CPA Career Overview

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What Is Certified Public Accounting?

Accounting involves recording financial information, preparing financial documents, and analyzing financial records. Public accounting focuses on financial documents that clients must disclose to the public, such as tax documents. Although tax returns are not open to the public, they fall under the umbrella of public accounting because of the legal requirement to disclose financial information to the government. Public accounting also includes financial reports that corporations provide to the Securities and Exchange Commission (SEC) and potential investors.

Public accountants may specialize in areas such as taxation, consulting, or auditing. They may work for individuals, businesses, or the government. Public accountants who meet certain qualifications can work as certified public accountants (CPAs). This page covers important information about CPA careers, including responsibilities, qualifications, and professional organizations.

What Is a CPA?

CPAs must undergo a state licensing process and meet requirements beyond those of a public accountant. These professionals must pass a rigorous examination and meet educational and work experience requirements to earn a state license. Each state sets its own licensure process and requirements to become a CPA. Requirements typically include 150 credits of postsecondary education and passing scores on the CPA exam.

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What Does a CPA Do?

CPAs prepare and examine tax returns, conduct audits, and advise clients on financial decisions. CPAs may work in accounting and financial services, for the government, or as self-employed professionals. CPAs must create financial documents and communicate with clients verbally and in writing; therefore, the field requires strong analytical, communication, and problem-solving skills.

CPAs can pursue multiple career paths within public accounting. Tax preparation is one of the best-known career paths for CPAs. Many CPAs prepare federal income tax returns, which list their clients’ income, deductions, and losses. CPAs may offer tax preparation services independently as self-employed CPAs or for an accounting firm or corporation. They prepare both individual and business tax returns, complying with federal laws and regulations. Therefore, many CPAs are busiest in the months before the federal tax filing deadline.

Tax preparation is one of the best-known career paths for CPAs.

In addition to federal income tax returns, CPAs can prepare property tax reports; state income tax returns; and other tax-related documents, such as capital gains reports. CPAs may also offer tax advising services, such as recommending strategies to lower tax liability or suggesting changes to business structures to maximize tax savings.

CPAs also audit and review financial statements for clients. They examine financial statements to ensure proper information, look for errors in tax returns or other accounting documents, and help clients comply with financial laws and regulations.

Some CPAs specialize in forensic accounting. Forensic accountants analyze financial records to uncover fraud, embezzlement, or other financial crimes. They may work for law enforcement agencies and accounting firms. These CPAs can also act as expert witnesses during trials or provide litigation support for prosecutors. Forensic accountants also conduct reviews that determine business valuations, calculate economic damages, and resolve disputes over acquisitions or losses.

Because CPAs manage sensitive financial information, they must abide by a professional code of ethics.

The federal government grants CPAs exceptional power over public accounting documents. For example, the Internal Revenue Service (IRS) allows CPAs to prepare taxes, sign client tax returns, and represent clients before the IRS. Similarly, the SEC only accepts audits of public companies that have been conducted by a CPA. Because CPAs manage sensitive financial information, they must abide by a professional code of ethics.

CPAs rely on several skills and tools to complete their work, such as mathematical reasoning skills. While accountants typically rely on software to perform advanced mathematical functions, they must analyze and manipulate numerical data to complete tax returns, prepare financial documents, and conduct audits. Effective CPAs combine mathematical reasoning skills with problem-solving abilities to identify ways to lower tax liability and propose solutions to financial problems.

What Are the Responsibilities of a CPA?

Examine Financial Records

CPAs analyze financial records to prepare tax returns, create budget reports, and conduct audits for their clients. They ensure financial records comply with federal, state, and local laws and regulations. Examining financial records requires strong analytical and critical thinking skills.

Calculate Tax Returns

Public accountants often prepare business and individual tax returns. They compute total taxes owed, file appropriate forms to claim deductions, and ensure that clients pay their taxes fully and on time.

Prepare Financial Documents

Accountants prepare many types of financial documents, including tax returns, budget reports, and financial statements. They also prepare quarterly earnings reports for businesses and create accounting records to track expenses and profits. CPAs must ensure that financial documents follow reporting and procedural standards.

Conduct Forensic Examinations

Public accountants who specialize in forensic accounting conduct audits and investigations to uncover financial crimes like fraud. They analyze financial documents to uncover potentially criminal transactions, investigate contract disputes, and provide accounting expertise for law enforcement officials. CPAs may also conduct audits, which draw on their forensic accounting skills.

Advise Clients on Financial Decisions

Many public accountants provide financial management advice for businesses and individuals. They may analyze financial documents to make recommendations for improving operations or lowering tax liabilities. CPAs may also suggest methods for reducing costs or improving profits. Some CPAs help clients plan for long-term financial goals, such as retirement.

Manage Financial Information

CPAs must effectively manage financial information for clients, including reviewing accounts to identify discrepancies and reconcile differences. CPAs provide tax management services and advise corporations and individuals on potential tax advantages based on their financial information.

What Qualifications Do You Need to Become a CPA?

  • Education

    * Bachelor’s Degree CPAs must hold at least a bachelor’s degree.
    * Master’s Degree Many CPAs earn a master’s degree to meet the educational requirements for the CPA exam.
    * 150 Credits Total Before sitting for the CPA exam, candidates must earn at least 150 credits of postsecondary education. Students can fulfill this requirement by completing a bachelor’s and then a master’s degree or a graduate certificate.

  • Skills

    * Analytical Abilities Public accountants must possess strong analytical skills to identify issues in financial documents and recommend solutions. These skills help CPAs effectively produce tax returns and other financial documents.

    * Mathematics While CPAs rely on software to conduct complex mathematical operations, they must analyze, interpret, and compare numerical information.

    * Organization Accountants manage multiple financial documents, often working for several clients at once. As a result, this position requires strong organizational skills.

    * Communication CPAs must know how to effectively communicate complex financial information in writing and orally.

  • Abilities

    * Managing Data All accountants manage large volumes of data, including private financial information and confidential documents.

    * Problem-solving CPAs help companies lower tax liabilities and make financial decisions. They rely on strong problem-solving skills to identify problems and solutions.

    * Time Management Many CPAs experience a busy season in the first quarter, just before the federal tax filing deadline. Public accountants must effectively manage their time to perform their job duties.

  • Knowledge

    * Advanced Accounting Principles CPAs must complete 150 postsecondary credits to earn their license, learning advanced accounting principles. Public accountants apply this knowledge on a daily basis.

    * Auditing CPAs often apply auditing skills to their jobs, conducting financial reviews and addressing inaccuracies and discrepancies.

    * Preparing Financial Documents CPAs prepare multiple types of financial documents. Knowing how to prepare tax returns, audits, and other documents is a core requirement for the profession.

Learn More About How to Become a CPA

How Are CPAs Employed?

CPAs work in multiple industries, including financial services and the government. Public accounting salaries vary depending on a worker’s industry.

  1. Accounting Industry In the accounting industry, CPAs review financial documents and prepare tax returns for businesses and individuals. They also provide auditing services, evaluating financial information for accuracy.
  2. Finance CPAs make financial recommendations, perform tax services, and offer management services like strategic financial planning. CPAs may also offer cash management or budgeting advice in the financial sector.
  3. Government CPAs may work for the IRS, Federal Bureau of Investigation, or General Accounting Office. They conduct audits, manage financial statements, and research government finance. State and local governments also employ CPAs.
  4. Nonprofit In the nonprofit sector, CPAs provide tax services, such as managing tax returns and filing nonprofit paperwork with the IRS. They may also create financial documents and conduct audits of revenue and expenses.
  5. Self-employed Many CPAs work independently, offering tax and financial services to individuals and businesses. They file tax returns, provide long-term savings advice, and help clients manage their finances.

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Professional Organizations for CPAs

  • American Institute of CPAs AICPA represents CPAs and manages the CPA exam. The organization provides career guidance, continuing education opportunities, professional development resources, and scholarships for prospective CPAs.
  • American Accounting Association Representing academics and professional accountants, the AAA publishes research, hosts meetings with networking opportunities, and hosts regional sections. The association also provides a career center for job-seekers.
  • National Society of Accountants NSA advocates for tax and accounting professionals, offering webinars, seminars, and meetings to build professional skills. The society awards scholarships to accounting students and hosts a members-only community.
  • Government Finance Officers Association Founded in 1906, GFOA represents public finance professionals, including CPAs. In addition to creating best practice guidelines, GFOA grants scholarships to accounting students and offers professional development tools.
  • Institute of Management Accountants IMA provides accountants with access to career resources, research, and publications. The institute offers the certified management accountant credential and hosts an education center with continuing education resources.

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