be competent, knowledgeable, and trustworthy. For a CPA, these expectations are even greater. This is because CPAs are considered to be fiduciaries, or trustees, who have the legal obligation to act on their client’s behalf. CPAs have a responsibility to act within the law while always keeping the best interests of their clients in mind. CPAs can lose their license if they fail to uphold the ethical obligations of their role as a trustee.

Janet Behm
Janet has over 25 years of experience as an Entrepreneur, Business Broker, and CFO; with specialties in Accounting, Tax, Systems Development, Internal Auditing, Management, Consulting, Contract Review, and Training. She has worked more...
You may also like
Accounting Seminar
Tax Saving Strategies for Business Owners
Best Business Structure for Small Business

Leave Your Comment

Your Comment*

Your Name*
Your Webpage