Certified Public Accountant

Certified Public Accountant
Name	Certified Public Accountant
Caption	CPA examination in progress
Formation	1896
Type	Professional designation
Headquarters	United States
Related	American Institute of Certified Public Accountants, National Association of State Boards of Accountancy

Certified Public Accountant

A Certified Public Accountant (CPA) is a licensed accounting professional authorized to provide accounting, auditing, tax, and attest services in the United States. The CPA designation is granted by state boards of accountancy and is widely recognized across business, finance, and public sectors, associated with firms, corporations, governments, and non-profit institutions. CPAs frequently interact with entities such as the Securities and Exchange Commission, Internal Revenue Service, Fannie Mae, Federal Reserve Board and major audit firms including Deloitte, PricewaterhouseCoopers, Ernst & Young, and KPMG.

History

The CPA credential traces origins to late 19th-century efforts to standardize accounting practice following industrial expansion and financial crises that implicated firms like Panic of 1873 and Panic of 1893. State-level licensure began after influential reports and professional organizing by groups such as the American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy, with the first laws enacted in states like New York. The CPA role evolved through regulatory milestones including the creation of the Securities Act of 1933, the Securities Exchange Act of 1934, and post-scandal reforms tied to events involving corporations like Enron, leading to the Sarbanes–Oxley Act of 2002.

Qualification and Licensing

To obtain a CPA license applicants must satisfy education, examination, and experience requirements set by state boards such as the California Board of Accountancy and the New York State Board of Public Accountancy. Typical prerequisites include a bachelor's degree from institutions like Harvard University, University of California, Berkeley, or University of Texas at Austin with a specified number of accounting credits, often 150 semester hours. Candidates must pass the Uniform CPA Examination administered by the American Institute of Certified Public Accountants together with the National Association of State Boards of Accountancy. Many jurisdictions require supervised experience under a licensed CPA at firms including Grant Thornton, Baker Tilly, or within public agencies like the Government Accountability Office. Licensure processes may include ethics exams developed by AICPA or state boards, and mobility rules influenced by interstate compacts such as the Uniform Accountancy Act.

Scope of Practice and Services

CPAs provide audit and assurance services to clients including publicly traded companies listed on the New York Stock Exchange and private entities. They perform financial statement audits, compilations, and reviews in compliance with standards from bodies like the Financial Accounting Standards Board and the Public Company Accounting Oversight Board. CPAs also deliver tax planning, compliance, and representation before the Internal Revenue Service; advisory services linked to mergers and acquisitions involving firms such as Goldman Sachs; forensic accounting in cases associated with Securities and Exchange Commission investigations; and management consulting for corporations like General Electric and Microsoft.

Regulation and Ethics

Regulation of CPAs rests with state boards and federal oversight when CPAs audit public companies through the Public Company Accounting Oversight Board, which arose after the collapse of firms tied to scandals such as Arthur Andersen LLP. Ethical standards are promulgated by the American Institute of Certified Public Accountants and enforced via state disciplinary processes; cases may involve enforcement actions by agencies including the Securities and Exchange Commission. Professional codes address independence, integrity, objectivity, confidentiality, and competence, with sanctions ranging from license suspension to civil penalties under statutes such as the Sarbanes–Oxley Act of 2002 and actions by prosecutors from offices like the United States Department of Justice.

Employment and Career Paths

CPAs pursue careers in public accounting firms—ranging from local firms to Big Four networks like Deloitte and PricewaterhouseCoopers—corporate roles in finance and accounting at companies like Apple Inc. and ExxonMobil, government positions at agencies including the Internal Revenue Service and Securities and Exchange Commission, and non-profit roles with organizations such as the Red Cross. Career trajectories commonly move from staff accountant to senior, manager, director, and partner or chief financial officer positions; notable career examples include executives who came from audit backgrounds at firms like KPMG and Ernst & Young.

Education and Continuing Professional Education

Formal education for aspiring CPAs is offered by universities such as University of Illinois Urbana–Champaign, University of Michigan, and Indiana University Bloomington, which provide programs aligned with accounting curricula and the 150-hour requirement. After licensure, CPAs must satisfy continuing professional education (CPE) mandates set by state boards and organizations like the AICPA to maintain competency in areas overseen by standard setters including the Financial Accounting Standards Board and Governmental Accounting Standards Board. CPE can cover taxation changes from the Internal Revenue Service guidance, auditing updates from the Public Company Accounting Oversight Board, and ethics training recommended by the AICPA.

International Recognition and Equivalents

Internationally, equivalents to the CPA include designations such as Chartered Accountant (India), Chartered Accountant (England and Wales), Certified Public Accountant (Japan), Chartered Professional Accountant (Canada), and credentials from bodies like the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Scotland. Mutual recognition agreements and frameworks—often negotiated among organizations like the International Federation of Accountants and national institutes—facilitate cross-border practice and mobility between jurisdictions such as Canada, United Kingdom, Australia, and Japan.

Category:Accountancy