I Pass the CPA Exam!

What Is a CPA & What Does a CPA Do? The Job of a Certified Public Accountant


As an occupant of the world of accounting, you probably know that the letters CPA stand for Certified Public Accountant. You may also know that such individuals possess unparalleled expertise in accounting, auditing, and other areas of finance due to their fulfillment of the CPA requirements. And with this expertise comes impressive career advantages, as the CPA benefits include increased salary, more job opportunities, and heightened respect. But what you may not know is what the role of a CPA is and what their responsibilities are. So, if you want to learn about the life of a CPA, use this information to get the answers to the questions, “What is a CPA?” and “What does a CPA do?”

Table of Contents

What Is a CPA?

Let’s start with a basic definition of a CPA.

A CPA is a Certified Public Accountant who holds the CPA license. The boards of accountancy in each of the 55 U.S. jurisdictions grant the CPA to accountants after these accountants meet a set of requirements specific to their state board.

The state boards hold CPA candidates to the highest of standards because CPAs are accounting experts entrusted to protect the public interest. CPAs must demonstrate significant depths of knowledge and aptitude to fulfill the position, so earning the CPA places you in an elite group of greatly respected professionals.

What Is the Difference Between an Accountant and a CPA?

Understanding the difference between an accountant and a CPA allows you to see just how prestigious the CPA certification is.

Essentially, a CPA differs from an accountant in 2 ways:

  1. Auditing: Only CPAs have the legal authority to audit public companies. They can prepare audit reports or review financial statements for the Securities and Exchange Commission (SEC).
  2. Tax Services: Only CPAs, enrolled agents (EAs), and attorneys have unlimited representation rights before the IRS. (So that’s something to consider if you’re thinking about both the CPA and LSAT exams.) Therefore, CPAs can represent clients in matters related to audits or collections. A CPA can also sign a client’s tax return as a paid preparer. Non-certified accountants aren’t privy to this same right.

What Does a CPA Do?

Above all, a CPA is a trusted advisor. These professionals work with individuals, businesses, schools, non-profits, and government agencies to help them navigate their financial goals and needs.

The scope of a CPA’s responsibilities can vary widely depending on their area of focus and industry. In fact, one of the greatest advantages of the CPA license is choice. With the title, you have greater flexibility in determining your own career path.

To help make sense of what CPAs do and where they work, we can divide their roles into 2 categories: CPAs who work for public accounting firms and those who do not.

What Does a CPA Do in a Public Accounting Firm?

Often, CPAs are employed by public accounting firms to conduct client-based work in the following areas:

Tax Advice and Preparation

Some CPAs specialize in tax preparation and other services. As part of this focus, they may prepare and sign tax returns for clients including individuals and businesses. Furthermore, CPAs can advise clients on a range of tax matters. For example, they can provide guidance on how to reduce future tax burdens.

CPAs can also help clients in rather sticky or complex tax situations. Specifically, CPAs can represent clients in front of the IRS as well as in front of state or local tax boards. Again, CPAs have unlimited representation rights before the IRS. Consequently, they can represent clients in matters related to payments and collections, audits, and appeals. And remember, CPAs only share similar representation privileges with EAs and attorneys.

Auditing and Assurance

CPAs perform objective audit services for business clients. Specifically, they review and analyze a client’s financial statements and then prepare an unbiased report on their findings. The goal of the audit is to determine if the client’s financial statements are accurate and in accordance with financial reporting standards.

The SEC requires that all public companies have a CPA firm audit their financial statements before the information is given to shareholders and the public. So, if you choose to focus on auditing with your CPA license, you can expect to be in demand.

As a second piece of the audit, CPAs are often called on to explain their findings to a company’s executives and/or board. Therefore, they assure that these individuals can understand the report and act if needed.

Forensic Accounting

You’re likely familiar with at least 1 or 2 stories of an employee or executive who embezzled money from their company. In many of these cases, the company didn’t catch on to the fraud until after the money went missing. But when the red flag does go up, CPAs are asked to conduct forensic or investigative accounting.

When a company believes it may be the victim of fraudulent activity, it can hire a CPA to comb through its books and determine if any funds have disappeared. In these circumstances, CPAs act as investigators and collect and evaluate evidence. As such, CPAs who specialize in forensic accounting may be called upon to share and interpret their findings in a court of law.

Business Consulting

Remember, CPAs are trusted advisors. As such, they often consult with business clients on a depth of financial matters. For example, CPAs can advise business clients on their control systems, long-term planning, and operational activities. In any case, the CPA is responsible for making informed recommendations to improve some aspect of the business.

Financial and Estate Planning

Similarly, CPAs also work closely with individual clients on personal business matters. For starters, they can provide guidance on when to sell a company or transfer ownership with minimum tax repercussions. Often, these types of conversations go hand in hand with helping a client conduct estate planning. Moreover, CPAs can assist clients with setting and meeting financial goals, planning for retirement and other major life events, and determining sound investment strategies.

Litigation Services

CPAs are not lawyers, but they work closely with them by focusing on litigation services. Often, lawyers need a financial expert to assist with certain cases. Perhaps, they’ll call a CPA in to analyze financial records or even act as an expert witness in court. Commonly, CPAs provide litigation services in fraud, bankruptcy, merger and acquisition, and divorce proceedings.

Where Else Can a CPA Work?

So, CPAs don’t have to work directly for accounting firms. They can find employment in other venues and industries. I’ve outlined some of the more common employment options below.

Management and Executive Roles

Not surprisingly, CPAs can find themselves in public and private companies holding management and executive positions. These positions can include Chief Financial Officer (CFO) and Chief Operations Officer (COO). CPAs are accounting experts with advanced knowledge of the field. Because of this, organizations seek out CPAs to lead teams, minimize inefficiencies, and maximize profitability.

Non-Profit Positions

Similarly, non-profit organizations need strong financial management and leadership. When working for a non-profit, CPAs are called on to help the organization practice responsible spending and money management.

However, CPAs can still work for non-profits without directly showing up in their office every day. Non-profits like to appoint CPAs to their boards to ensure fiscal compliance and smart operating strategies.

Government Employment

CPAs can find numerous positions at the local, state, and federal government levels. If you aspire to work for the highest ranks of government, you may be able to put your CPA license to use in the FBI, IRS, or the General Accounting Office.

Obviously, your specific responsibilities in any government job are dependent on that job. However, you can expect many government jobs to focus on auditing, financial reporting, and investigative accounting.

Teaching and Research

CPAs can find work as educators in major universities as well as business and community colleges. In this type of role, you’d likely teach classes related to taxation, auditing, cost and managerial accounting, and business ethics. As part of such a role, you may also spend time writing books and articles on topics that are relevant to the CPA license.

Skills You Need to Become a CPA

Being a Certified Public Accountant demands more than just a fundamental understanding of accounting principles. To excel in this dynamic field, you should have a diverse skill set. Below is some info about the key skills every CPA should have.

Core Accounting Skills

A deep knowledge of accounting practices is a given. This includes proficiency in:

  • Financial reporting
  • Auditing
  • Tax preparation and planning
  • Budgeting and forecasting

Leadership Abilities

Effective CPAs often find themselves in leadership roles. You’ll need to lead teams, manage projects, and make strategic decisions, too.

Critical Thinking

The ability to analyze complex information and solve problems is crucial. Whether it’s troubleshooting financial discrepancies or strategizing for fiscal growth, critical thinking is a must.

Strong Communication Skills

CPAs must convey financial information clearly and concisely. This includes both written reports and oral presentations. Being able to simplify complex data for clients or stakeholders is invaluable, so it’s helpful if you can read complex financial information and break it down into easy-to-understand concepts.

Technical Proficiency

In today’s digital age, familiarity with accounting software and tools is essential. So you’ll need skills in:

  • Advanced spreadsheet functions
  • Business intelligence software
  • Data analysis and visualization tools

Attention to Detail

Precision is non-negotiable in accounting. Ensuring accuracy in financial documents and identifying errors or inconsistencies is part of the daily routine.

Ethical Judgement and Integrity

Trustworthiness and ethical standards are foundational to maintaining your reputation and the trust of clients.

By mastering these skills, you’ll be well-equipped to navigate the complexities and challenges that come with a career as a CPA.

How Does Having a CPA License Affect Job Satisfaction?

Getting your CPA certification can boost your career, and may even help you enjoy the ride a lot more. Having a CPA license can significantly boost job satisfaction for several reasons:

  1. Increased Variety of Tasks: Unlike entry-level accounting roles, which can often be repetitive, a CPA license allows you to engage in more specialized tasks. This variety can lead to a more stimulating work environment.
  2. Alignment with Interests: Your CPA certification enables you to pursue roles that align more closely with your personal interests. Whether it’s working directly with clients on financial planning or providing strategic advice, your job becomes more meaningful.
  3. Higher-Level Responsibilities: CPAs often take on more complex and impactful responsibilities, such as financial analysis and strategic planning. This can lead to a greater sense of accomplishment and professional growth.
  4. Empowerment and Autonomy: With a CPA license, you gain the credibility and authority to make significant decisions. This increased autonomy can lead to greater job satisfaction as you feel more empowered in your role.
  5. Career Advancement: A CPA license opens doors to higher-level positions and career advancements. Knowing that you have a clear pathway for growth within your profession can be incredibly motivating. (And the increase in pay that can come with getting your CPA isn’t bad, either!)
  6. Increased Earning Potential: More opportunities and more responsibility often translate into a higher income, and typically, CPAs earn significantly more than non-CPAs. The 2023 average CPA salary was $96,752, though the average range is between $60,874 to $150,612. Accountants without a CPA license tend to earn less, with an average range between $47,138 and $82,167.

What is Job Security Like for CPAs?

The job security for CPAs is exceptionally high. One contributing factor is the growing shortage of accounting professionals. Fewer students are pursuing degrees in accounting, and an even smaller number are advancing to become CPAs.

Moreover, a significant percentage of current accountants are nearing retirement age. This demographic shift is set to exacerbate the existing shortage, potentially leading to a more pronounced demand for skilled CPAs.

Key Factors Driving Job Security for CPAs:

  • Educational Pipeline Issues: There is a downward trend in the number of students choosing accounting as their major.
  • Retirement of Existing Professionals: A large portion of current CPAs will be retiring soon, opening up numerous positions.
  • Wealth of Opportunities: Due to their specialized knowledge, CPAs can explore a variety of roles in public accounting, corporate finance, and consulting, among others.

Given these factors, those entering the CPA profession can expect robust job security and a wealth of opportunities across multiple sectors. So, if you’re considering a career as a CPA, now is an excellent time to join the profession.

Is the CPA License Right for You?

Clearly, the CPA license provides you with choices. So, if you’re thinking about pursuing the certification, then you should start by learning more about the CPA process and how to become a CPA. Basically, to become a CPA, you must do the following:

You Have to Be Licensed by Your State

Unlike other professional certifications and licenses, you won’t find a single administrative body that oversees the CPA title. Rather, each U.S. state and jurisdiction sets its own requirements for the CPA license. More specifically, the state board of accountancy leads the charge. However, the CPA requirements tend to be similar across these state boards.

So, to begin the CPA certification process, you must investigate the specific qualifications for your state or jurisdiction. While there are commonalities among the state CPA requirements, there are also plenty of subtle differences.

What’s more, you can earn your CPA license in more than one state. CPAs are like attorneys and teachers in that they can practice in more than one state thanks to reciprocity laws.

You Have to Meet the Education Requirement

To earn your CPA license, you must accumulate a great deal of accounting knowledge. In other words, you need to meet state-designated education standards.

Every state board maintains a strict CPA education requirement. As a baseline among these requirements, you need to have 120 credit hours of education (equivalent to a bachelor’s degree). However, most states require even more education in the form of 150 credit hours (equivalent to a bachelor’s and a master’s degree). Furthermore, state boards may also dictate that your degree, or at least some of your coursework, is in a field related to the CPA license.

You Have to Pass a 4-Part Exam

Although state boards have varying requirements to earn the CPA license, they all administer the same exam: the Uniform Certified Public Accountant Examination. The CPA Exam follows a Core + Discipline model. That is, candidates must pass three Core sections and one CPA Discipline section of their choice.

The Core sections test the ability to understand, apply, analyze, and evaluate the foundational topics a newly licensed CPA is expected to know:

The Discipline sections focus on providing specialized knowledge in more advanced topics, allowing candidates to gain deeper expertise in a specific area:

  • Business Analysis and Reporting (BAR) – Discipline
  • Information Systems and Controls (ISC) – Discipline
  • Tax Compliance and Planning (TCP) – Discipline

You must pass each CPA Exam part within a 30-month rolling period. So, once you take your first exam part, your state board will officially start your clock. You’ll then 30 months to take and pass the remaining exam parts.

The passing score for the CPA Exam is 75. How hard is this to achieve? Well, according to the American Institute of Certified Public Accounts (AICPA), CPA Exam pass rates usually fall somewhere between 45-55%.

Help for Passing the CPA Exam

As you can see, you have limited time to sit for and pass the CPA Exam. Plus, the exam presents some difficulty for candidates. Therefore, I highly recommend that you invest in a CPA review course. These courses provide study materials and expert support to ensure you can pass the exam on the first try.

Finding the right course for you can be overwhelming. But my expert analysis of the most popular and best CPA review courses will help you do just that. Then, once you choose the best exam prep for you, you can use my exclusive CPA review course discounts to save big. And if you have no idea where to start, I’ve created a guide so you can learn how to choose a CPA review course.

You Have to Meet the Experience Requirement

The CPA experience requirement also differs across state boards. But in most instances, you’ll need to accumulate 1- 2 years of relevant work experience before you can earn your license. Typically, an actively licensed CPA must supervise and verify this experience.

How to Apply for the CPA Exam

Applying for the CPA Exam involves several crucial steps to ensure you’re eligible and properly registered. Here’s a short guide to get you started:

1. Check State CPA Exam Requirements

Each state has its own criteria for who can sit for the CPA Exam. Before anything else, visit the website of your state’s Board of Accountancy to confirm you meet all education and experience requirements.

2. Gather Necessary Documentation

Prepare to submit various documents including:

  • Proof of education (like your official transcripts)
  • Identification (in most cases, you case use a driver’s license or passport)
  • Experience verification, if applicable

3. Submit Your Application

Once you have all your documents ready:

  • Complete the Application Form: Download and fill out the application form from your state’s Board of Accountancy website.
  • Pay the Fee: CPA Examination fees vary by state, so refer to your state Board’s fee schedule. However, we have a post about CPA Exam fees to give you an idea of what to expect.

4. Wait for Application Approval

After submitting, your application will be reviewed. Processing times can differ, usually ranging from a few weeks to a couple of months. In the meantime, you can get started on your CPA study schedule.

5. Receive Your Notice to Schedule (NTS)

When your application is approved, you’ll receive a Notice to Schedule (NTS). This document confirms your eligibility and allows you to book your exam sections.

6. Schedule Your Exam

With your NTS, visit the Prometric website to:

  • Select Testing Dates: Choose convenient dates for each section of the exam.
  • Locate Test Centers: Find a nearby test center or opt for remote testing, if available.

Quick Tips

  • Double-Check Fees and Deadlines: Missing a deadline can delay the entire process.
  • Stay Organized: Keep a checklist to track document submission and deadlines.
  • Prepare in Advance: Begin studying as soon as you apply to maximize your chances of passing.

Following these steps will ensure a smooth application process for the CPA Exam. Good luck!

Ready to Take the Next Step? Check Out These CPA Resources

If you want to learn more about the CPA program, you can do so with my free CPA e-course. It tells you how to pass the CPA Exam on your first attempt, so sign up now!

1 Star2 Stars3 Stars4 Stars5 Stars (3 votes, average: 2.33 out of 5)
Loading...

About the Author Stephanie Ng

I am the author of How to Pass The CPA Exam (published by Wiley), and I also passed all 4 sections of the CPA Exam on my first try. Additionally, I have led webinars, such as for the Institute of Management Accountants, authored featured articles on websites like Going Concern and AccountingWeb, and I'm also the CFO for the charity New Sight. Finally, I have created other accounting certification websites to help mentor non-CPA candidates. I have already mentored thousands of CPA, CMA, CIA, EA, and CFA candidates, and I can help you too!

follow me on:

Leave a Comment:

4 comments
Add Your Reply