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'Certified Public Accountant' ('CPA') 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 certification as a CPA. In most U.S. states, only CPAs who are licensed are able to provide to the public attestation (including auditing) opinions on financial statements. The exceptions to this rule are Arizona, Kansas, North Carolina and Wyoming, where although the "CPA" designation is restricted, the practice of auditing is not.
Many states have a lower tier of accountant qualification (below that of CPA), usually entitled "Public Accountant" (with designatory letters "PA"). However the majority of states have closed the designation "Public Accountant" to new entrants, with only about 10 states continuing to offer the designation. Many PAs belong to the National Society of (Public) Accountants.
Many states prohibit the use of the designations "Certified Public Accountant" or "Public Accountant" (or the abbreviations "CPA" or "PA") by a person who is not certified as a CPA or PA in that state.^[1] As a result, in many circumstances, an out-of-state CPA is restricted from using the CPA designation or designatory letters until a license or certificate from that state is obtained.

Contents

Services Provided by CPAs

CPA exam

Other licensing and certification requirements

Two tier states

Work experience requirement

Ethics

Continuing Professional Education

Inter-state practice

AICPA membership

State CPA association membership

International context

Notes

See also

External links

Services Provided by CPAs

The primary function CPAs fulfill relate to assurance services, called public accounting. In assurance services, also known as financial audit services, CPAs attest to the reasonableness of disclosures, the freedom of material misstatement, and the adherence to the applicable generally accepted accounting principles (GAAP) in financial statements. CPAs can also be employed by corporations - termed 'the private sector' - in finance functions such as Chief Financial Officer (CFO) 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. In audit engagements, CPAs are (and have always been) required by professional standards and Federal and State laws to maintain independence (both in fact and in appearance) from the entity for which they are conducting an attestation (audit and review) engagement. However, most individual CPAs who work as consultants do not work as auditors, or vice versa.
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 Attest Services

★ Financial Accounting

★ Management Consulting and Performance Management

★ Information Technology, especially as applied to accounting and auditing

★ Corporate Finance (Merger & Acquisition, initial public offerings, share & debt issuings)

★ Financial Planning

★ Financial Analysis

★ Venture Capital

★ Forensic Accounting (preventing, detecting, and investigating financial frauds)

★ Tax Preparation and Planning

★ Estate Planning

★ Corporate Governance
While some CPAs are generalists and offer a range of services (especially those in small practices) many CPAs specialize in just one area and do not provide all the services listed above.

CPA exam

Main articles: Uniform Certified Public Accountant Examination

In order to become a U.S. CPA, the candidate must sit for and pass the Uniform Certified Public Accountant Examination (Uniform CPA Exam), which is set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy.
Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically the requirement is a U.S. bachelors degree in accounting with an additional 1 year study. This requirement for 5 years study is known as the "150 hour rule" and has been adopted by the majority of state boards, although there are still some exceptions (e.g. Delaware).
The Colorado State Board of Accountancy allows Chartered Certified Accountants (ACCA), together with Chartered Accountants from eligible jurisdictions automatic eligibility to sit for the Uniform CPA Exam as a Colorado candidate.
Certain overseas qualified accountants seeking to become U.S. CPA may be eligible to sit for the ''International Qualification Examination'' as an alternative to the Uniform CPA Exam.
The Uniform CPA exam tests general principles of state law such as the law of contracts and agency (questions not tailored to the variances of any particular state) and some federal law as well.^[2] Most states do not yet require applicants for CPA status to pass any state-specific examination.^[3]

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 and the Examination component is the Uniform CPA itself.

Two tier states

Some states have a 2 tier system whereby an individual would first become certified as a CPA -- usually by passing the CPA exam. That individual would then later be eligible to be licensed once a certain amount of work experience is accomplished. Most states, however, have a 1 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, Illinois, Montana,Florida and Nebraska. However the trend is for 2-tier states to gradually move towards a 1-tier system. Since 2002, the State Boards of Washington and South Dakota have ceased issuing CPA certificates, and Illinois plans to follow suit in 2010.
A number of states are 2-tiered, but require work experience for the CPA certificate, such as Ohio.

Work experience requirement

The Experience component varies from state to state:

★ The 2-tier states generally do not require work experience for a CPA certificate (it is required for a license to practice).

★ 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. 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 ''Fourth E'' in terms of requirements to become a CPA. The majority of these will accept the AICPA self-study ''Professional Ethics for CPAs'' CPE course, however some states (notably California) set their own course, or specify a different requirement.

Continuing Professional Education

Most states require attendance for a minimum number of hours annually (often 40 hours annually or 80 hours biannually) for appropriate continuing professional education (CPE) to maintain a CPA license.
Two-tier states do not usually require CPE to maintain a CPA certificate. However, all members of the American Institute of Certified Public Accountants must undertake CPE as a condition of AICPA membership.

Inter-state practice

An accountant is required to meet the legal requirements of any state in which he wants to practice. Also, the term "practice of public accounting" and similar terms are given definitions that vary from state to state. The practice of public accounting under state law often includes the signing of audit reports and the performance of other services, such as tax or management consulting, while holding oneself out as a CPA.
Most states will grant CPA status under reciprocity to a CPA licensed in another state. CPAs from 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 practising rights to a CPA licensed in another state.

AICPA membership

The CPA designation is granted by individual state boards, not the American Institute of Certified Public Accountants (AICPA). Membership in the AICPA is not obligatory for CPAs, although many 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.

State CPA association membership

CPAs may also choose to become members of their local state association or society (also optional). 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 (in addition to any code enforced by the state regulatory authority), 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.

★ Directory of State CPA Societies

International context

Many persons from outside the United States obtain the U.S. CPA designation through sitting for the Uniform CPA Exam or International Qualification Examination (IQEX). Due to the size of the U.S. accounting profession and the importance of U.S. accounting rules, many overseas accountants wish to obtain the U.S. CPA designation in addition to, or as an alternative to, a local qualification.
The designation ''Certified Public Accountant'' also exists as a public accounting designation in many overseas countries, unrelated to the U.S. CPA designation. These countries include:

★ China: The Chinese Institute of Certified Public Accountants

★ Cyprus : Institute of Certified Public Accountants in Cyprus

★ Hong Kong : Hong Kong Institute of Certified Public Accountants

★ Republic of Ireland : Institute of Certified Public Accountants in Ireland

★ Israel : Institute of Certified Public Accountants in Israel

★ Japan : The Japanese Institute of Certified Public Accountants

★ Kenya : Institute of Certified Public Accountants of Kenya

★ Korea : The Korean Institute of Certified Public Accountants

★ Malaysia : Malaysian Institute of Certified Public Accountants

★ Malta : The CPA title is given to qualified who have at least 3 years of experience, in accordance to the ''Accountancy Profession Act''.

★ Mexico : The National Federation of Certified Public Accountants, The Mexican Institute of Certified Public Accountants

★ Philippines : Philippine Institute of Certified Public Accountants

★ Singapore : Institute of Certified Public Accountants of Singapore

Notes

1. For example, a Texas statute provides: "A person may not assume or use the title or designation 'certified public accountant,' the abbreviation 'CPA,' or any other title, designation, word, letter, abbreviation, sign, card, or device tending to indicate that the person is a certified public accountant unless the person holds a certificate under this chapter." Tex. Occup. Code sec. 901.451(a).
2. See generally ''Uniform CPA Examination: Examination Content Specifications'', American Inst. of Certified Public Accountants, p. 11-12 (orig. issued June 14, 2002; references updated Oct. 19, 2005) at [1]
3. An example of an exception is Utah.

See also

★ Accountant

★ Chartered Certified Accountant (ACCA)

★ Chartered Accountant

★ Certified General Accountant (Canada)

★ Certified Practising Accountant (Australia)

★ Certified Management Accountant

External links

★ National Association of State Boards of Accountancy - CPA Exam (NASBA) — United States

★ American Accounting Association

★ CPA exam (AICPA)

★ CPA Exam Cram Blog (New Jersey Society of CPAs)

★ Becoming a CPA (AICPA)

★ Accounting information for college and high school students (AICPA)

★ CPA License Information

★ A historical article on how account certification was first organized in the U.S.

★ National Society of (Public) Accountants