A CPA is a certified public accountant, meaning that they have undergone a difficult and lengthy process to receive licensure that allows them to practice public accounting within a certain state or jurisdiction. They are the equivalent to chartered accountants (CAs) and similar designations awarded in other countries. Private accountants, otherwise known as corporate or industry accountants, do not have such licensure and therefore cannot legally perform the tasks that a CPA can.
A CPA is someone who has not only acquired an Accountancy degree but has also gone the extra mile to earn their CPA license. This process vary from state to state and entails meeting certain educational requirements, including the 150 semester hour requirement that is 30 hours beyond the usual 120 credits awarded by a normal degree, meeting the work experience requirement, ethics exam requirements, passing the four-part CPA exam within the allotted time frame, and dedicating most of their free time towards preparing for the exam.
Once complete, the licensed CPA will be permitted to work as a tax accountant or auditor, meaning that they can represent clients before the IRS for tax purposes (as can EAs), can approve financial documentation of a business entity, authenticate tax returns and issue opinions on audited or reviewed financial statements, and other similar functions. Their job is essentially to review the financial documents of an individual or company and compile reports to present to the regulating bodies.
Private accountants usually work for a specific company that produces goods and services as part of their internal workforce. They are responsible for compiling the financial reports and other documentation that the company’s executives and managers need to make business and financial decisions going forward. Since corporate accountants work for the company itself, rather than as external to the company and so only represent one client. They can prepare tax documentation and other financial documentation relevant for tax accountants and auditors, but they cannot sign on the documentation or represent the company before the IRS or other governmental bodies.
CPA vs Private Accounting
|Requires licensure||Usually requires at least an accounting or financial degree|
|Usually works for an accounting firm||Usually works for a company|
|External to the company||Internal to the company|
|Represents many clients||Usually represents one client|
|Needs to periodically renew their license||No license to renew|
|Needs to periodically meet CPE requirements||Further education is optional|
|Better chance of promotion||May be overlooked for promotion without acquiring some type of professional accounting license or certificate|
|Can represent client before IRS||Cannot represent client before IRS|
|Can only practice in the licensing jurisdiction, unless they get a reciprocal license||Can practice anywhere|
|Long hours during tax season or during audits||Usually balanced hours|
|Wider variety of tasks||Usually specialized work|