What Is A CPA? 13 Types Of Certified Public Accountants

What is a CPA? This is one of the most puzzling questions confusing many business owners. As a critical component of the finance and accounting industry, a Certified Public Accountant (CPA) is a highly-regarded professional responsible for various financial services. 

This article will delve into the intricacies of a CPA’s definition, qualifications, and importance in the business world. Moreover, we also provide a deeper understanding of the value a Certified Public Accountant can bring to organizations and individuals. Stay with us as we will unravel many interesting secrets for you.

What is A Certified Public Accountant (CPA)?

A Certified Public Accountant (CPA) is a prestigious title awarded to qualified accounting professionals. Licensing is granted by each state’s Board of Accountancy, with the American Institute of Certified Public Accountants (AICPA) offering valuable resources for obtaining the license. The CPA title designation ensures adherence to the highest professional standards within the accounting industry.

While not all accountants hold the CPA license, those who exemplify commitment, expertise, and proficiency, CPAs handle essential accounting tasks such as generating precise reports for businesses and individuals, tax reporting and filing, providing strategic guidance to optimize tax savings, and boosting profitability.

What Does A CPA Do?

Certified Public Accountants may engage in various aspects of the accounting profession, specializing in forensic accounting, personal financial planning, and taxation. They must also fulfill continuing education requirements and adhere to ethical standards. Essential services CPAs provide include:

• Tax Advice and Planning: CPAs represent clients in dealings with the IRS or state and local tax boards. They will offer guidance to minimize tax liabilities and prevent audits or inquiries from authorities.
• Audit and Assurance Services: A fiance CPA audit is distinct from an IRS audit, providing an impartial evaluation of a business’s finances to ensure compliance. Assurance services involve gathering and clarifying relevant information for company decision-makers to facilitate informed choices.
• Management and Consulting: People who got a CPA license can contribute to overseeing a company’s daily financial operations and support strategic, long-term planning. Services may encompass budgeting, cash management, financial planning, shareholder financial statement preparation, risk management coordination, investment advice, and estate planning assistance.

13 Different Types Of Certified Public Accountants

The AICPA identifies several main specializations within the accounting profession, including:

• Personal Financial Planning
• Information Management and Technology Assurance
• Forensic Accounting
• Valuation
• Taxes
• Audit and Attestation Services
• Government Accounting
• Nonprofit Accounting
• Environmental Accounting
• International Accounting
• Business Environment and Concepts (BEC)
• Financial Accounting and Reporting (FAR)
• Regulation (REG)

These diverse specializations offer accounting professionals opportunities to build expertise and advance their careers. As you see, becoming a CPA helps you broaden your career path with various occupations.

CPAs in Public Accounting Firms

Public accounting professionals collaborate with businesses and individuals to review and prepare financial information for public release or government filing. They offer a comprehensive range of services, generally encompassing three primary areas:

• Auditing and Assurance: This area focuses on conducting audits and assurance engagements, subsequently issuing opinions based on the findings. Auditing and assurance services ensure financial statements accurately represent a company’s financial position, bolstering stakeholder confidence.
• Tax Preparation and Services: CPAs prepare mandatory tax filings and deliver tax planning and analysis services in this domain. They help clients navigate complex tax regulations, maximize deductions, and maintain compliance with tax laws.
• Consulting Services: Finance CPAs provide various consulting services, from identifying and implementing new financial systems to interpreting financial statements and recommending accounting best practices. Specializations within the consulting field include forensic accounting, which involves investigating financial fraud. Or financial and estate planning focuses on wealth management and preservation. Finally, litigation services, where CPAs offer expert testimony and support in legal disputes.

By offering these extensive services, CPAs in the public accounting industry play a crucial role in supporting clients’ financial stability and growth.

CPAs in Business

Certified Public Accountants in business settings fulfill various responsibilities, adapting to their company’s goals and objectives. Regardless of their precise role, CPAs often undertake the following tasks:

• Tax Oversight: CPAs prepare and file company taxes and may represent the company in dealings with the IRS when required.
• Record Keeping: They manage financial records independently or as part of a team of financial professionals.
• Financial Reporting: As financial experts and liaisons to upper management, CPAs create and present financial reports to company leaders.
• Internal Audits: CPAs conduct internal audits to ensure the accuracy of financial records and the proper tracking of funds entering and leaving the business.
• Financial Forecasting: They may assist in providing quarterly or annual profit projections and offer guidance on capital investments.
• Compliance: CPAs help businesses maintain regulatory compliance, updating accounting processes and procedures in response to regulatory changes.

By fulfilling these responsibilities, CPAs in business contribute significantly to their organization’s financial stability, growth, and long-term success.

CPAs in Government

CPAs in Government play a vital role across federal, state, and local jurisdictions, ensuring financial stability and accountability. Their responsibilities include auditing, financial reporting, and management accounting. Moreover, they evaluate and advise officials on the efficiency of governmental agencies at all levels.

At the federal level, expect with a CPA license can:

• Investigate white-collar crimes, contributing to the enforcement of financial regulations and the fight against fraud.
• Manage financial statement audits for government agencies, ensuring transparency and fiscal responsibility.
• Perform research and analysis on financial management issues, supporting informed decision-making by government officials.

At the state and local level, CPAs may:

• Analyze a school district’s financial viability, contributing to the sustainable management of educational resources.
• Assess the appropriateness of expenditures for constructing prisons, promoting responsible allocation of public funds.
• Review the effectiveness of the workers’ compensation system, ensuring its proper functioning and support for injured workers.

CPAs in Government are instrumental in upholding financial integrity and promoting responsible fiscal management across various public sectors.

CPAs in Not-for-Profit

By working as staff members or in an advisory capacity, CPAs contribute to nonprofit organizations’ financial stability and success in various ways:

• Tax Solutions: CPAs help nonprofits navigate tax regulations, address tax-related issues, and ensure compliance with relevant laws.
• Internal Control Systems: They assist in establishing and maintaining robust internal control systems, enhancing financial transparency, and safeguarding organizational assets.
• Budgeting and Resource Allocation: CPAs contribute to adequate budget preparation and resource allocation, allowing organizations to optimize the use of their funds in pursuit of their mission and objectives.
• Financial Reporting and Fundraising: They prepare accurate financial data for both internal decision-making and external fundraising efforts, building trust with stakeholders and attracting the necessary support to drive the organization’s initiatives.
• Financial Management: CPAs oversee financial reporting and management, ensuring the organization’s mission and objectives are met through sound fiscal practices.

By providing these essential services, CPAs in not-for-profit organizations help to create a solid financial foundation that enables these entities to deliver on their mission and make a lasting impact in their respective fields.

See more: CPA Vs. Tax Preparer: Which Is The Best Option For Your Company?

CPAs in Education

CPAs in education hold significant roles within academic institutions, contributing to financial management, reporting, and fostering the next generation of accounting professionals. Their involvement spans various educational settings, including business schools, professional schools of accountancy, graduate programs, and community colleges.

As educators, CPAs are responsible for the following:

• Teaching: Instruct students in various accounting areas, such as auditing, financial accounting, taxation, cost and managerial accounting, and ethics.
• Mentorship: Providing guidance and support to students, organizing professional student groups, and participating in extracurricular activities that foster career growth.
• Research: Engaging in research and contributing to developing accounting practices and theories.
• Publications: Writing books and articles to share knowledge and insights in accounting, further advancing the profession.
• Consultation: Leveraging their expertise and knowledge to consult businesses on management practices, translating academic insights into practical applications.

By sharing their knowledge and experience and fostering a culture of continuous learning and improvement, CPAs in education play a vital role in shaping the future of the accounting profession.

What Can A CPA Do That An Accountant Can’t Do?

CPAs in finance possess a unique skill set that sets them apart from regular accountants. Their ability to sign tax returns, represent individuals or companies before the IRS, and provide comprehensive financial expertise stems from the rigorous professional requirements they must fulfill. Unlike regular accountants, CPAs have the authority to prepare and attest to audited financial statements, which carry significant legal implications.

This added responsibility necessitates higher designation requirements for CPAs in finance, ensuring they can effectively navigate complex economic landscapes and uphold the highest standards of accuracy and integrity in their work.

See more: EA Vs. CPA: Which One Is Better For Tax Professionals?

Frequently Asked Questions

What Kind Of Education Will A CPA Need?

A CPA in finance needs a least a four-year bachelor’s degree. In addition to completing the degree, a CPA candidate must meet state-specific education and experience requirements and pass a rigorous exam. Many states also require CPA candidates to complete several continuing education hours yearly to maintain their license.

Where To Find The State’s CPA Requirements?

To find state-specific CPA requirements, you should visit the website of your state’s Board of Accountancy. Each state has its own Board of Accountancy that sets and enforces the requirements for CPA licensure. These requirements can vary from state to state, so it’s essential to visit the website of your state’s Board of Accountancy to find the specific requirements for your state

Are CPAs and accountants the same thing?

CPAs and accountants are not the same, although both work in accounting. CPAs, or Certified Public Accountants, have met specific licensing requirements, including education, experience, and passing the CPA exam. While all CPAs are accountants, not all accountants are CPAs, making the CPA title a mark of higher expertise and professional standing.

See more: How Much Does A CPA Cost? Tax Preparation For Business Owners

In conclusion, understanding “What is a CPA?” reveals the diverse and critical roles Certified Public Accountants play in various sectors, including public accounting, business, Government, not-for-profit organizations, and education. With numerous specializations available, CPAs can tailor their careers to their interests and expertise, ensuring they contribute to businesses’ and communities’ financial stability and growth. 

As we’ve explored the ten different types of Certified Public Accountants, it becomes evident that the CPA designation is a mark of dedication and skill and a testament to the adaptability and value they bring to the world of CPA in finance.