Certified Public Accountant (CPA)

Business trends in the 21st century are evolving into different forms. Traditional CPA practices are now branching out to different fields of expertise to catch up with demands of the market. Becoming a competitive CPA today requires having a high standard for yourself and the perseverance to widen your skill set. Let us look at the different discussions related to being a CPA.

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CPA Exam
The most challenging part in becoming a CPA is passing the United Certified Public Accountant Examination. This examination aims to standardize the quality of professionalism expected from a CPA. Developed by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy, the CPA exam is the foremost regulatory tool practiced in all U.S. States and dependencies.

The CPA Exam is known for its brutal length structured into a two-day exam. In 1996, the CPA Exam was divided into four sections namely Business Law and Professional Responsibilities, Auditing, Accounting and Reporting (Taxation, Managerial, Government, and NGO), and Financial Accounting and Reporting for Business Enterprises. Since then the Unified CPA Exam has stuck with the four-section two-day format. However, the CPA Exam shifted to computer-based administration prompting a move to modify these core areas. As it stands, the four main sections of the CPA Exam includes Auditing and Attestation, Financial Accounting and Reporting, Regulations, and Business Environment and Concept. Seventy percent of the questions on the CPA Exam are multiple choice questions while thirty percent of the questions are practical simulations.

What to Expect in a CPA Exam
Students in finance and accounting have to deal with critical decisions before committing to taking a CPA Exam. After all, the preparation for this examination is done in a span of months. Getting prepared in the most possible way involves knowing the nature of the examination from the structure and difficulty to the testing method and criteria for a successful examination.

CPA examinees are wary of the simulation part of the CPA Exam. It is supposed to test your accounting knowledge through a variety of task that can be answered in different ways. Simulation exams test the depth of your accounting skills and measure your analytical skills, communication skills, and research.

Usually the final output of simulation exams is memorandums written by the examinees containing the arrived solution to the problem and his decisions based on the data presented to him. Thus, it is very important that one does not only get to the right answer, but also has the discernment to comprehend the numbers and act on it. Your written memo is judged on organization, development and expression. You should have a structure of ideas shown in your paper, presentation of evidence based from your solutions, and perfect usage of English and accounting terms for clarity.

The scoring scale in a CPA exam ranges from 0 to 99. Seventy-five is the passing score as it is the score that reflects examinees with the sufficient accounting skills to "protect the public".

Content Areas in a CPA Exam
The four major sections of a CPA Exam has corresponding subtopics needed to test the applicant's communication skills, research skills, analysis, judgment, and understanding of the subject. Based on the 2000 Practical Analysis, these skills became the foundation of the major sections of the CPA Exam.

The first section, Auditing and Attestation, includes initializing and planning auditing engagements, considering internal control in both manual and computerized environments, obtaining documents and solid data to form a basis for conclusions, and reviewing the auditing engagement completely and independently. The second section will test you on business structure, economic concepts, financial management, information technology, and planning and measurement.

Candidates are then tested on their knowledge of professional ethics, federal taxation, professional and legal responsibilities, business law, and the skills required to apply these knowledge. One should be aware of every legal responsibilities and implications of a business transaction as well as the accountability expected from a CPA. The regulation section of the exam tests the candidate on the code of professional conduct, proficiency, independence and due care, tax ethics, and more.

The Financial Accounting and Reporting section tests the knowledge of general accounting principles viable for business enterprises, not-for-profit-organizations, and government entities along with the skills needed to apply these tasks.

CPA Licensing and Certification Requirements
The Unified CPA Exam is only one of the several licensing and certification requirements that a candidate has to go through. Once you have passed the exam, you have to understand other regulations that govern your state's licensing requirements. In general, CPA licensing is based on the 3 E's - examination, education, and experience. Depending from state to state, one must apply for a certain number of accounting units in college before being qualified to sit on a CPA exam. Some states adopt the two-tier system where licensing and certification is given separately. In the two-tier system, the candidate must first pass the examination to be certified, and then the candidate must put in the required number of work years before applying for a license.

Work experience requirements also differ from state to state. Two tier states do not require work experience to be certificated. Other states will require the candidate to have your work experience years credited to a career of a public accounting nature, while other states accept a more general area of accounting experience. Candidates in most states are also required to take a special examination on ethics. For your license to be renewed, you must take a 40 hour refresher course every year.

Functions of a Certified Public Accountant
A duly licensed CPA offers the skill needed to carry assurance services. One of the main reasons for budding accountants to take a CPA certification and license is having the power to assess financial statements of an organization based on general accounting standards. The ability of a CPA allows an organization to find unreasonable disclosures misstatement of materials to arrive at a transparent financial report.

In private enterprises, small businesses need a CPA to keep their financial standing in check. A periodic audit will help control expenses, analyze money flow, check inventories, spot employee theft, and solve tax requirements. The general services of a CPA offered in the private sector include tax preparation, audit representation, and IRS correspondence. CPAs are also employed by individuals who are in need of a financial adviser. Usually, their expertise gives advisory services such as cash flow analysis, education funding, estate planning, retirement planning, and tax planning.

A CPA can offer specialized services based on their experience. With the wide range of functions of a CPA in the public and the private sector, their knowledge along with their analytical skills is valuable in every market. Some CPAs branch out to high finance and corporations without taking the auditing role. However, CPAs are required by federal standard and law to be largely independent in relation to the company where they are conducting an attestation engagement.

Following a CPA Public Practice
If you are considering a CPA career, you should understand the rigors of this path from preparation and candidate requirements to the professional realm. Newly certified CPAs have a sense of achievement that gives them the boost to take on any career challenge. However, like any other career path, becoming a CPA is just a stepping stone for bigger things. While becoming a CPA will give you a lot of career opportunities and higher salary, your success will still be based on the decisions that you make.

Certified Public Accountants first get their feet wet on accounting firms. From there, they choose between public practice and joining a private organization. CPA in the public arena serves as an outsider that performs accounting tasks for firms such as auditing, and assurance services. Since companies are adjusting to become more environmental friendly, CPAs are hired to conduct environmental audits so that companies are assured that they are complying with environmental standards and prevent damages from environmental complaints. Investigative accounting is also a hot growth area for CPAs. They are tasked to investigate figures, look through the data, and determine if a fraud has been committed. Forensic accountants usually have related experience in the legal field and criminal investigation and are usually associated with law firms as they assist lawyers in litigation process.

Making a Headway in Information Technology
For years, information technology has supplied companies with new tools that allow their business operations to be more effective in the market. Half of the IT trend comes from the hardware while other half comes from the software. CPA with excellent computer skills are hired to develop accounting and business related software that are usually fitted to cater to the specialized needs of the company. There are various IT consultation firms that are in need of this emerging combination of skills. Software development has taken form in human resource management, payroll processing, financial analysis, and a number of various tasks.

Having a CPA in a business software development firm allows the company to branch out and offer specialized services for companies. Specialized software fitted for a company is needed to accurately reflect the data and tasks that they want to get done. There are many reasons why a company will need customized business software. One of them is that managers need to look at relevant data to arrive at critical decisions to grow their company. Companies also have different spending and earning priorities which cannot be readily measured by conventional software. Having customized software designed by CPAs allows a company to be competitive in their respective industries.

Consulting Service and Personal Finance
CPAs can also choose to work individually or create a firm that offers consulting services for small companies and individuals. Most of the time, they are hired to make an assessment of a company's financial situation. While many people in the market offer these services, a CPA has the edge since it has the authority to give individuals and companies a more technical perspective on one's finances.

If you want to consider consulting services, make sure that you have the proper work experience and the versatility to tackle and business question. Companies may come at you to assess the viability of their company growth plans, implement an internal control system, computerize company accounting functions, or facilitate acquisitions and mergers. You can also explore production and marketing assistance to widen your array of services. These tasks are not strictly done by CPAs, but having a CPA license will certainly boost your credential.

However, CPAs are led to a pitfall if they dive into consulting services without the proper experience. In many instances, these tasks require you to break out of becoming a CPA and acquire a combination of skills that are useful to the market. That is why it is common for CPAs to take another degree or a secondary career. The more skills that you have as a professional, the more marketable you are to prospective clients.

Successful CPA Firms
Evolving business trends changed the nature of CPA firms from number crunchers to an outsourced department by companies. In this case, successful CPA firms should have the ability to be the jack of all trades. CPA firms should have a core number of specialized services while having a set of complementary services that can be integrated for the needs of a company.

Choosing the right CPA Firm starts with getting quality referrals. Usually, you can get a referral from a bank or any organization who needed a CPA before. Match the services offered by the CPA firm with your list of needs, discuss each item with them, and ask for a detailed quote for their services. From the initial meeting, companies should establish if the CPA firm will be very communicative to your needs by asking about certain issues. You must be assured that they will be responsive when a conflict arises and have a developed a strategy to react to different situations. If you are interviewing a CPA firm, request for the personnel that will actually do the work for you. Some CPA firms have representatives that negotiate for the firm. However, there can be relational problems down the road if you do not establish communications with individuals that will actually manage your finances.


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