Becoming a CPA (Certified Public Accountant) takes years of education and professional accounting experience as well as months of dedication to passing the exam, but it’s completely worth it though, In this article, we will be learning more about CPA.
A CPA is a trusted financial adviser, who has passed the CPA exam and met the required education and work experience before being licensed, CPA is known by many names in different states,
What is CPA?
CPA stands for Certified Public Accountant, is a designation or a title given by AICPA (American Institute of Certified Public Accountants) to every individual who passes the uniform CPA examination and meets the education and experience requirements.
History of CPA
The American Institute of Certified Public Accountants (AICPA) was formerly formed as the American Association of Public Accountants (AAPA) in the year of 1887, consisting of just 31 accountants. This Association was then succeeded by the Institute of Public Accountants, as a result, they had a membership of 1,150 and their name was also changed as American Institute of Accountants in 1917. Later in 1927, the American Society of Certified Public Accountants was formed which merged with the Institute in 1936, leading to the formation of AICPA (American Institute of Certified Public Accountants). The AICPA was establishing Accounting standards until 1973 when the Financial Accounting Standards Board (FASB) came into the picture
Functions of CPA
A CPA has a variety of jobs and functions in a public and private accounting firm, let us take a look at a few of those functions
Auditing and Review
It is probably one of the main jobs a CPA performs in public accounting, which is auditing the client’s financial statements and disclosing it with an opinion of whether any misstatements were found in the material.
It is required by the SEC (Securities and Exchange Commission) to have CPA audit their financial statements before issued to shareholders.
This includes preparing different types of client tax forms like property taxes to income taxes
CPAs also engage in different types of consulting services like helping the clients identify business problems and effective and efficient running of their operations.
Forensic Accounting Services
Sometimes CPAs are hired to trace some fraudulent activities that were recovered, or if any money was stolen, etc.
Financial Planning and Business Valuation
They often engage to advise clients by providing the information and suggestions of business and financial activities like selling shares and transferring it to another person and advising about tax ramifications and succession planning.
They are often used by attorneys in the courtroom, mostly common in divorce proceedings, bankruptcies, and business mergers/acquisitions.
They understand finance, operations, law and profitability maximizations, So they make fine managers.
It’s common for a company to hire a Certified Public Accountant as the CEO, CFO or COO because they understand how the company functions.
These non-profit organizations need the CPAs the most because they are the ones who can give the best guide on how to use its very limited funds.
Government and Education
The government and education sector offers a variety of job like the IRS, FBI and most of the accounting professors at universities are CPAs
Why you should become a CPA?
You can make more money than their counterparts; On an average CPAs could make 1million dollars more than the non-certified counterparts
You get better opportunities; public firms will allow you to advance up the hierarchy into senior positions, leading you to become a partner too.
You get a Stable career, The fact is that CPAs and accountants are always in demand
CPAs have people's respect, people know how difficult it is to become a CPA and they respect you because of it.
Also Read: CMA vs CPA
How to become a CPA?
Becoming a CPA is one of the toughest things as well as the most rewarding experience that you will make in the accounting career, Here are few steps that help you in achieving your desire of becoming a CPA.
Fulfill the Educational requirements
Educational requirements differ from state to state, but most require you to have at least a bachelor’s degree in order to be eligible for the exam. Typically, the applicants should have had at least 24 credit hours in auditing, taxation, and accounting education along with that 30 credit hours of finance, business law, and management.
Apply for the CPA exam
First, you will need to get your educational requirements verified by your state board of accountancy. Once approved, you will be able to apply for the exam,
For more visit The CPA application process.
Get a Review Course and start the preparation
Choose a CPA review course which suits your learning style, schedule, and budget
Pass the CPA Exam
The exam is scored on a scale of 1-99. Candidates must get a score of 75 or higher in order to pass each section, The CPA exam is tested during four test windows basis
For more visit Four-test window.
Pass the AICPA Ethics Exam
Once you have passed all four sections of the exam, you will have to take a short ethics exam, which is not mandatory in all states. All you have to do is read the ethics book given mailed by the exam authority and take the test online.
Fulfill your Work Experience requirement
Once both the CPA and AICPA ethics exams are dealt with, you will need to have work experience. They may range between 6 months and 2 years under the direct supervision of a CPA. Some states may require you to have at least 1 year of auditing experience.
Pay your dues and get your license
After you fulfill the work experience requirement, all you have to do is pay your state board licensure fees, and wait for your certificate which will be mailed by 2-3 weeks.