Efficient accounting is a crucial part of starting, running, and growing a business. In most companies, accounting involves collecting, recording, analyzing, and interpreting financial information. The data gathered and compiled by accountants is valuable in helping businesses make informed financial decisions and business moves.
It’s not just businesses that can take advantage of professional accountants. Institutions, organizations, and even individuals can hire the services of an accountant to sort out their financial issues, including things like taxes, insurance, property division, assets valuation, and so on. This is one of the reasons why professional accounting is such a lucrative occupation.
However, if you’re looking to start a career in accounting, you need to be a licensed CPA. A listing on the United CPA Association can help you launch your career and expose you to potential clients. But, before that, you near to learn professional accounting skills and get licensed as a CPA (certified public accountant). Here are some of the essential things you need to know about the field of CPA and professional accounting.
Who is a CPA?
In plain terms, a CPA is an accountant who has passed the CPA exam. In addition to passing the exam, a CPA must also fulfill any further requirement by the host state to be allowed to practice accounting.
The CPA exam is divided into four broad sections, which are:
- Auditing and Attestation
- Business Environment and Concepts
- Financial Accounting and Reporting
Proficiency in each of the four sections is tested in a 4-hour test examining the various concepts and topics in the section. To become a qualified CPA, you must successfully complete all four sections within an 18-month rolling window period. This means that once you complete one unit, you have 18 months to complete the remaining three. A score of 75 and higher is accepted as a pass in each section.
You can take the tests in whichever order that you chose, and although there are many colleges offering CPA course, you don’t necessarily have to go to school as long as you register for the exam and get approved by your state. A lot about how you prepare and take the exams is depended on you.
The AICPA is responsible for creating the exams and scheduling the open testing windows. However, the states are responsible for administering the exam and reporting the scores, as well as issuing CPA certifications and licenses to those who pass. Every state has its unique work experience and certification requirements when it comes to issuing CPA licenses. Make sure to check for any special CPA licensing requirements, such as qualifying exams and probation period in your state.
What Does a CPA Do?
Once you have all the proper certification and licensing, you can now begin your career as a professional public accountant. But, what can you really do with those credentials, what opportunities await you in the field?
Well, with a CPA license, there are several career paths that you can take; for instance, you can choose to work as a full-time accountant in a single firm, become an accounting consultant, or even try contracting your services to accounting and auditing firms. The options are broad and diverse, which makes accounting a highly flexible career option. And the good thing is, whichever path you take, you’re bound to make a decent living.
A survey by the AICPA showed that, on average, a CPA based in the U.S. makes about $119,000 a year. CPAs with extensive experience in the field can earn upwards of $150,000 every year.
Many CPAs end up working in either established public accounting firms or starting their own. What are some of the responsibilities and tasks associated with public accountants in their line of work?
Tax compliance and planning can be a major headache for many organizations and even individuals. As a CPA, you can represent businesses and individuals in front of the IRS to help resolve tax matters. You may also be hired to advise others on how to file and plan their taxes, including income tax, business tax, and claiming returns and rebates. Businesses and entrepreneurs are always looking for ways to minimize their tax burden and automate their tax compliance requirements. You can be the bridge between taxpayers and the tax authorities.
Many organizations, especially small businesses, are willing to pay for professional accounting advice. Many small businesses don’t have a well-staffed or elaborate accounting department, so when they are faced with accounting problems, they often turn to consultancy services for assistance. Clients can consult on a number of different accounting and financial issues. Businesses mostly consult CPA when they are preparing to make drastic changes in the business structure, such as purchasing assets, taking out loans, and expanding the workforce.
Auditing and Reviewing
Auditing and reviewing financial statements are some of the most common jobs for public accountants. This usually involves thoroughly assessing financial documents and reports and giving an unbiased opinion on the findings. As a public accountant, you should be able to reveal any inconsistencies, mistakes, or inaccuracies in the statements or reassure the concerned parties that every single entry is in order.
With most companies, auditing is done at least every year or after every quarter. Public companies are also required by law to have their financial reports audited by a certified CPA firm for validation before they are handed to the public and shareholders.
Financial Management Services
Many financially cautious companies involve CPA firms in making managerial decisions, particularly those involving massive transfers of funds, such as financial budgeting and planning, liquidation of assets, selling or buying shares, and revenue management. CPAs can help businesses manage their financial risks and make accurate financial projections by providing valuable insights into the business and economic environment as a third party.
Forensic Accounting and Litigation Services
Organizations can also hire CPA firms for what’s known as forensic or investigative accounting. In forensic accounting, CPAs thoroughly check a company’s financial documents, reports, and statements with the aim of sniffing out fraudulent activities such as tax evasion, funds embezzlement, and misappropriation of company’s funds and assets. Although CPAs can’t technically practice law, their work in forensic accounting can be vital in settling lawsuits and administering fair justice. This is quite common in cases of bankruptcies, tax and insurance frauds, partnership disputes, and divorces.
The technical requirements for becoming a certified CPA are pretty straightforward; all you need to do is pass the CPA exam and get the necessary permits. However, it takes a lot more than just the technical skills and accreditation to become a great CPA. You need to possess the right temperament – have a keen eye for details, good organizational skills, a sense of accountability, and be reliable and trustworthy. Plus, it also helps if you are really good at math!