What Is The Difference Between A CPA And An Accountant?

 
Before understanding the differences between a CPA and a regular accountant let us know what accounting means first. The process of setting up a book keeping system, monitoring and interpreting is called “Accounting” in general terms. And the person who does it is typically called an “Accountant”. But, most people confuse all accountants with CPAs. A CPA is a Certified Public Accountant. Remember, not all accountants are CPAs although all CPAs are accountants. Anyone who does book keeping can be called an accountant but to be a CPA a person must go through rigorous procedures of learning and testing.
 
In a big company there may be thousands of accountants, but only few CPAs who usually supervise many accountants and there is one “Controller” who takes care of the entire army of accountants. This post is also usually held by a CPA not an ordinary accountant. Some states have restricted the use of word accountant to CPAs only. A CPA is some one who has passed the test of Uniform CPA examination which is very difficult. A person can put CPA besides his name after passing this examination. But passing a CPA is not easy, it involves thorough understanding and preparation of the accounting principles and many tax laws which are beyond the understanding of regular accountants. Regular accountants might practice accounting but they may not have taken CPA examination.
 
The word “public” in CPA signifies that CPAs can give their services to third party. In most of the states only CPAs are designated to offer public accounting service not an ordinary accountant. Anyone can be called an accountant regardless of the experience or level of their training. A CPA has enormous reputation and carried a lot of weight in business and financial circles. They are the most advisors for many big firms and for small businesses the advice of a CPA is next to their family members.
 
Coming back to the point of how CPA goes through a rigorous educating and testing process, the candidates usually complete the toughest business courses at universities and colleges before taking up the examination. Typically the accounting graduates must take at least 150 hours of course credit before appearing for CPA examination. The examination tests the candidate in the areas of business, auditing and general accounting rules. This exam is the accounting equivalent of bar exam and medical board test. The CPAs are required to follow the strict ethical code and perform within the highest standards of the profession. At the same time the CPAs should continuously keep themselves updated with the current changes in rules and regulations and take continuing education classes. The CPAs are required to take 80 hours of continuing education every two years. On the other hand there are no such requirements for ordinary accountants their scope of work is generally limited around book keeping and maintaining general accounts of the business. The CPAs who are licensed to practice public accountancy are also closely monitored for unethical practices and the board may snatch their license if they are suspected in a single accountancy malpractice.
 
CPAs offer tax and financial services to individuals and to businesses also. They also offer strategic advice to many businesses. They also offer investment advice, estate planning and much more. Many businesses turn to CPAs to discuss the profitability of new product lines, seek financial advice in diversifying investments. They offer various business and consulting services. They help businesses perform complex financial analysis and planning to attain profitability. In this world of ever changing laws and technology both international and regional, the competition is so stiff that businesses approach CPAs to increase their financial efficiency. An ordinary accountant can’t perform these complex tasks.
 
The CPAs also perform audits of large corporations and come up with loop holes and inconsistencies in the accounting system of that corporation which is a very complex task. The ordinary accountants are not eligible and trained enough to do this.
 
In other words CPAs offer complete services while an accountant can do general accounting and take care of simple tax related matters.