Just as a surgeon needs a medical license to operate and a driver needs a state-issued ID to get behind the wheel, an accountant must be licensed in order to perform many key services, such as auditing.<\/p>\n
Today, Certified Public Accountants (CPAs) are critical to business, finance and regulation, often operating at the crucial seam of industry and government. And yet, while there are more than 600,000 of us working in the U.S. today, many business owners couldn\u2019t tell you the difference between an unlicensed accountant and a CPA.<\/p>\n
Today, we\u2019ll do our best to fix that. In this short article, we\u2019ll review the basics that everyone should know about CPAs: who we are, how we\u2019re trained, and what we do. Then, we\u2019ll offer a few tips for finding the right CPA firm for your business.<\/p>\n
In the U.S., the origins of the CPA can be traced back well over a century.<\/p>\n
By the late 1800s, accountants were widely used across the United States and the world at large. However, the quality of their work varied widely, as did their reputability. As regulations became more complex and accountants became more embedded in industry, both the government and the private sectors pushed to establish a new set of standards, a license that had to be earned through rigorous training and testing.<\/p>\n
This license would serve as a mark of quality, assuring both businesses and the government that an individual had the knowledge, skillset and track record to perform sensitive accounting tasks. For example, when a licensed accountant put their stamp of approval on a set of financial records, all parties should be able to trust that the records are complete and accurate.<\/p>\n
As a result, the CPA Exam was established in New York State in 1896 and was soon adopted in other states. It\u2019s been used across the U.S. ever since; today, it\u2019s the gold standard of the accounting profession.<\/p>\n
Written by the American Institute of Certified Public Accountants<\/a> (AICPA) and administered by the National Association of State Boards of Accountancy<\/a> (NASBA), the CPA Exam is a standardized test, much like the Bar for attorneys.<\/p>\n A rigorous exam, it consists of four parts, testing would-be CPAs on their knowledge of Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation. Today, most exams also include a fifth portion: ethics.<\/p>\n The CPA exam thoroughly tests individuals on their accounting skills and understanding of the industry\u2019s regulations, best practices and ethical issues. However, passing the exam isn\u2019t enough. States also require CPAs to complete 150 college credit hours of accounting-related courses and complete at least a year of work in the field.<\/p>\n Even when they have passed the exam and met all other requirements, CPAs must fulfill annual Continuing Professional Education (CPE) requirements. This often means over 40 hours of CPE work each year.<\/p>\n And while it takes plenty of hard work to become a CPA, one can lose their certification relatively quickly. Allow your license to lapse without renewal, and it will be temporarily revoked. Commit a graver offense \u2013 such as performing auditing services with an expired license or committing fraud \u2013 and you could lose your license permanently.<\/p>\n A CPA designation a tough standard, but that\u2019s what makes it a mark of quality and trust.<\/p>\n Having passed the CPA Exam and completed rigorous state requirements, a CPA is licensed to perform a wide range of accounting services within the state in which they qualified, as well as within states with mobility laws. (Today, all<\/em> states except for Hawaii have mobility laws allowing out-of-state CPAs to practice.)<\/p>\n One of the most common and important services provided by a CPA is auditing. An CPA may audit numerous aspects of a business, such as their processes and procedures, their compliance with government regulations, or the accuracy of the financial records they have reported to investors. Many of these audits are legal requirements for businesses, designed to prevent fraud and encourage best practices, and they can only <\/em>be performed by an independent, unbiased Certified Public Accounting.<\/p>\n Performing a financial audit can be complex, requiring knowledge of financial practices as well as the Generally Accepted Accounting Principles (GAAP), which is essentially the government\u2019s list of rules for auditors.<\/p>\n In addition to the complexity, an audit also requires a great deal of trust. The business or nonprofit organization for which you\u2019re performing the audit must trust your skillset, while the government must trust that you are performing the audit ethically, without bias. This is why CPAs are required to undergo such rigorous training and testing before they begin their work.<\/p>\n In addition to performing audits, CPAs may provide a wide range of other accounting and consultancy services (so long as they maintain independence with the organizations they are auditing). Some of those services include corporate finance services, regulatory compliance, and tax planning and tax preparation, as well as preparing financial statements, among others.<\/p>\n Looking for a CPA professional in Chicago, IL or the Chicago area?<\/p>\n While all Certified Public Accounting firms are qualified to perform key services like auditing, firms differ greatly when it comes to their specialization, capabilities and communication.<\/p>\n Here\u2019s what to look for:<\/p>\n Professional Memberships and Affiliations.<\/strong><\/span> You can learn a lot about a firm by the organizations with which they align themselves. At Dugan + Lopatka, an accounting firm in the Chicago suburbs<\/a>, our organization is a member of the Illinois CPA Society and the American Institute of CPAs, the largest membership association in the world.<\/p>\n Dugan + Lopatka is also a founding member of CPA Management Systems Inc. (CPAMS), a global alliance of independent accounting firms. This allows us to consult with firms nationally and internationally on complex, location-specific tax issues and share best practices with peers.<\/p>\n Learn more about our professional memberships and associations here.<\/a><\/p>\nWhat does a CPA do?<\/h3>\n
How to find the best CPA firm for your business.<\/h3>\n