Certified Public Accountant: 2 Things To Know

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A Certified Public Accountant (CPA) qualifies as one after successfully passing a series of exams conducted by a recognized university or institute. He also needs additional work experience in order to get his certificate of practice.

*Qualifications: A CPA is normally required to be a member of the National Society of Public Accountants which has some pre-set stringent norms for membership. In the US where most CPAs work, each state has its own set of rules governing the workings of CPAs and an out-of-state candidate is first required to get the certificate of the state where he intends to work.

The concept of the CPA was started in the early nineteenth century and the candidate had to qualify in an examination conducted by the American Institute of Certified Public Accountants (AICPA). The CPA entrance exam covers auditing and attestation, accounting and regulation, business concepts and financial reporting.

*Services: Public accounting is the primary service provided by CPAs. These are also called financial audit services or in general terms, assurance services. A CPA is qualified to certify whether financial statements have been prepared in adherence to pre-determined accounting principles. They are also empowered to attest the genuineness of disclosures and their reasonableness. They will qualify a report if found to contain misstatements, errors or attempts at fraud.

CPAs are trained to know and stick to professional standards that are controlled by US federal and state laws and are supposed to adopt a neutral, unbiased view when it comes to passing a judgment on audit cases where they are called in to submit an opinion. However, it is seen that CPAs do not function as auditors if they are otherwise functioning as consultants.

Small and medium enterprise hire CPAs for taxation related matters and to independently oversee the functioning of their audit departments in order to ensure the correctness of practices followed. This is in addition to centralizing accounting functions in businesses which operate cross-country and have to comply with different jurisdictions of different states.

Since CPAs are more qualified and work in specialized spheres, their fees are also higher. Moreover, because they are empowered to certify and attest certain important financial documents, they can charge extra fees for the same. That is precisely why they are preferred more by larger businesses and corporations because of their specialized training. Unlike bookkeepers, they need to upgrade knowledge skills constantly in order to get their license renewed. Taxation matters, budgeting and funds management are usually their forte.


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