Certified Public Accountant is the statutory title of qualified accountants in the United
States who have passed the Uniform Certified Public Accountant Examination and have met
additional state education and experience requirements for membership in their respective
professional accounting bodies and certification as a CPA.
Individuals who have passed the Exam but have not either accomplished the required on-the-job
experience or have previously met it but in the meantime have lapsed their continuing
professional education are, in many states, permitted the designation "CPA Inactive" or
an equivalent phrase.
In most U.S. states, only CPAs who are licensed are able to provide to the public attestation
opinions on financial statements.
The exceptions to this rule are Arizona, Kansas, North Carolina, and Michigan where the "CPA"
designation and the practice of auditing are not restricted.
Many CPAs are members of the American Institute of Certified Public Accountants or their state
CPA society.
Many states have a lower tier of accountant qualification below that of CPA, usually entitled
"Public Accountant" or "Licensed Public Accountant", although other titles have included "Registered
Public Accountant", "Accounting Practitioner", and "Registered Accounting Practitioner".
Such designations were originally intended to license non-certified accountants who were
practicing public accounting before a state law was enacted which would serve to regulate
the practice of public accounting in that state.
The majority of states have closed the designation "Public Accountant" to new entrants, with
only six states continuing to offer the designation.
Many PAs belong to the National Society of Accountants.
Many states prohibit the use of the designations "Certified Public Accountant" or "Public Accountant"/"Licensed
Public Accountant" by a person who is not certified as a CPA or PA in that state.
As a result, in many circumstances, an out-of-state CPA is restricted from using the CPA designation
or designators letters until a license or certificate from that state is obtained.
Texas additionally prohibits the use of the designations "accountant" and "auditor" by
a person not certified as a Texas CPA, unless that person is a CPA in another state, a non-resident
of Texas, and otherwise meets the requirements for practice in Texas by out-of-state CPA
firms and practitioners.
Many other countries also use the title CPA to designate local public accountants.
Services provided by CPAs The primary functions CPA fulfill relate to
assurance services, or public accounting.
In assurance services, also known as financial audit services, CPAs attest to the reasonableness
of disclosures, the freedom from material misstatement, and the adherence to the applicable
generally accepted accounting principles in financial statements.
CPAs can also be employed by corporations—termed "the private sector"—in finance functions
such as Chief Financial Officer or finance manager, or as CEOs subject to their full
business knowledge and practice.
These CPAs do not provide services directly to the public.
Although some CPAs serve as business consultants, the consulting role is under scrutiny following
the corporate climate in the aftermath of the Enron scandal.
This has resulted in divestitures in the consulting divisions by many accounting firms.
This trend has since reversed.
In audit engagements, CPAs are required by professional standards and Federal and State
laws to maintain independence from the entity for which they are conducting an attestation
engagement.
However, most individual CPAs who work as consultants do not work as auditors.
CPAs also have a niche within the income tax preparation industry.
Many small to mid-sized firms have both a tax and an auditing department.
Along with attorneys and enrolled agents, CPAs may represent taxpayers in matters before
the Internal Revenue Service.
Whether providing services directly to the public or employed by corporations or associations,
CPAs can operate in virtually any area of finance including:
Assurance and Attestation Services Corporate Finance
Corporate Governance Estate Planning
Financial Accounting Financial Analysis
Financial Planning Forensic Accounting
Income Tax Information Technology, especially as applied
to accounting and auditing Management Consulting and Performance Management
Tax Preparation and Planning Venture Capital
Financial reporting Regulatory reporting
CPA exam
In order to become a CPA in the United States, the candidate must sit for and pass the Uniform
Certified Public Accountant Examination, which is set by the American Institute of Certified
Public Accountants and administered by the National Association of State Boards of Accountancy.
The CPA was established in law on April 17, 1896.
Eligibility to sit for the Uniform CPA Exam is determined by individual state boards of
accountancy.
All states have adopted what is known as the "150 hour rule", which usually requires an
additional year past a regular 4 year college degree, or a master's degree.
The Uniform CPA Exam tests general principles of state law such as the law of contracts
and agency and some federal laws as well.
Other licensing and certification requirements Although the CPA exam is uniform, licensing
and certification requirements are imposed separately by each state's laws and therefore
vary from state to state.
State requirements for the CPA qualification can be summed up as the Three Es—Education,
Examination and Experience.
The education requirement normally must be fulfilled as part of the eligibility criteria
to sit for the Uniform CPA Exam.
The examination component is the Uniform CPA Exam itself.
Some states have a two-tier system whereby an individual would first become certified—usually
by passing the Uniform CPA Exam.
That individual would then later be eligible to be licensed once a certain amount of work
experience is accomplished.
Other states have a one-tier system whereby an individual would be certified and licensed
at the same time when both the CPA exam is passed and the work experience requirement
has been met.
Two-tier states include Alabama, Florida, Illinois, Montana, and Nebraska.
The trend is for two-tier states to gradually move towards a one-tier system.
Since 2002, the state boards of accountancy in Washington and South Dakota have ceased
issuing CPA "certificates" and instead issue CPA "licenses."
Illinois plans to follow suit in 2012.
A number of states are two-tiered, but require work experience for the CPA certificate, such
as Ohio.
Work experience requirement The experience component varies from state
to state: The two-tier states generally do not require
work experience for a CPA certificate..
Some states, such as Colorado and Massachusetts, will waive the work experience requirement
for those with a higher academic qualification compared to the state's requirement to appear
for the Uniform CPA.
The majority of states still require work experience to be of a public accounting nature,
namely 2 years audit or tax or a combination thereof.
However an increasing number of states, including Oregon, Virginia, Georgia and Kentucky will
accept experience of a more general nature in the accounting area.
This allows persons to obtain the CPA designation while working for a corporation's finance
function.
The majority of states require work experience to be verified by a licensed CPA.
This can cause difficulties for applicants based outside the United States.
However, some states such as Colorado and Oregon will accept work experience certified
by a Chartered Accountant as well.
Ethics Over 40 of the state boards now require applicants
for CPA status to complete a special examination on ethics, which is effectively a fifth exam
in terms of requirements to become a CPA.
The majority of these will accept the AICPA self-study Professional Ethics for CPAs CPE
course or another course in general professional ethics.
Many states, however, require that the ethics course include a review of that state's specific
rules for professional practice.
Continuing Professional Education CPAs are required to take continuing education
courses in order to renew their license.
Requirements vary by state but the vast majority require an average of 40 hours of CPE every
year with a minimum of 20 hours per calendar year.
The requirement can be fulfilled through attending live seminars, webcast seminars, or through
self-study.
As part of the CPE requirement, most states require their CPAs to take an ethics course
during every renewal period.
Again, ethics requirements vary by state but the courses range from 2–8 hours.
AICPA guidelines grant licensees 1 hour of CPE credit for every 50 minutes of instruction.
Inter-state practice An accountant is required to meet the legal
requirements of any state in which they want to practice.
Also, the term "practice of public accounting" and similar terms are given definitions PA
status under reciprocity to a CPA licensed in another state.
CPAs from other states with less stringent educational requirements may not be able to
benefit from these provisions.
This does not affect those CPAs who do not plan to offer services directly to the public.
Moreover, most states would grant the temporary practicing rights to a CPA of another state.
Practice mobility In recent years, practice mobility for CPAs
has become a major business concern for CPAs and their clients.
Practice mobility for CPAs is the general ability of a licensee in good standing from
a substantially equivalent state to gain practice privilege outside of his or her home state
without getting an additional license in the state where the CPA will be serving a client
or an employer.
In today’s digital age, many organizations requiring the professional services of CPAs
conduct business on an interstate and international basis and have compliance responsibilities
in multiple jurisdictions.
As a result, the practice of CPAs often extends across state lines and international boundaries.
Differing requirements for CPA certification, reciprocity, temporary practice and other
aspects of state accountancy legislation in the 55 U.S. licensing jurisdictions make the
interstate practice and mobility of CPAs more complicated.
By removing boundaries to practice in the U.S., CPAs are able to more readily serve
individuals and businesses in need of their expertise.
At the same time, the state board of accountancy’s ability to discipline is enhanced by being
based on a CPA and the CPA firm’s performance of services, rather than being based on whether
a state license is held.
The American Institute of Certified Public Accountants and the National Association of
State Boards of Accountancy have analyzed the current system for gaining practice privileges
across state lines and have endorsed a uniform mobility system.
This model approach is detailed through the substantial equivalency provision of the Uniform
Accountancy Act.
The UAA is an "evergreen" model licensing law co-developed, maintained, reviewed and
updated by the AICPA and NASBA.
The model provides a uniform approach to regulation of the accounting profession.
Under Section 23 of the UAA, a CPA with a license in good standing from a jurisdiction
with CPA licensing requirements essentially equivalent to those outlined in the UAA is
deemed to be “substantially equivalent,” or a licensee who individually meets the requirements
of: Obtaining 150 credit hours with a Baccalaureate
Degree Minimum 1 year of CPA experience
Passing the Uniform CPA Examination Uniform adoption of the UAA’s substantial
equivalency provision creates a system similar to the nation’s driver’s license program
by providing CPAs with mobility while retaining and strengthening state boards’ ability
to protect the public interest.
The system enables consumers to receive timely services from the CPA best suited to the job,
regardless of location, and without the hindrances of unnecessary filings, forms and increased
costs that do not protect the public interest.
As of October 2012, a total of 49 out of the 50 states and the District of Columbia have
passed mobility laws and are now in the implementation and navigation phases.
Only the Commonwealth of the Northern Mariana Islands, the Virgin Islands, Hawaii, Puerto
Rico and Guam have not passed mobility laws.
On September 20, California Governor Jerry Brown signed legislation that permits cross-border
mobility for CPAs.
The law went into effect July 1, 2013.
The District of Columbia passed mobility laws that went into effect on October 1, 2012.
AICPA membership The CPA designation is granted by individual
state boards, not the American Institute of Certified Public Accountants.
Membership in the AICPA is not obligatory for CPAs, although some CPAs do join.
To become a full member of AICPA, the applicant must hold a valid CPA certificate or license
from at least one of the fifty-five U.S. state/territory boards of accountancy; some additional requirements
apply.
AICPA members approved a proposed bylaw amendment to make eligible for voting membership individuals
who previously held a CPA certificate/license or have met all the requirements for CPA certification
in accordance with the Uniform Accountancy Act.
The AICPA announced its plan to accept applications from individuals meeting these criteria, beginning
no later than January 1, 2011.
State CPA association membership CPAs may also choose to become members of
their local state association or society.
Benefits of membership in a state CPA association range from deep discounts on seminars that
qualify for continuing education credits to protecting the public and profession's interests
by tracking and lobbying legislative issues that affect local state tax and financial
planning issues.
CPAs who maintain state CPA society memberships are required to follow a society professional
code of conduct, further reassuring clients that the CPA is an ethical business professional
conducting a legitimate business who can be trusted to handle confidential personal and
business financial matters.
State CPA associations also serve the community by providing information and resources about
the CPA profession and welcome inquiries from students, business professionals and the public-at-large.
CPAs are not normally restricted to membership in the state CPA society in which they reside
or hold a license or certificate.
Many CPAs who live near state borders or who hold CPA status in more than one state may
join more than one state CPA society.
See also Accountant
Certified General Accountant Institute of Certified Public Accountants
in Ireland Certified Management Accountant
Certified National Accountant Certified Practising Accountant
Chartered Certified Accountant Chartered Global Management Accountant
Legal liability of certified public accountants References
External links Directory of State CPA Societies