Tue. Oct 19th, 2021

Accountants are an integral part of any business. They are the people responsible for maintaining financial records and reports. But not every accountant can take the helm of a company’s books. For public companies, especially, this individual must be a Certified Public Accountant (CPA). CPAs are professionals certified by the American Institute of Certified Public Accountants (AICPA). They receive this designation after passing the CPA exam and having completed all the necessary training and work experience.

It takes hard work and exceptional knowledge of best accounting practices to become a CPA. Even further, CPAs must continually maintain their accreditation over time. In doing so, they are distinguished from general accountants and other financial professionals. More importantly, companies can safely rely on a CPA with their most important and essential financial documents.

A certified public accountant at work

How to Become a CPA

Becoming a CPA is no easy task and requires many hours of study, not to mention uniform CPA exam pass. The basic criteria for the exam include 150 hours of accounting courses and a bachelor’s degree in business administration, finance or accounting. However, many states have their own stipulations that take into account the qualification to take the exam.

Two-tier states, such as Minnesota, allow potential CPAs to take the uniform CPA exam after completing 120 hours of coursework. The stipulation is that they will have to finish the remaining 30 hours after the exam.

Also, some states like Illinois require a level of study related to accounting or finance as part of your baccalaureate. Some states go even further. California, for example, imposes specific higher-level accounting courses as part of the qualification to take the exam.

Some states also have a minimum age requirement to take the exam, typically 18 years. That said, the state of New York and Missouri require examiners to be 21 years of age at the time they take the test.

While there are some nuances from state to state, the exam itself is uniform throughout. By passing the test, you will obtain the CPA designation in the state where you take it. That said, CPA is becoming a mobile license. Renewal rules depend on the issuing status.

Accreditation with the AICPA

The American Institute of Certified Public Accountants (AICPA) administers the uniform CPA exam and also issues licenses. CPA holders must comply with the AICPA Code of Ethics and rules and statements issued by the organization. AICPA sets general industry standards for CPAs and determines best practices for all CPAs.

Note that while the AICPA is specific to U.S. accountants, other countries around the world have similar designations and standards for their version of a CPA. Most of the developed world depends on Permitted Accounts (CAs), which are effectively the same. They have the same caliber of education and practice, in addition to ethical standards.

The career path of a CPA

CPAs have several professional opportunities at their disposal. Their extensive knowledge of accounting standards and practices allows them to offer value in a variety of roles. Some of the career paths that CPAs take are:

  • Audit. Independent auditing is common in CPAs working with public companies.
  • Accounting. Small business-focused CPAs tend to evolve toward general accounting.
  • Forensic accounting. A lucrative field that requires strong research skills.
  • Chief Financial Officer. The highest position a CPA can hold in your business or nonprofit.
  • Fractional positions. The equivalent of stand-alone accounting services for CPAs.

CPAs are in high demand by businesses large and small, and even by people with complex financial accounting requirements. Their certification provides them with opportunities not available to other accountants. For example, the SEC requires public companies to have them financial records audited independently by a CPA.

Loss of certification

CPAs that do not renew accreditation in the mandatory state interval will move to the “inactive” state. This is not a loss of license; however, CPA certification may be suspended or revoked if they exhibit conduct outside the AICPA Code of Ethics or Ethics. For example, this may include:

  • Repeated expiration of the license
  • Carrying out services with an expired license
  • False accreditation advertising
  • Participate in fraudulent accounting practices
  • Suspension or cancellation of the IRS, SEC or other organization
  • Conviction of financial and non-financial crimes

Suspension of a CPA license is subject to the situation and revocation of certification is usually permanent. This makes it much more important for CPAs to be diligent in maintaining the high standards set by AICPA as an intern or financial advisor.

Experience is still important

One thing is the designation of Certified Public Accountant (CPA); the experience is another. Also, not all CPAs have the same level of experience. Practical knowledge is important when managing the finances of each company. That’s why public companies work with companies that use permanently controlled CPAs.

For those who are interested in becoming a CPA, the best thing you can do is work for a larger accounting firm that serves public companies on a loyal basis. This is the gateway to experience in different aspects of auditing and financial management. Over time, CPAs will develop the skills, experience, and understanding they need to be competent.

For more information on accounting, investing and wealth generation, sign up at Freedom through wealth e-mail below. In fact, you can advance in your financial education and learn more about how to make smart investments in the process.

For companies looking for a CPA to manage their books and manage all financial reporting, there is no substitute for experience. Look for companies with a strong reputation and permanent accounting staff. There is no substitute for accurate, timely and transparent accounting.

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