Difference between CPA and non-CPA

Since a license is not mandatory to practice the accounting profession, non-CPAs also qualify to be called accountants. Hence, an accountant is an all-encompassing term that includes both CPAs and non-CPAs. However, the CPA certification adds greater credibility to accountantsAccountantsAn accountant is a finance professional responsible for recording business transactions on behalf of a firm, reporting the firm’s performance and issuing financial statements. Thus, an accountant plays an important role whether it is a small domestic entity or a large multinational company.read more and also expands their scope of work.

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CPA vs non-CPA Comparison Table

What is a CPA?

A CPA is a state board-issued accounting license acquired by a candidate after passing the Uniform CPA exam and fulfilling the educational and experience requirements. The American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA) supervise the entire process to gain a CPA credential. 

Prerequisites for a CPA license

To acquire a CPA license, you have to meet all the following four E’s:

  • Exam – Qualify the Uniform CPA ExamEducation – Bachelor’s Degree with 150 credit hours and necessary courseworkExperience – 1-3 yearsEthics Exam (only if required by the state board)

Apart from the Uniform CPA exam, all other requirements vary by state boards. Besides the above prerequisites, you must also fulfill the Continuing Professional Education (CPE) requirements to retain your license.

Uniform CPA exam

Passing the Uniform CPA exam is the most crucial step in the attaining the license. The AICPA coordinates with the State Boards of Accountancy and NASBA to administer this exam.

The exam consists of four sections to be taken one at a time. You must clear all the four exam sections within 18 months of passing the first section. Please note that you need at least a 75 on a scale of 0-99 in every section to pass.

Roles and Responsibilities

The rigorous preparation for the license infuses a strong set of accounting and managerial expertise in CPAs. With their seasoned skills and unique judgment, they easily adapt to the contemporary needs of the dynamic business world. Some of the key job responsibilities of a CPA are as follows:

  • Preparation and analysis of financial recordsAuditing and reviewing financial statementsFinancial StatementsFinancial statements are written reports prepared by a company’s management to present the company’s financial affairs over a given period (quarter, six monthly or yearly). These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all levels.read moreFinancial and management consultingTax planningTax PlanningTax planning is the process of minimizing the tax liability by making the best use of all available deductions, allowances, rebates, thresholds, and so on as permitted by income tax laws and rules imposed by a country’s government. It contributes to better cash flow and liquidity management for taxpayers, as well as better retirement plans and investment opportunities.read more, preparation, and filingFinancial data managementCompliance to regulationsFinancial planning, reporting, and budgetingBudgetingBudgeting is a method used by businesses to make precise projections of revenues and expenditure for a future specific period of time while taking into account various internal and external factors prevailing at that time.read moreForensic accounting

CPAs are most valued for their advisory role. With their extensive knowledge of all aspects of finance, they are ideal for guiding you through all your growth plans. From starting a new office or planning a multibillion-dollar mergerMergerMerger refers to a strategic process whereby two or more companies mutually form a new single legal venture. For example, in 2015, ketchup maker H.J. Heinz Co and Kraft Foods Group Inc merged their business to become Kraft Heinz Company, a leading global food and beverage firm.read more, they are the right pick to achieve your desired milestones. 

Career Prospects

The exclusive skills and broad scope of work of CPAs makes them eligible for higher pay packages. CPAs earn nearly 10%-15% higher than their non-certified counterparts. Besides that, they also enjoy a stable career, numerous job opportunities, immense respect, and a professional edge over non-CPAs.

Moreover, as per the Accountancy Licensee Database (ALD), there are 658,267 actively licensed CPAs across the United States. This number is expected to grow further in the coming years. The US Bureau of Labor Statistics (BLS) has reported a 22% employment growth for CPAs during 2021-2028. 

Exclusive rights of CPAs vs non-CPAs

CPAs are usually in much demand in all business sectors. However, they are particularly sought after by large corporations and public limited companies. This is due to some exclusive rights they enjoy owing to their license.

Under federal law, public limited companies (PLC) have to offer audited financial statements to their stakeholders. They are also often faced with complex financial and tax concerns and have dealings with the Internal Revenue Service (IRS).

CPAs offer them dedicated services in the following areas:

  • Writing audited financial statementsFiling a report with the US Securities & Exchange Commission (SEC)Signing their tax return as a paid preparerIssuing an opinion on reviewed, compiled, or audited financial statements

Being an Accountant might be good; however, being a CPA is even better. Though it calls for countless hours of dedicated learning and training, the rewarding outcome is worth every bead of sweat on your forehead. 

What is a Non-CPA (General Accountant)?

A general accountant is an accounting professional entitled to record, examine, analyze, and report financial transactions. Their key responsibility is to ensure the accuracy of financial records and compliance to accounting principlesAccounting PrinciplesAccounting principles are the set guidelines and rules issued by accounting standards like GAAP and IFRS for the companies to follow while recording and presenting the financial information in the books of accounts.read more. In addition, they strive to assess and eliminate as many risks as possible to help the business run efficiently.

Educational requirements

To be an accountant, you need to have at least a bachelor’s degree in accounting or a related field like business or finance. However, candidates with an associate degree having relevant experience can also work as junior accountants.

Moreover, accountants can also specialize in management, public, or government accounting to improve their job prospects.

Duties and responsibilities

Some of the job responsibilities of non-CPAs are as follows:

  • Preparing financial reportsFinancial ReportsFinancial reporting is a systematic process of recording and representing a company’s financial data. The reports reflect a firm’s financial health and performance in a given period. Management, investors, shareholders, financiers, government, and regulatory agencies rely on financial reports for decision-making.read more, budgets, or documentsReporting findings to managers or other senior officialsFinancial consultingEnsuring regulatory complianceDiscussing business policies and opportunities with managersVerifying the accuracy of recordsConducting financial auditsFinancial AuditsFinancial audit is an independent examination of the financial statements of an entity irrespective of its size. It is done by auditors or audit firms who provide an opinion regarding the accurate and fair view of the facts & figures mentioned in the financial statements.read moreCalculating tax details

Of late, general accountants have also started leveraging updated technologies like Robotics Process Automation and Artificial Intelligence to assist them in their tasks.

Career prospects

Accountants work in almost every business sector, from thriving government agencies, non-profit organizations, and corporations to the budding start-ups.

According to the BLS, jobs in the accounting profession are likely to grow by 4% during 2019-2029. So, it is expected to keep enjoying a reasonable market demand in the future.

However, average salary and low prestige compared to CPAs act as an impediment to attaining career stability in this profession. Therefore, accountants must strive to get certified to bridge this gap and ensure sustained professional growth.  

CPA vs non-CPA Choice

Despite sharing a similar job profile, accountants still lag behind CPAs due to their lack of in-depth knowledge, formal training, and relevant experience. The absence of certification also puts them at a disadvantage. They are not licensed to deal with government agencies like SEC and IRS directly or sign tax returns or audited financial statements.

With their niche knowledge and skill, CPAs are well-equipped to offer valuable financial insights, contribute to budgeting processes, and design effective strategies. Though with experience, non-CPAs too can do these.

However, their competency and credibility are debatable. Accountants are generally better suited to perform the basic accounting tasks like bookkeepingBookkeepingBookkeeping is the day-to-day documentation of a company’s financial transactions. These transactions include purchases, sales, receipts, and payments.read more, handling common tax issues, and maintaining business accounts.

Moreover, with a regulatory body looming overseeing their practice, the quality and integrity of a CPA’s work is rest assured. However, there are no professional bodies governing non-CPAs. Hence, the onus of choosing the right accountant lies on the clients.

Finally, the choice between a CPA and a non-CPA boils down to a client’s circumstance or situation at hand.  Generally, small businesses with relatively lower budgets and less complex financial and tax issues opt for non-CPAs. On the other hand, large corporations or PLCs favor CPAs as they provide exclusive and reliable accounting services.

CPA vs Non-CPA Infographics

This has been a guide to CPA vs. Non-CPA. Here we discuss the difference between CPA and Non-CPA along with infographics and a comparative table. You can learn more from the following articles –

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