Definition of Certified Public Accountant
The term Certified Public Accountant is more popularly known by its acronym “CPA”. It is a professional title given to accountants based in the United States and other countries who have successfully passed the “Uniform Certified Public Accountant Examination” and have also met all the additional requirements that are associated with this certification. In some cases if the person does not fulfill all the requirements of this certification then they are allowed to use the title “CPA inactive”. In general, only certified professionals are allowed to analyze the financial statements for their clients in most of the states in the United States. However, certain states such as Ohio, North Carolina, Kansas and Arizona are exempt from this rule.
The general structure of Certified Public Accountant consists of three parts; experience, examination and education. Any candidate must fulfill all of these three criteria before they can use the title of “CPA”. Amongst all of these, only the CPA Examination part is the same while the education and examination part usually varies from one country to another country and even amongst jurisdictions, in the case of United States. In order to get the licensure, the candidate must satisfy all the three criteria and mere completion of the CPA Examination would not suffice. The entire CPA exam consists of four different parts which includes; Regulation, Financial Accounting and Reporting, Business Environment and Concepts and Auditing and Attestation. Candidates must also sit for an exam that consists of a total of fourteen hours, which is absolutely mandatory for fulfilling the examination requirements of CPA.
Structure
The Uniform CPA Examination was started in the year 1917 as the basis for admitting people into the American Institute of CPAs. The examination comprises of four sections, which the candidates must attempt in a total of fourteen hours. Once the candidate successfully satisfies three criteria; experience, examination and education they are issued a licensure from the American Institute of CPAs. From the beginning until 2003, the CPA was administered primarily in the pen and paper format, twice every year. However, this format was replaced by the computer based one since April 2004 and the pen-pencil based one was completely replaced. In 2009, the number of administrations had reached a new milestone by hitting 1 million in number. The procedures of attaining licenses in quite difficult since, CPAs are individuals who deal with the public interest, which is a sensitive issue.
The CPA Examination is in itself quite complex and large. As a result of this, the examination is always administered through the strong collaboration of several different organizations. The most challenging part is maintaining the high level of quality that CPA is renowned for, which it has been able to do successfully over the years. The four prime organizations supporting Uniform CPA in this endeavor are Board of Accountancy, Prometric, NASBA (National Association of State Boards of Accountancy) and AICPA (American Institute of Certified Public Accountants). All of these organizations help administer the CPA across the country through their test centers scattered across the United States. The Board of Accountancy for instance has the authority to issue licenses to the prospective CPAs.
Responsibilities of a Certified Public Accountant
The primary responsibility of a CPA relates to providing public accountancy services to their clients. They are also responsible for ensuring whether a certain organization adheres to the Generally Accepted Accounting Principles or not for the preparation of the financial statements. Apart from working independently, a CPA can also work with corporations as their employee under the title such as Chief Financial Officer (CFO) or Chief Executive Officer (CEO). A lot of CPAs also opt for working as individual consultants for corporations, but their role was overshadowed due to the Enron Scandal which involved some of the best CPAs in the industry during that time.
Becoming a CPA
In order to become a CPA, an individual must fulfill the educational requirements first in the United States. Every state has their own set of rules and regulations for CPA and one must find out the minimum requirements before they can sit for the exam. In order to show the educational requirements one may also be asked to send in their transcripts of their university, which will allow the board to assess whether the person is qualified for sitting for the exam or not. In some cases, the person may also be asked to do some additional courses if they do not meet the educational requirements. Once the educational requirements are met the candidate can then sit for the CPA exam.
A CPA from Australia, Canada, New Zealand, Hong Kong, Ireland, and Mexico and also become a CPA in the United States by sitting for the International Qualifications Examinations which is a 4.5 hrs exam instead of the regular 14 hour exam of American CPA. However, it must be noted that people with other qualifications such as ACCA have to go through the entire CPA examination procedure like any other candidate, since it is not recognized in the United States.
Certified Public Accountants are those who have completed the Uniform CPA examination and therefore the other members or even associates of the American Institute of Chartered Accountants cannot use the term CPA. Becoming a CPA entails huge responsibility of ensuring that the records of a company are up-to-date and their financial statements also comply with the state laws and also the GAAP policies.
References
1. American Institute of CPAs. (2012). Retrieved on 25th September 2012 from http://www.aicpa.org/BecomeACPA/CPAExam/Pages/CPAExam.aspx
2. Examination Overview. (2012). Retrieved on 25th September 2012 from http://www.aicpa.org/BECOMEACPA/CPAEXAM/EXAMOVERVIEW/Pages/default.aspx
3. The Uniform CPA Examination Organizations. (2012). Retrieved on 25th September 2012 from http://www.aicpa.org/BecomeACPA/CPAExam/ExamOverview/Partners/Pages/default.aspx
4. For Candidates. (2012). Retrieved on 25th September 2012 from http://www.aicpa.org/BECOMEACPA/CPAEXAM/FORCANDIDATES/Pages/ForCandidates.aspx
