THE DIFFERENCES BETWEEN A CPA AND A REGULAR ACCOUNTANT

Certified Public Accountants (CPAs) and regular accountants perform almost similar functions. While all CPAs are accountants, all accountants are not CPAs. Here are some of the differences between CPAs and general accountants.

LICENSING

A Certified Public Accountant (CPA) is a general accountant who has passed rigorous testing and met strict jurisdictional licensing requirements. A general accountant can only become a CPA after passing certain tests conducted by the country’s respective Institute. In the US, requirements vary by state, but they typically require minimum educational training (usually a bachelor’s degree in accounting), passing the CPA exam as well as meeting minimum experience requirements. Contact CPA Henderson NV.

Candidates for the CPA credential take a uniform exam, administered by the American Institute of CPAs (AICPA). The exam tests one’s knowledge and application of accounting principles and concepts in four main areas:

•Financial accounting and reporting

•Regulation

•Auditing and Attestation

•Business environments and concepts

After graduation and a year of practical experience under a CPA, a candidate must pass a comprehensive test of tax, auditing, business, and general accounting skills. After getting licensed, CPAs are also required to maintain their professional competence by continuing to take educational classes throughout their career. Continuing education helps CPAs stay up to date on accounting best practices and keep up with the changes in the accounting world.

A general accountant, on the other hand, is anyone who can perform the basic functions of recording and reporting of financial and business transactions. Although typically an accountant does have a degree in accounting or related field, it’s not a strict requirement.

General accountants will often perform tasks such as maintaining general business accounts, bookkeeping and handling simple tax matters, among other duties. A general accountant looks after financial records and has a good knowledge of cash flow, owner’s equity, balance sheet and chart of accounts, and how they’re going to affect the business. Nonetheless, general accountants with the appropriate level of training and experience can perform a broad range of services.

FIDUCIARY RESPONSIBILITY

You can expect accountants to prepare three main types of financial statements: compiled, audited and reviewed. CPAs can provide all three kinds of financial statements while a general accountant can only prepare a compiled financial statement. Many private, as well as public businesses that are required to have their financial statements audited or reviewed, will find that only a CPA can audit and review financial statements and provide the relevant reports. As such, this is one of the main factors to consider when deciding between going with a general accountant or a CPA.

Small companies that don’t sell shares, for example, may get along fine with a general accountant. However, larger firms selling stock in the securities exchange need the expertise of a CPA to provide audited statements so investors can judge the stock’s worth.

TAXES AND REGULATIONS

General accountants may prepare proper returns, but working with a CPA comes with distinct advantages. A CPA is likely to be more knowledgeable in tax codes due to their rigorous educational training and licensing examination.

One other crucial factor is that CPAs are eligible to represent their clients before the IRS (Internal Revenue Service) in the event of audit support requirements, while general accountants are not.

CODE OF ETHICS

The accounting profession, like many others, presents numerous circumstances when ethical considerations have to be made. While general accountants should maintain acceptable ethical standards, they are not bound by a strict code of ethics or the need to meet the high standards of professionalism expected of a CPA.

Moreover, CPAs are considered to have the legal obligation and power to act on and behalf of their client’s best interests. General accounts are not considered to have a fiduciary responsibility to their clients. Read more….