John Savignano, CPA discusses the real differences between a CPA and an accountant and why accountants should consider taking those extra steps to getting their license.
CPAs have "accountant" in their name—Certified Public Accountant. But many "accountants" never become CPAs.
An accountant has at least a bachelor's degree in accounting. That's all they need to work in this role. They don't have to take a professional exam to show they've retained what they learned over four years of school or acquire an accountant's license.
On the other hand, a CPA has met specific and rigorous certification criteria, including educational and work requirements. They must then pass a CPA exam.
For this reason, a CPA is generally more knowledgeable than an accountant who has yet to earn a CPA license when all else is equal. This means that CPAs can take on specific client responsibilities that a regular accountant can't.
CPAs are generally respected for this accomplishment and often have a more meaningful, rewarding relationship with their clients as a result.
What Do Accountants Do?
An accountant reviews and analyzes financial data. They then explain what the numbers mean and prepare financial documents and summaries.
Their role with respect to clients would be:
- Make sure financial documents are accurate, up-to-date, and filed on time.
- Record and classify transactions
- Stay up to date and keep them informed about best practices and changing regulations
- Work as an advisor to overcome financial challenges to reach goals
As John Savignano, CPA has said, "It's not only about spreadsheets. It's about helping the clients solve problems, working with clients, becoming part of the team."
What Do CPAs Do?
A CPA does all of the above, plus:
- Creating and maintaining financial policies, security measures, monitoring, and reporting
- Helping clients create functional budgets
- Maximizing cash flow
- Performing internal audits
- Reviewing and advising on compensation packages
- Other financial consulting
While all accountants should work ethically, CPAs are held to a higher standard. They would lose their CPA license if they were found to be acting unethically.
CPAs are expected to always work for the public interest with the utmost integrity and objectivity while applying the greatest care when performing any financial duties.
CPA Vs. Accountant: Which Is Better? John Savignano Shares His Take on it.
There isn't just one answer here.
Both are trained in GAAP (generally accepted accounting principles), which allows them to deliver consistent financial records and reports. Both can use accounting tools and technology to enhance data collection, productivity, and accuracy.
But CPAs are more qualified to perform most accounting duties and can legally perform tasks that a regular accountant can't. A CPA is considered more skilled and credible.
Only a CPA can perform an audited financial statement and file with the SEC. A CPA can represent someone during an IRS audit.
For these reasons, CPAs can also typically charge a higher price for their services because, of course, they should be paid more. They have verifiable skills and experience non-certified accountants don't.
Specialized Accountants and CPAs
Both non-certified accountants and CPAs can specialize. This allows the accountant to become an expert in a sub-section of the field. These include but aren't limited to:
- Business Management Accounting
- Certified Fraud Examiner
- Tax Planner
- Tax Preparation
- High-Net-Worth Client Consulting and Services
Whether a CPA or a regular accountant, they'll typically perform better and get paid more when working within their expertise.
What Percentage of Accountants Become CPAs
Every CPA was once a non-certified accountant. They worked in this capacity while completing the requirements to become a CPA.
Based on these two data points, roughly 50% are CPAs.
According to BLS, they anticipate industry growth of 6% between 2021 and 2031 (about average).
How Much Do CPAs Make?
A Journal of Accountancy survey found a CPA with 1-3 years of experience makes around $52,639, but it goes up significantly from there. Once they have 8-10 years of experience, the average income doubles. Achieving "Partner" in a CPA firm can add another $60K-70K to this amount.
Requirement for a CPA
This varies by state, but all require at least a bachelor's degree with a minimum number of accounting and business courses. In some states, they must have an accounting degree.
Like other major professional exams, the CPA exam is generally considered hard. It has four parts, and only 20% pass all four the first time. They have 18 months to pass all four with a minimum of 75%.
Depending on the requirements, they may have to complete one to two years as an accountant before taking the exams (or after exams but before becoming a CPA, depending on the state).
They should generally plan to spend seven years earning a CPA if they're just starting a bachelor's program, but this can vary by state and the speed at which they meet requirements.
In states where one isn't required to have an accounting degree, they might spend many years learning accounting on the job. Then they top that non-accounting degree off with some accounting and business courses and take the exam. This is another excellent way to become a CPA.
Once someone becomes a CPA, they will complete a certain number of continuing education credits (called CPE) to renew their license.
If they choose not to pursue a CPA, accountants should know that non-certified accountants are also in demand and can have very rewarding careers. And even if they decide accounting isn't what you want to do for the rest of your life, learning accounting can open doors across the business world.
John Savignano, CPA won't be the first to say, "accounting is not for everyone, but I tell them if you want to be in the business world, accounting is the language and accounting is a good door opener or stepping ground to go into other fields."
Published by Samantha Brown