Certified Public Accountant
Encyclopedia
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. Individuals who have passed the Exam but have not either accomplished the required on-the-job experience or have previously met it but in the meantime have lapsed their continuing professional education are, in many states, permitted the designation "CPA Inactive" or an equivalent phrase. 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 Ohio
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 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. As a result, in many circumstances, an out-of-state CPA is restricted from using the CPA designation or designators letters until a license or certificate from that state is obtained.
Texas additionally prohibits the use of the designations "accountant" and "auditor" by a person not certified as a Texas CPA, unless that person is a CPA in another state, a non-resident of Texas, and otherwise meets the requirements for practice in Texas by out-of-state CPA firms and practitioners.
Many other countries also use the title CPA to designate local public accountants.
services, CPAs attest to the reasonableness of disclosures, the freedom from 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. This trend has since reversed. 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.
CPAs also have a niche within the income tax preparation industry. Many small to mid-sized firms have both a tax and an auditing department.
Whether providing services directly to the public or employed by corporations or associations, CPAs can operate in virtually any area of finance including:
(Uniform CPA Exam), which is set by the American Institute of Certified Public Accountants
(AICPA) and administered by the National Association of State Boards of Accountancy
(NASBA). The CPA was established in law on April 17, 1896.
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 which includes a minimum number of qualifying credit hours in accounting and business administration 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.California). This requirement mandating 150 hours of study has been adopted by 45 states. Work experience under the supervision of a practising accountant is not generally required.
The Colorado State Board of Accountancy allows Chartered Certified Accountant
s (ACCA
), together with Chartered Accountant
s from eligible jurisdictions (Australia, South Africa, Canada, Ireland, New Zealand) automatic eligibility to sit for the Uniform CPA Exam as a Colorado
candidate. As of December 9, 2009, ACCA
members are not automatically eligible to sit for the Uniform CPA Exam.
Certain overseas qualified accountants seeking to become U.S. CPAs 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.
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. Some states have a two 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. Other states have a one 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
, Florida, Illinois
, Montana
, and Nebraska
. The trend is for two-tier states to gradually move towards a one-tier system. Since 2002, the State Boards of Washington and South Dakota
have ceased issuing CPA "certificates" and instead issue CPA "licenses," and Illinois
plans to follow suit in 2012.
A number of states are two-tiered, but require work experience for the CPA certificate, such as Ohio
.
Because the electronic age makes conducting business across state borders an everyday occurrence, there is a critical need for states to adopt a uniform mobility system that will allow licensed CPAs to provide services across state lines without unnecessary burdens that do not protect the public interest.
Currently, each state has its own rules, regulations and requirements to allow out-of-state CPAs to provide services in that state, resulting in a patchwork system that is inefficient and increasingly difficult to navigate.
The American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA) have analyzed the current system for gaining practice privileges across state lines and have concluded it simply does not work.
Compliance and enforcement of the existing system is almost impossible, with multiple, cumbersome processes and disparities in requirements and fees. Business realities, including an increase in interstate commerce and virtual technologies require a uniform system that allows fluid practice across state lines.
Implementation of a uniform provision would allow consumers to receive timely services from the CPA best suited to the job, regardless of location, without the hindrances of unnecessary filings, forms and increased costs that do not protect the public interest.
Businesses today are often located in multiple states and have compliance responsibilities in multiple jurisdictions and a uniform process will give CPAs the flexibility to better serve these clients.
Uniform adoption of the substantial equivalency provision included in the Uniform Accountancy Act (the model bill for CPA regulation written and endorsed jointly by AICPA and NASBA) will create a system similar to the nation’s driver license that will provide CPAs with mobility while retaining and strengthening state boards’ ability to protect the public interest.
Prior to 2007, four states (Ohio, Missouri, Virginia and Wisconsin) had practice mobility laws in place for CPAs. In 2007, seven more states (Tennessee, Texas, Illinois, Indiana, Maine, Rhode Island and Louisiana) enacted new practice mobility laws for CPAs.
As of April 29, 2009 a total of 39 states have enacted this law. They are: Arkansas, Arizona, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Iowa, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming. In addition, 8 other states have similar legislation pending before them (Alabama, Hawaii, Massachusetts, Nevada, New Hampshire, North Carolina, Oregon and Vermont).
(AICPA). Membership in the AICPA is not obligatory for CPAs, although some 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.
AICPA members approved a proposed bylaw amendment to make eligible for voting membership individuals who previously held a CPA certificate/license or have met all the requirements for CPA certification in accordance with the Uniform Accountancy Act (UAA). The AICPA announced its plan to accept applications from individuals meeting these criteria, beginning no later than January 1, 2011.
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.
In some of these countries the CPA designation is not recognized by law. For example in Pakistan the ICPAP does not confer a public accounting designation as it is not a chartered or recognized body. There are only two accounting bodies chartered by law in Pakistan i.e. Institute of Chartered Accountants of Pakistan
and the Institute of Cost and Management Accountants of Pakistan
. Only chartered accountants can perform financial audit and Cost and Management Accountants and CAs can perform Cost Audit in Pakistan. In the United Kingdom membership of the ACPA is not recognized by statute.
Uniform Certified Public Accountant Examination
The Uniform Certified Public Accountant Examination is the examination administered to people who wish to become Certified Public Accountants in the United States....
and have met additional state education and experience requirements for certification as a CPA. Individuals who have passed the Exam but have not either accomplished the required on-the-job experience or have previously met it but in the meantime have lapsed their continuing professional education are, in many states, permitted the designation "CPA Inactive" or an equivalent phrase. In most U.S. states, only CPAs who are licensed are able to provide to the public attestation (including auditing) opinions on financial statements
Financial statements
A financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...
. The exceptions to this rule are Arizona
Arizona
Arizona ; is a state located in the southwestern region of the United States. It is also part of the western United States and the mountain west. The capital and largest city is Phoenix...
, Kansas
Kansas
Kansas is a US state located in the Midwestern United States. It is named after the Kansas River which flows through it, which in turn was named after the Kansa Native American tribe, which inhabited the area. The tribe's name is often said to mean "people of the wind" or "people of the south...
, North Carolina
North Carolina
North Carolina is a state located in the southeastern United States. The state borders South Carolina and Georgia to the south, Tennessee to the west and Virginia to the north. North Carolina contains 100 counties. Its capital is Raleigh, and its largest city is Charlotte...
and Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
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 Accountants
National Society of Accountants
National Society of Accountants was incorporated as nonprofit corporation National Society of Public Accountants in 1945 to promote professionalism and in order that its members had the right to represent their clients before the US Treasury Department. Its first headquarters was in Oklahoma...
.
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. As a result, in many circumstances, an out-of-state CPA is restricted from using the CPA designation or designators letters until a license or certificate from that state is obtained.
Texas additionally prohibits the use of the designations "accountant" and "auditor" by a person not certified as a Texas CPA, unless that person is a CPA in another state, a non-resident of Texas, and otherwise meets the requirements for practice in Texas by out-of-state CPA firms and practitioners.
Many other countries also use the title CPA to designate local public accountants.
Services provided by CPAs
The primary functions CPA fulfill relate to assurance services, or public accounting. In assurance services, also known as financial auditFinancial audit
A financial audit, or more accurately, an audit of financial statements, is the verification of the financial statements of a legal entity, with a view to express an audit opinion...
services, CPAs attest to the reasonableness of disclosures, the freedom from material misstatement, and the adherence to the applicable generally accepted accounting principles
Generally Accepted Accounting Principles
Generally Accepted Accounting Principles refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards...
(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
Enron scandal
The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world...
. This has resulted in divestitures in the consulting divisions by many accounting firms. This trend has since reversed. 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.
CPAs also have a niche within the income tax preparation industry. Many small to mid-sized firms have both a tax and an auditing department.
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 Attestation Services
- Corporate FinanceCorporate financeCorporate finance is the area of finance dealing with monetary decisions that business enterprises make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize shareholder value while managing the firm's financial risks...
(Merger & Acquisition, initial public offerings, share & debt issuings) - Corporate GovernanceCorporate governanceCorporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...
- Estate PlanningEstate planningEstate planning is the process of anticipating and arranging for the disposal of an estate. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses...
- Financial Accounting
- Financial AnalysisFinancial analysisFinancial analysis refers to an assessment of the viability, stability and profitability of a business, sub-business or project....
- Financial Planning
- Forensic AccountingForensic accountingForensic accounting is the specialty practice area of accountancy that describes engagements that result from actual or anticipated disputes or litigation. "Forensic" means "suitable for use in a court of law", and it is to that standard and potential outcome that forensic accountants generally...
(preventing, detecting, and investigating financial frauds) - Income TaxIncome taxAn income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
- Information Technology, especially as applied to accounting and auditing
- Management ConsultingManagement consultingManagement consulting indicates both the industry and practice of helping organizations improve their performance primarily through the analysis of existing organizational problems and development of plans for improvement....
and Performance Management - Tax PreparationTax preparationTax preparation is the process of preparing tax returns, often income tax returns, often for a person other than the taxpayer, and generally for compensation. Tax preparation may be done by the taxpayer with or without the help of tax preparation software and online services...
and Planning - Venture CapitalVenture capitalVenture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
CPA exam
In order to become a CPA in the United States, the candidate must sit for and pass the Uniform Certified Public Accountant ExaminationUniform Certified Public Accountant Examination
The Uniform Certified Public Accountant Examination is the examination administered to people who wish to become Certified Public Accountants in the United States....
(Uniform CPA Exam), which is set by the American Institute of Certified Public Accountants
American Institute of Certified Public Accountants
Founded in 1887, the American Institute of Certified Public Accountants is the national professional organization of Certified Public Accountants in the United States, with more than 370,000 CPA members in 128 countries in business and industry, public practice, government, education, student...
(AICPA) and administered by the National Association of State Boards of Accountancy
National Association of State Boards of Accountancy
The National Association of State Boards of Accountancy is an umbrella group for the 55 state boards that regulate the accountancy profession in the United States of America....
(NASBA). The CPA was established in law on April 17, 1896.
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 which includes a minimum number of qualifying credit hours in accounting and business administration 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.California). This requirement mandating 150 hours of study has been adopted by 45 states. Work experience under the supervision of a practising accountant is not generally required.
The Colorado State Board of Accountancy allows Chartered Certified Accountant
Chartered Certified Accountant
Chartered Certified Accountant was historically seen as a British qualified accountant designation awarded by the Association of Chartered Certified Accountants . However, although ACCA is UK based, it is a global body for professional accountants with 147,000 qualified members and 424,000...
s (ACCA
Association of Chartered Certified Accountants
Founded in 1904, the Association of Chartered Certified Accountants is the global body for professional accountants offering the Chartered Certified Accountant qualification . it is one of the largest and fastest-growing global accountancy bodies with 147,000 members and 424,000 students in 170...
), together with Chartered Accountant
Chartered Accountant
Chartered Accountants were the first accountants to form a professional body, initially established in Britain in 1854. The Edinburgh Society of Accountants , the Glasgow Institute of Accountants and Actuaries and the Aberdeen Society of Accountants were each granted a royal charter almost from...
s from eligible jurisdictions (Australia, South Africa, Canada, Ireland, New Zealand) automatic eligibility to sit for the Uniform CPA Exam as a Colorado
Colorado
Colorado is a U.S. state that encompasses much of the Rocky Mountains as well as the northeastern portion of the Colorado Plateau and the western edge of the Great Plains...
candidate. As of December 9, 2009, ACCA
Association of Chartered Certified Accountants
Founded in 1904, the Association of Chartered Certified Accountants is the global body for professional accountants offering the Chartered Certified Accountant qualification . it is one of the largest and fastest-growing global accountancy bodies with 147,000 members and 424,000 students in 170...
members are not automatically eligible to sit for the Uniform CPA Exam.
Certain overseas qualified accountants seeking to become U.S. CPAs 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.
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
Uniform Certified Public Accountant Examination
The Uniform Certified Public Accountant Examination is the examination administered to people who wish to become Certified Public Accountants in the United States....
and the Examination component is the Uniform CPA
Uniform Certified Public Accountant Examination
The Uniform Certified Public Accountant Examination is the examination administered to people who wish to become Certified Public Accountants in the United States....
itself. Some states have a two 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. Other states have a one 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
Alabama
Alabama is a state located in the southeastern region of the United States. It is bordered by Tennessee to the north, Georgia to the east, Florida and the Gulf of Mexico to the south, and Mississippi to the west. Alabama ranks 30th in total land area and ranks second in the size of its inland...
, Florida, Illinois
Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
, Montana
Montana
Montana is a state in the Western United States. The western third of Montana contains numerous mountain ranges. Smaller, "island ranges" are found in the central third of the state, for a total of 77 named ranges of the Rocky Mountains. This geographical fact is reflected in the state's name,...
, and Nebraska
Nebraska
Nebraska is a state on the Great Plains of the Midwestern United States. The state's capital is Lincoln and its largest city is Omaha, on the Missouri River....
. The trend is for two-tier states to gradually move towards a one-tier system. Since 2002, the State Boards of Washington and South Dakota
South Dakota
South Dakota is a state located in the Midwestern region of the United States. It is named after the Lakota and Dakota Sioux American Indian tribes. Once a part of Dakota Territory, South Dakota became a state on November 2, 1889. The state has an area of and an estimated population of just over...
have ceased issuing CPA "certificates" and instead issue CPA "licenses," and Illinois
Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
plans to follow suit in 2012.
A number of states are two-tiered, but require work experience for the CPA certificate, such as Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
.
Work experience requirement
The experience component varies from state to state:- The two-tier states generally do not require work experience for a CPA certificate (it is required for a license to practice).
- Some states, such as ColoradoColoradoColorado is a U.S. state that encompasses much of the Rocky Mountains as well as the northeastern portion of the Colorado Plateau and the western edge of the Great Plains...
and MassachusettsMassachusettsThe Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...
, will waive the work experience requirement for those with a higher academic qualification compared to the state's requirement to appear for the Uniform CPAUniform Certified Public Accountant ExaminationThe Uniform Certified Public Accountant Examination is the examination administered to people who wish to become Certified Public Accountants in the United States.... - The majority of states still require work experience to be of a public accounting nature. However an increasing number of states, including OregonOregonOregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...
, VirginiaVirginiaThe Commonwealth of Virginia , is a U.S. state on the Atlantic Coast of the Southern United States. Virginia is nicknamed the "Old Dominion" and sometimes the "Mother of Presidents" after the eight U.S. presidents born there...
, GeorgiaGeorgia (U.S. state)Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...
and KentuckyKentuckyThe Commonwealth of Kentucky is a state located in the East Central United States of America. As classified by the United States Census Bureau, Kentucky is a Southern state, more specifically in the East South Central region. Kentucky is one of four U.S. states constituted as a commonwealth...
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 ColoradoColoradoColorado is a U.S. state that encompasses much of the Rocky Mountains as well as the northeastern portion of the Colorado Plateau and the western edge of the Great Plains...
and OregonOregonOregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...
will accept work experience certified by a Chartered AccountantChartered AccountantChartered Accountants were the first accountants to form a professional body, initially established in Britain in 1854. The Edinburgh Society of Accountants , the Glasgow Institute of Accountants and Actuaries and the Aberdeen Society of Accountants were each granted a royal charter almost from...
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 fifth exam in terms of requirements to become a CPA. The majority of these will accept the AICPA self-study Professional Ethics for CPAs CPE course or another course in general professional ethics. Many states, however, require that the ethics course include a review of that state's specific rules for professional practice.Continuing Professional Education (CPE)
CPAs are required to take continuing education courses in order to renew their license. Requirements vary by state but the vast majority require 120 hours of CPE every 3 years with a minimum of 20 hours per calendar year. The requirement can be fulfilled through attending live seminars, webcast seminars, or through self-study (textbooks, videos, online courses, all of which require a test to receive credit). As part of the CPE requirement, most states require their CPAs to take an ethics course during every renewal period. Again, ethics requirements vary by state but the courses range from 2–8 hours.Inter-state practice
An accountant is required to meet the legal requirements of any state in which they want to practice. Also, the term "practice of public accounting" and similar terms are given definitions PA status under reciprocity to a CPA licensed in another state. CPAs from other 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 practicing rights to a CPA of another state.Practice mobility
In recent years, mobility for CPAs has become a major issue of concern. Practice mobility for CPAs is the ability of a licensee to gain a practice privilege outside of their home state without getting an additional license in another state where they will be serving a client.Because the electronic age makes conducting business across state borders an everyday occurrence, there is a critical need for states to adopt a uniform mobility system that will allow licensed CPAs to provide services across state lines without unnecessary burdens that do not protect the public interest.
Currently, each state has its own rules, regulations and requirements to allow out-of-state CPAs to provide services in that state, resulting in a patchwork system that is inefficient and increasingly difficult to navigate.
The American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA) have analyzed the current system for gaining practice privileges across state lines and have concluded it simply does not work.
Compliance and enforcement of the existing system is almost impossible, with multiple, cumbersome processes and disparities in requirements and fees. Business realities, including an increase in interstate commerce and virtual technologies require a uniform system that allows fluid practice across state lines.
Implementation of a uniform provision would allow consumers to receive timely services from the CPA best suited to the job, regardless of location, without the hindrances of unnecessary filings, forms and increased costs that do not protect the public interest.
Businesses today are often located in multiple states and have compliance responsibilities in multiple jurisdictions and a uniform process will give CPAs the flexibility to better serve these clients.
Uniform adoption of the substantial equivalency provision included in the Uniform Accountancy Act (the model bill for CPA regulation written and endorsed jointly by AICPA and NASBA) will create a system similar to the nation’s driver license that will provide CPAs with mobility while retaining and strengthening state boards’ ability to protect the public interest.
Prior to 2007, four states (Ohio, Missouri, Virginia and Wisconsin) had practice mobility laws in place for CPAs. In 2007, seven more states (Tennessee, Texas, Illinois, Indiana, Maine, Rhode Island and Louisiana) enacted new practice mobility laws for CPAs.
As of April 29, 2009 a total of 39 states have enacted this law. They are: Arkansas, Arizona, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Iowa, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming. In addition, 8 other states have similar legislation pending before them (Alabama, Hawaii, Massachusetts, Nevada, New Hampshire, North Carolina, Oregon and Vermont).
AICPA membership
The CPA designation is granted by individual state boards, not the American Institute of Certified Public AccountantsAmerican Institute of Certified Public Accountants
Founded in 1887, the American Institute of Certified Public Accountants is the national professional organization of Certified Public Accountants in the United States, with more than 370,000 CPA members in 128 countries in business and industry, public practice, government, education, student...
(AICPA). Membership in the AICPA is not obligatory for CPAs, although some 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.
AICPA members approved a proposed bylaw amendment to make eligible for voting membership individuals who previously held a CPA certificate/license or have met all the requirements for CPA certification in accordance with the Uniform Accountancy Act (UAA). The AICPA announced its plan to accept applications from individuals meeting these criteria, beginning no later than January 1, 2011.
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.
Certified Public Accountants outside the U.S.
The designation Certified Public Accountant (CPA) also exists as an accounting designation in many countries ouside the United States. Education, experience and examination requirements vary. These countries include:- China: Chinese Institute of Certified Public Accountants
- Cyprus: Institute of Certified Public Accountants in Cyprus
- Hong Kong: Hong Kong Institute of Certified Public Accountants
- Israel: Institute of Certified Public Accountants in Israel
- Indonesia: The Indonesian Institute of Certified Public Accountants
- 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: The Malaysian Institute of Certified Public Accountants
- Malta: The Ministry of Finance grants the Malta CPA title to B.Accty (Hons) graduates from the University of Malta or ACCAAssociation of Chartered Certified AccountantsFounded in 1904, the Association of Chartered Certified Accountants is the global body for professional accountants offering the Chartered Certified Accountant qualification . it is one of the largest and fastest-growing global accountancy bodies with 147,000 members and 424,000 students in 170...
/ICAEW qualified accountants who have sat for the Maltese Variant with at least 3 years experience - Mexico: The National Federation of Certified Public Accountants, The Mexican Institute of Certified Public Accountants
- Pakistan: Institute of Certified Public Accountants of PakistanInstitute of Certified Public Accountants of PakistanINTRODUCTIONThe Institute of Certified Public Accountants of Pakistan was established in August, 1992 with the objective of imparting world class training in Accounting, Finance, Management, Corporate Laws, Tax Laws and its allied areas to the student, working executives and professionals in...
- Philippines: Philippine Institute of Certified Public AccountantsPhilippine Institute of Certified Public AccountantsThe Philippine Institute of Certified Public Accountants is the national professional accountancy body of Philippines.-Aims:It was established with the following aims and purposes:...
- Republic of Ireland: Institute of Certified Public Accountants in Ireland
- Singapore: Institute of Certified Public Accountants of Singapore
- Turkey: TURMOB
- United Kingdom: Association of Certified Public AccountantsAssociation of Certified Public AccountantsThe Association of Certified Public Accountants is an amalgamation of The Society of Public Accountants which was founded in 1989, and the Association of Certified Public Accountants which was formed in 1991...
- Venezuela: The CPA denomination in this country (or CPC, Contador Publico Colegiado, in spanish) is granted to a person holding a five-year bachellor's degree in Public Accounting (Licenciado en Contaduria Publica), following his or her inscription in a State Society of Public Accountants (Colegio de Contadores Publicos) after meeting all requirements for such inscription to be accepted by the chosen State Society of Public Accountants. Federacion de Colegios de Contadores Publicos de Venezuela
In some of these countries the CPA designation is not recognized by law. For example in Pakistan the ICPAP does not confer a public accounting designation as it is not a chartered or recognized body. There are only two accounting bodies chartered by law in Pakistan i.e. Institute of Chartered Accountants of Pakistan
Institute of Chartered Accountants of Pakistan
The Institute of Chartered Accountants of Pakistan is a professional accountancy body in Pakistan. , it had 5,078 members working in and outside Pakistan. The institute was established on July 1, 1961 to regulate the profession of accountancy in Pakistan. It is a statutory autonomous body...
and the Institute of Cost and Management Accountants of Pakistan
Institute of Cost and Management Accountants of Pakistan
The Institute of Cost and Management Accountants of Pakistan was established in 1951 and was granted statutory status under the Cost and Management Accountants Act, 1966 for the regulation of the profession of Cost and Management Accounting. The institute was established with the name Pakistan...
. Only chartered accountants can perform financial audit and Cost and Management Accountants and CAs can perform Cost Audit in Pakistan. In the United Kingdom membership of the ACPA is not recognized by statute.
See also
- AccountantAccountantAn accountant is a practitioner of accountancy or accounting , which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources.The Big Four auditors are the largest...
- American Institute of Certified Public AccountantsAmerican Institute of Certified Public AccountantsFounded in 1887, the American Institute of Certified Public Accountants is the national professional organization of Certified Public Accountants in the United States, with more than 370,000 CPA members in 128 countries in business and industry, public practice, government, education, student...
- American Society of Tax Problem SolversAmerican Society of Tax Problem SolversThe American Society of Tax Problem Solvers is a non-profit organization of tax professionals in the United States. The primary functions of ASTPS is to provide special training and accreditation to tax and legal professionals...
- Certified General Accountant (Canada)Certified General AccountantCertified General Accountant is the designation of professionals who are jointly members of the Certified General Accountants Association of Canada and a provincial or territorial CGA association, or a CGA association overseas...
- Certified Management AccountantCertified Management AccountantThe title Certified Management Accountant is used by various professional bodies around the world to designate their different professional certifications....
- Certified National Accountant (Nigeria)CNA- Organizations :*California Nurses Association*Canadian Nuclear Association*Canadian Nurses Association*CNA Institute for Public Research and Center for Naval Analyses*Center for Transportation and Logistics Neuer Adler*Royal Canadian Numismatic Association...
- Certified Practising Accountant (Australia)CPA AustraliaCPA Australia is one of three professional accounting bodies in Australia, the others being the Institute of Public Accountants and the Institute of Chartered Accountants of Australia....
- Chartered AccountantChartered AccountantChartered Accountants were the first accountants to form a professional body, initially established in Britain in 1854. The Edinburgh Society of Accountants , the Glasgow Institute of Accountants and Actuaries and the Aberdeen Society of Accountants were each granted a royal charter almost from...
- Chartered Certified Accountant (ACCA)Association of Chartered Certified AccountantsFounded in 1904, the Association of Chartered Certified Accountants is the global body for professional accountants offering the Chartered Certified Accountant qualification . it is one of the largest and fastest-growing global accountancy bodies with 147,000 members and 424,000 students in 170...
- Chartered Global Management AccountantChartered Global Management AccountantChartered Global Management Accountant is a professional management accounting credential to be issued beginning on January 31, 2012.CGMA is intended to be a worldwide standard designation for management accountants...
- Institute of Certified Public Accountants of PakistanInstitute of Certified Public Accountants of PakistanINTRODUCTIONThe Institute of Certified Public Accountants of Pakistan was established in August, 1992 with the objective of imparting world class training in Accounting, Finance, Management, Corporate Laws, Tax Laws and its allied areas to the student, working executives and professionals in...