Certified professional accountants (CPAs) play a key role in a variety of financial plans and transactions. Their services are instrumental for individuals and organizations looking to achieve ambitious financial objectives. Despite this, the field remains shockingly misunderstood.
Outsiders often think of CPAs as boring or stuffy—and many assume that all accountants are, by nature, CPAs. In reality, however, accountants and CPAs hold both notable similarities and differences. It is vital that those aspiring to make a difference in these areas understand key distinctions. This knowledge may ultimately influence academic and career planning.
Below, we clarify the confusion surrounding CPAs and the opportunities this credential can bring about:
What Is a CPA?
Much of the confusion surrounding the important CPA designation surrounds its status as both a credential and a type of profession. As a credential, CPA reflects success on a rigorous accountancy exam. Likewise, workers referred to as CPAs possess extensive training and skill in accountancy. The jobs they hold can vary to a surprising degree based on their preferred industry or position. Often, the field is categorized based on two main tracks:
While the term ‘public accountant’ is highlighted in the acronym for CPA, not all CPAs actually work in public accounting. Those who do, however, tend to focus on auditing, tax preparation, business valuation, and financial planning. They may work for dedicated accounting firms, as freelancers or small business owners, or for accounting departments at corporations or government agencies.
Many CPAs eventually move beyond public accounting to pursue a broad spectrum of positions informed by and related to their original passion for accounting. Many pursue lucrative jobs in financial management. It is not uncommon for CPAs to ascend to such prestigious positions as a chief financial officer or chief operating officer. No matter which job titles they pursue, however, these professionals remain heavily influenced by their previous education and work as CPAs.
CPAs Versus Accountants
All CPAs are trained as accountants, but not all accountants are CPAs. While CPA can technically be thought of as a career path, it’s more accurately referred to as a credential program in which only the most thoroughly educated candidates emerge with certification. Those who put in the extra work to become CPAs may ultimately boast stronger reputations and can typically command higher salaries than ‘typical’ accountants. That being said, many accountants who lack certification still manage to secure satisfying and even lucrative work in their field of choice.
What Does it Take to Become a CPA?
To become certified as CPAs, accountants must pass a rigorous exam. Furthermore, they must complete all coursework and training initiatives mandated in the state in which they intend to serve. Qualifications for licensure can vary dramatically from one jurisdiction to the next, so it is critical that CPAs craft their academic journey based on where and in what capacity they expect to work. That being said, while most CPAs are licensed in just one or two states, some maintain licensure in a variety of jurisdictions.
To prepare for tough exams, aspiring CPAs typically enroll in graduate-level degree programs to gain the knowledge and the educational hours required to take the test. A Master of Science in Accounting, for example, provides the high-level skills and knowledge needed to pass challenging tests and find success in this demanding career field.
A Day In the Life: Key Roles and Responsibilities Often Held By CPAs
CPA positions may look dramatically different based on a variety of factors. While many CPAs work for accounting firms or departments within large corporations, some set out on their own in hopes of launching businesses or serving as consultants. The industry also plays an important role. A CPA employed in, for example, investment banking may hold significantly different responsibilities than an accountant who primarily assists small business owners. In general, however, CPAs can expect to hold at least a few of the following key job duties:
- Developing, organizing, and maintaining detailed financial records.
- Conducting audits to ensure that previously drafted records are both accurate and compliant with current regulations.
- Organizing and filing tax documents at the federal, state, and regional levels.
- Making recommendations for financial best practices to corporate executives or individual clients.
- Coordinating and implementing efforts for cutting costs and enhancing revenues.
Earning Potential: How Much Do CPAs Make? What Is the Current Job Outlook?
In general, accountants tend to secure impressive compensation, although pay can vary depending on industry and niche. The Bureau of Labor Statistics highlighted median annual wages of $70,500 for accountants and auditors as of 2018.
CPAs generally command more impressive wages. Income varies based on experience, with a survey from the Association of International Certified Professional Accountants (AICPA) revealing that newly qualified CPAs earn, on average, $66,000 per year. After just a few years in the field, however, many achieve six figures. According to AICPA, the average CPA earns an annual $119,000. Furthermore, AICPA data reveals that most certified public accountants also receive generous bonuses.
With a job outlook of six percent between 2018 and 2028, accounting maintains an average rate of growth compared to other occupations. Growth in high-demand areas such as technology may prove far higher, however. In general, the industry is competitive—but not to the point that aspiring accountants should feel deterred.
Certification as a CPA can grant job seekers a significant edge as they strive to impress potential employers. Likewise, those going into business for themselves may find that their designation as CPA allows them to secure more—and better—clients.
With so many career opportunities available to CPAs, it’s only understandable that this path sparks considerable confusion. In general, however, the CPA designation can best be thought of as a tool for opening doors to new professional opportunities. Equipped with this valuable certification, it’s possible to enter a variety of promising positions and make a real difference for both organizations and individuals.