While the primary function of certified public accountants is to present clients with advice on both planning for and meeting financial goals, their professional responsibilities by no means stop there.

1. A Brief Background on
Certified Public Accountants
by: Adam Greene CPA

2. The field of accounting reaches far beyond numerical calculations and an endless
bounty of spreadsheet tabs. Accountants are not only tasked with the
responsibility of monitoring financial positions, but also the duty to uphold a high
standard of ethics within their work. While the primary function of certified public
accountants is to present clients with advice on both planning for and meeting
financial goals, their professional responsibilities by no means stop there.

3. Professional Overview
In the United States, a CPA is an individual licensed by one or more states to manage, audit, and report financial
information. Becoming a CPA requires a passing score on the Uniform CPA exam, several hours of apprenticeship at an
accounting firm, and a college degree. The American Institute of Certified Public Accountants develops the Uniform CPA
exam and the National Association of State Boards of Accountancy administers it four times per year.
In addition to passing the exam, CPAs are required to complete Continuing Professional Education courses to maintain their
licenses. Similar to doctors and lawyers, accountants are responsible to exercise due care to uphold the quality of
professional service. Accountants who violate due care or the code of ethics face disciplinary action or termination from
practice.
Whether a CPA works for a large accounting firm or his own accounting practice, all CPAs are trained and educated in
various assurance services. Assurance services aim to reduce the risk of making poor decisions based on incorrect
information. Depending on a client’s needs, large firms and small practices offer different benefits. Upon passing the CPA
exam, accountants choose between three divisions of accounting: audit services, management, or financial accounting.

4. Management Accounting
CPAs are tasked with analyzing the financial information produced by a company’s accounting information
system, which is an organized method or practice of recording costs and transaction data. Decision-
makers at a company generally utilize management accounting insights to make short-term and day-to-
day business decisions. This style of accounting is geared towards achieving business development
goals.
For example, a business that operates an assembly line in a factory needs to know which activities
influence the bottom line. A CPA employs relevant cost analysis or activity-based cost reviews to pinpoint
ineffective activities and excessive expenditures. Using such techniques, CPAs generate cost-saving
recommendations that are passed on to the business's decision-makers.

5. Financial Accounting
Unlike management accounting, financial accounting focuses on complying with external requirements
and evaluating long-term business objectives.
Businesses are required by state and federal laws to produce quarterly and annual financial statements.
Publicly traded companies must provide accurate and timely reports on their financial positions. A
company’s financial position refers to the balance of its economic resources and claims against those
resources.
These documents typically include a balance sheet, income statement, and statement of cash flows. In
some circumstances, a company might also publish a statement of retained earnings. CPAs prepare the
financial statements in accordance with the U.S. Generally Accepted Accounting Principles and file the
required documents with the United States Securities and Exchange Commission. Only accountants with
the CPA credential are permitted to submit filings with the SEC.

6. Audit Services
CPAs evaluate financial statements, tax documents, and accounting system controls. Internal CPAs verify
and inspect the integrity of financial statements prior to filing the documents with the SEC or IRS.
External auditors, also called independent accountants, do not work directly for the client. It is their job to
ascertain that the information provided in a company’s financial report conforms to the generally accepted
accounting principles and the law. The results of an external audit are not necessarily to confirm the
precision of a firm’s calculations, but rather to give a professional opinion that the information represents a
fair valuation of the company to its investors.

7. Certified Financial Planner vs. Certified Public Accountant
In the finance and accounting industry, certified financial planners and CPAs share a number of similar
responsibilities. A CFP typically designs and deploys financial plans for investors. In addition to
investment insight, a CFP often provides services such as estate and retirement planning, as well as
business development insight. Essentially, while CFPs are tasked with crafting investment plans, CPAs
primarily offer assurance services.

8. CPAs Add Value
Hiring a CPA to review a company’s financial position yields several long- and short-term benefits. CPAs
help businesses maintain compliance with governmental regulations and prepare for filing taxes, saving
time and money in case of an audit. While executive officers are held personally liable for any errors
present in the organization’s financial statements, a CPA verifies the final calculations. Additionally, CPAs
act as information management specialists and ensure that a company’s accounting system runs
efficiently.

9. Partners in Business
Running a company with incorrect financial information presents a serious risk to the bottom line. CPAs
work with business leaders to make reasonable decisions in an economic environment abundant with
alternative choices.