CPA vs. Accountant: What Are the Main Differences?

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Accountants and CPAs (Certified Public Accountants) both are essential for business functions, and both roles have an important distinction. All CPAs are accountants, however not all accountants are CPAs—that’s because factors such as licensing, their function, skills, and more differ them.

So would a CPA designation be beneficial to the career you seek? Let’s get a more detailed look into CPA vs. accountant and what are the main differences between the two.

The Difference Between Accountant vs. CPA

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Accounting is the process of recording, keeping, and reporting the financial affairs of an organization, which shows the company’s clear financial position. The CPA, on the other hand, is the title given by the American Institute of Certified Public Accountants to individuals with education or experience in accounting when they pass the CPA examination.

Role

CPAs are monitored or ruled by the Boards of Accountancy. Assurance services or public accounting are the principal services provided by CPAs. On another note, CPAs who operate as consultants do not work as auditors.

Accountants do not have a precise governing body. As for the accountant’s role, the main responsibilities include planning the future, auditing accounts, and maintaining books of accounts. An accountant looks at the overall situation of a company and acts as a business counselor in terms of planning and accounting strategy.

In the assurance service category, only a CPA can prepare an audited financial statement or a reviewed financial statement, although any accountant can prepare a compiled financial statement.

Licensure, education, and training

One of the significant differences between CPAs vs. accountants is that there is no license required to become an accountant; however, to become a Professional CPA, you need to get the license.

CPA candidates need at least a bachelor’s degree related to finance and accounting to apply for the exam. They need to pass rigorous testing and strict requirements for licensing in the state in which they intend to practice.

In some states, the requirements include being a United States citizen, a resident of the state, or both in order to take the exam. CPA applicants must complete 150 hours of university coursework, including specific hours in upper-level accounting, auditing, and business core courses.

To become an accountant, a bachelor’s degree in finance, business management, accounting, or a related field is required. An accountant’s job training generally begins with a school-based internship program and on-the-job training.

Accountants can further their careers by earning extra certifications, such as Chartered Financial Analyst (CFA), Certified Management Accountant (CMA), Certified Internal Auditor (CIA), or Certified Fraud Examiner (CFE).

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Taxes and regulations

Accountants are legally allowed to prepare tax returns, although they may not have as much knowledge of tax codes as a CPA does. Another important distinction is that CPAs can represent clients in front of the IRS in the event of a tax audit, and they can sign tax returns, whereas non-CPA accountants cannot.

Code of ethics & requirements

Since regular accountants have no specific governing body, they don’t have a particular code of ethics to adhere to. On the other hand, CPAs are members of the American Institute of Certified Public Accountants and are required to follow strict ethical principles and professional standards the AICPA has established. The Code of Ethics includes five categories, which are as follows:

  • Responsibilities
  • The public interest
  • Integrity
  • Objectivity and independence
  • Due care

Fiduciary responsibility

A fiduciary is an individual or an organization that has the legal authority to act on behalf of others. Those may include bankers, financial advisors, and board members.

CPAs are regarded as having the legal responsibility and authority to act on behalf of and in clients’ best interests. Accountants without a CPA license are not considered fiduciaries to their clients, even though they may maintain certain ethical standards.

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Skills

To succeed in any corporate environment, accountants must have a variety of skills. After receiving a bachelor’s degree, they need to ensure that they are prepared to handle financial data management, advice and analysis, reporting compliance, and financial report preparation.

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CPAs acquire a skill set that builds on accounting capabilities and enhances their potential as the most highly qualified and knowledgeable accountants. CPAs must possess abilities in accounting and business concepts, research, analytics, problem-solving, communication, project management, and ethical standards.

The Bottom Line

While both CPAs and accountants are involved in financial reporting and analysis, there are distinct differences between the two. CPAs have additional qualifications and certifications, allowing them to perform a wider range of services and to represent clients before the IRS.

Accountants, on the other hand, can provide valuable financial advice and help with tax preparation, but may not possess the same level of expertise or legal standing as a CPA. Ultimately, the choice between a CPA and an accountant will depend on your specific needs and the complexity of your financial situation.

If you’re interested in pursuing a career in accounting, start by enrolling in our  Bachelor of Arts in Accounting degree program!

Frequently Asked Questions (FAQs)

Is an accountant better than a CPA?

A Certified Public Accountant (CPA) has greater knowledge and expertise in accounting, taxation, and financial planning, and is held to a higher ethical standard than a regular accountant.

What is the difference between a CPA and a private accountant?

A CPA is a licensed accountant who has met state-specific education and experience requirements, passed the CPA exam, and adheres to a code of ethics. A private accountant, on the other hand, may not hold a CPA license and may work in a variety of industries or for an individual or organization.

Is a CPA the same as an ACCA?

ACCA (Association of Chartered Certified Accountants) is a UK-based professional accounting organization, similar to the CPA in the US. However, they have different requirements and focus on international accounting standards.

Is it worth going for CPA?

Pursuing a CPA license can be worth it for those who want to work in public accounting, as it can lead to better job opportunities and higher salaries. However, it requires a significant investment of time and money.

What is the highest position in accounting?

The highest position in accounting varies depending on the organization, but it often involves the title of Chief Financial Officer (CFO) or Chief Executive Officer (CEO).

 

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