Most people know that accountants earn high salaries, but get confused as to why some are referred to as accountants while others are called CPAs. In this article, we will be focusing on what a CPA is and why it is considered to be more prestigious than being a regular accountant.
What does CPA stand for?
A Certified Public Accountant (CPA) is someone who has not only acquired an Accountancy degree but has also gone the extra mile to earn their CPA license. This license is US-based and is provided by the American Institute of Certified Public Accountants (AICPA.) In order to qualify, they first needed to meet the 150 College Credit requirement, the work experience requirement and then sit for the CPA exam. This will be expanded upon below.
What does a CPA do?
CPAs are legally authorized to perform public accountancy tasks that other accountants are not authorized in. This includes representing businesses for IRS audits, auditing and approving financial documents of businesses, compiling financial statements and preparing and authorizing tax returns, among other tasks. These specialized tasks require attention to detail and a great deal of responsibility and knowledge specialization on the part of the CPA.
Why should I get a CPA license?
A CPA license is the highest level of certification that a US-based accountant can acquire and is therefore a highly prestigious title to have tacked on to the end of your name. It indicates that you possess more knowledge, understanding and expertise than the average accountant. It also shows that you are driven and willing to work hard to achieve your goals. This is because CPAs have generally gone through far more training and studies than regular accountants and have the certification to back them up. This is especially true of knowledge pertaining to tax and legal regulations, which makes them attractive to employers when it comes to hiring for higher-level positions and consideration for promotions.
Some other advantages include:
Within the US
As mentioned above, their knowledge and specialization should make you sought after for tasks that regular accountants cannot perform, and you will get paid accordingly. You will also be permitted to start your own CPA firm or work in a wider variety of fields than regular accountants. There are also positions that are more likely to be given to a CPA than a regular accountant, especially in the fields of Business and Industry, Finance Advisory tasks and in Government.
The Big Four also tend to favor CPAs over regular accountants for higher level positions. Even if you are not planning on remaining with a Big Four company in the long-run, it is an impressive reference to add to your resume should you want to apply for other jobs in the future. Additionally, the Big Four have branches worldwide, which could also open the door to working oversees, should you wish to explore the wider world without risking your financial security.
For non-US citizens
It is also a useful degree to have if you are a non-US based accountant, as it will allow you to take on US-based clients. With work-from-home having become normalized in response to the Covid-19 pandemic, outsourcing work to people living in other countries is becoming more and more common-place. This especially true given that companies can also get away with paying non-US-based workers less than what they would need to pay US-based workers for the same jobs. This is also advantageous to the offshore employee, as they will also be earning more than the average accountant in their own country. Of course, this depends on the country. There is a vast difference in expected compensation between a prospective employee from New Zealand as opposed to someone from India, for instance.
NASBA’s Mutual Recognition Agreements
The NASBA/AICPA International Qualifications Appraisal Board (IQAB) has agreements with other internationally acclaimed accounting bodies. This allows US CPA license holders to work in these countries without needing to convert their license completely. This holds true for licensed accountants from those countries who would like to work in the US as well.
According to NASBA’s website, IQAB currently have recognition agreements with:
- South African Institute of Chartered Accountants
- CPA Australia
- Chartered Accountants Australia and New Zealand (CAANZ)
- CPA Canada (CPAC)
- Hong Kong Institute of Certified Public Accountants (HKICPA)
- Chartered Accountants Ireland (CAI)
- Instituto Mexicano de Contadores Publicos (IMCP)
- Institute of Chartered Accountants of Scotland (ICAS)”
(From: NASBA: Mutual Recognition Agreements)
There are also many countries that have many offices for US-based companies located there, such as Israel with its high concentration of offices from US-based tech companies and India with its highly educated work force and relatively low payment requirements.
How do I get a CPA?
Getting your CPA is not simple as it sounds. Firstly, completing a standard bachelor’s degree only awards 120 credits. This means that you will still need the equivalent of one-years’ worth of college credits to even qualify to sit the exam. You will also need to fulfill the state-specific residency requirements. Following this, you will need to send your application form to state-specific evaluation agency and await approval. This can take anywhere between 5 days to 8 weeks.
Once that is approved, you can sit the exam. However, the exam is actually divided into four separate exams, or parts, namely Auditing & Attestation (AUD), Finance Accounting & Reporting (FAR), Business Environment & Concepts (BEC), and Regulation (REG). These need to be passed within the space of 18-months, or you will need to start writing the exams all over again. So, do not bank on passing every exam when setting up your study/ exam schedule.
Another important consideration is that some states also require the candidate to sit for an ethics exam as well. Finally, once you have met all of these requirements and passed all of your exams, you will be issued a CPA license from one of the 55 US State Boards. You do not need an accounting degree in order to take the CPA exams, but it will be more challenging.
CPAcredits.com is a useful resource for acquiring any outstanding credits that you may need to meet the 150-credit requirement. The courses are much cheaper than the typical college or university course at a $550 – $650 price range, can be done in your own time, each span 7.5 weeks and award 3 credits, and, most importantly, are all recognized by NASBA. They are all online, and fall under accounting, business and general interest elective courses, so you will be able to choose whatever you feel would best fit your needs and interests.
Do I need a CPA to work as an accountant?
No, you can work as an accountant without getting a CPA. You do not even necessarily need an accounting degree to work in the field. Nor would you need an accounting degree to get your CPA. However, you will be limited to what kind of positions you can hold and where you can work. This is because most non-CPA accounting positions are lower level, more specific types of accounting tasks and limited to private accounting. There are still many possibilities, though. For instance, they can work as external auditors, management accountants, and IT auditors, among other jobs. Some of the fields that they could work in include Healthcare, Educational and Corporate. But it is possible to even reach the level of CFO with enough hard work and dedication. It is just much harder.