CPA vs. Accountant: How are they different?

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Difference between CPA and Accountant

For many people, the distinction between a CPA and an accountant is a murky one. Aside from the more intensive training and education required to merit the title of "CPA", there are however a few more differences between both, as you will see in this comparison article.

CPA
Accountant

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The term “accountant” is commonly used in reference to non-certified accountants, which can basically be anyone who offers accounting services. There are no educational requirements for such an occupation, and most states simply require these practitioners to accomplish a certain number of hours of study in addition to continuing yearly education.

In contrast, CPAs will have to undergo various educational and training requirements. CPAs are required to have a degree in accounting for instance, and they will have to pass exams that deal with accounting theory, practice, auditing, and law, among other things. They will also have to work in an established accounting firm for at least two years, and obtain no less than 500 hours of practical auditing in order to qualify for the CPA title. CPAs are also required to undergo a certain number continuing education hours yearly in order to maintain their CPA license.

Roles

CPAs and qualified accountants are typically tasked with the preparation of financial statements. The difference is that accountants cannot prepare audited financial statements. In fact, accountants are required to provide a report stating that no auditing or review methods were utilized, and that only information provided by the management was used to prepare these financial statements.

A CPA on the other hand is fully qualified to prepare audited financial statements. The process requires a methodical examination and testing of the financial records of the company. CPAs will also have to file a report to the effect that all information found in the financial statements is presented fairly and accurately. CPAs are also qualified to prepare reviewed financial statements unlike accountants. The process isn't quite as stringent as that of an audit, although verification of the information is required, in addition to a detailed report outlining the scope, limitations, and findings of the review.

Cost Implications

The cost of hiring a CPA is of course considerably more than the costs associated with hiring an accountant. This is because of the more extensive education and training required of CPAs. In addition, CPAs will also have to adhere to much more rigid standards with regard to the preparation of financial statements, which takes up the cost even higher. While the benefits of a CPA is worth the added cost to some, many smaller businesses opt to save money by preparing their own financial statements, and hiring a non-certified accountant at years end in order to file their taxes.

Similarities and Differences

CPA

  • Has to undergo various educational and training requirements
  • Required to have a degree in accounting
  • Will have to pass exams that deal with accounting theory, practice, auditing, and law
  • Required to undergo a certain number of (CPE) continuing education hours yearly
  • Cannot advise clients to engage in any practices considered by many to be gray areas with regards to taxes

Accountant

  • Commonly used in reference to non-certified accountants
  • Required to accomplish a certain number of hours of study in addition to continuing yearly education
  • Can advise clients on how to navigate through their taxes by taking advantage of loopholes.

Who would you rather pay to do your taxes?
  • CPA
  • Accountant
 
 

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