What Can a CPA Do That an Accountant Can’t?

The terms “accountant” and “CPA” are often used interchangeably, leading to confusion about their distinct qualifications and responsibilities. This article clarifies the differences between these two roles, highlighting the unique services a Certified Public Accountant can provide due to their specialized licensing and rigorous training.

Understanding the Distinction

An “accountant” is a broad term for anyone performing accounting functions, such as recording financial transactions or preparing financial statements. Individuals in this role typically hold a bachelor’s degree in accounting and may work in various capacities. Conversely, a Certified Public Accountant (CPA) is a licensed professional who has met stringent state-specific requirements. This license, granted by state boards of accountancy, signifies a higher level of expertise, ethical adherence, and legal authority within the accounting profession. The primary distinction lies in this official licensure and the comprehensive process required to obtain it.

Exclusive Services Performed by CPAs

A key difference between a CPA and an accountant lies in the exclusive services only a licensed CPA is legally authorized to perform. These services are important for public trust, regulatory compliance, and investor protection.

Audits and Attestation Engagements

One such exclusive service is performing audits and attestation engagements. An audit involves an independent examination of an organization’s financial records to express an opinion on whether financial statements are presented fairly and in accordance with generally accepted accounting principles (GAAP). Publicly traded companies are legally required to have their financial statements audited by an independent CPA firm. Attestation services extend beyond traditional audits, providing assurance on various financial and non-financial information, such as compliance with specific regulations or the effectiveness of internal controls. These services require a CPA’s license due to the need for independence and adherence to professional standards.

IRS Representation

CPAs, along with attorneys and enrolled agents, can represent clients before the Internal Revenue Service (IRS) in certain matters. While a non-CPA tax preparer can only represent a client if they prepared and signed the return and only before specific IRS employees, CPAs have unlimited representation rights. This means a CPA can represent a taxpayer on any tax matter, regardless of who prepared the return, including audits, appeals, and collection issues.

Regulatory Filings

CPAs are authorized to sign off on certain regulatory filings, particularly those required by bodies like the Securities and Exchange Commission (SEC). For instance, public companies must file audited financial statements with the SEC, and only a CPA can prepare and certify these reports. This legal authority highlights the CPA’s role in ensuring the accuracy and reliability of financial information for investors and the public.

Services Provided by Both Accountants and CPAs

While CPAs hold unique privileges, many accounting services can be performed by both a non-CPA accountant and a CPA. This overlap provides flexibility for individuals and businesses seeking financial assistance.

Both accountants and CPAs regularly provide bookkeeping services, which involve the systematic recording of financial transactions. This activity is crucial for maintaining accurate financial records. They also prepare and file tax returns for individuals and businesses. While a non-CPA accountant can handle routine tax preparation, a CPA’s deeper understanding of complex tax laws and regulations can be advantageous for more intricate tax situations.

Financial planning and consulting are additional areas where both professionals can offer valuable guidance. This includes advising on budgeting, financial strategy, and business operations to help clients achieve their financial objectives. Payroll services, which involve managing employee compensation, tax withholdings, and related filings, are also commonly provided by both accountants and CPAs. A CPA’s extensive training and adherence to strict ethical standards often provide a broader perspective and enhanced level of assurance in these common accounting tasks.

The CPA Credential and Its Authority

The authority vested in CPAs stems from the rigorous requirements they must fulfill to earn and maintain their license. These requirements ensure a high level of competence, integrity, and public trust.

Education

A fundamental requirement for CPA licensure is extensive education, typically involving a bachelor’s degree with a minimum of 150 semester hours of coursework. This often exceeds the 120 hours required for a standard bachelor’s degree and may involve pursuing a master’s degree in accounting or additional undergraduate courses. This educational foundation provides CPAs with a comprehensive understanding of accounting principles, tax laws, and business practices.

Uniform CPA Examination

Candidates must pass the Uniform CPA Examination, a challenging multi-part exam covering Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR), and Regulation (REG), along with a chosen discipline section. This examination assesses a candidate’s knowledge and skills across a broad spectrum of accounting competencies.

Work Experience

Beyond education and examination, practical work experience is mandatory, usually ranging from one to two years under the supervision of a licensed CPA. This experience can be in public accounting, industry, or government, depending on state board regulations, and ensures candidates gain real-world application of their knowledge.

Ethics and Continuing Education

Maintaining the CPA license also requires adherence to a strict code of professional ethics, such as the AICPA Code of Professional Conduct, and ongoing Continuing Professional Education (CPE) requirements, typically 80 hours every two years, including ethics training. These continuing obligations ensure CPAs remain current with evolving standards and maintain the highest ethical conduct.