What does CPA stand for?
CPA stands for Certified Public Accountant. To be “certified” the accountant must be State licensed. Although each state has their own specific requirements to obtain a professional license, all states require that the accountant pass a uniform written exam. In addition to passing the exam, most states require post graduate college education and some professional experience.
What does a CPA do?
Accountants perform and manage the record keeping and financial needs for businesses. An accountant who is a licensed CPA is permitted to perform the additional services of performing financial audits and representing taxpayers before the IRS. To prepare graduate students for a CPA career, most university master’s programs in accounting have 2 separate tracks; one in the field of tax and the other in the field of audit. Some CPAs work in the private sector, meaning that they are employed in the accounting department of a company. Others work in the public sector, meaning they hire their services out to the public.
Some of the basic services a CPA offers in the public sector are:
- Income Tax Preparation for individuals, businesses, trusts, non-profits, and estates
- Preparation and help with Payroll taxes and associated quarterly filings
- Tax Strategies to help individuals and businesses (i) reduce their tax burdens, (ii) achieve their financial goals, and (iii) grow their businesses.
- IRS problem resolution and Audit Representation
- Bookkeeping and Adjustments by helping businesses maintain accurate financial records
- Financial Statement Audits
What is the difference between an accountant and CPA?
A CPA is a Certified Public Accountant, meaning that they are state-licensed and comply with professional standards to maintain that license. A CPA has an advanced college degree (usually a master’s degree), whereas anyone who has some sort of accounting background may proclaim themselves as an “accountant”. A CPA must pass a comprehensive exam and have professional experience to obtain their license. They are required to renew their certification regularly with ongoing qualifications throughout their professional careers.
All work performed by a CPA must meet professional standards. Accountants who do not have CPA licenses do not have any professional standards that they must adhere to. In addition, a CPA firm must go through a peer review of fellow certified public accountants if any attestation services are performed. In contrast, accountants who do not have licenses, have no governing body to monitor their actions.
A CPA can represent a taxpayer before the IRS. An accountant who does not have a CPA license or is not an IRS enrolled agent cannot represent a client before the IRS. A CPA can file a power of attorney to handle all affairs of a client with IRS representation.