Does a CPA Cover Every Aspect of Accounting?

A CPA role is considered more advanced than an accountant, and business owners and individuals perceive that CPA duties cover all the aspects of accounting, but is this true? Does a CPA cover every aspect of accounting, or does it have more specialized duties? This article delves into the accounting world, correctly differentiating the CPA’s responsibilities from other accounting professionals.  

What Is a CPA and What Do They Do?

A certified accounting professional (CPA) is a licensed professional who has met certain educational and experience requirements and is authorized to perform more complex responsibilities. 

A CPA is expected to have a bachelor’s degree in accounting and completed 150 credit hours in their semesters. More importantly, you are supposed to clear the CPA exam which is a 16-hour exam, divided into four parts, assigning you four hours for each section. 

In addition, two years of working experience in the accounting department is required.

As a highly qualified profession, the general responsibilities of a CPA include:

• Preparing audit reports: CPAs are responsible for preparing financial audit reports for public companies.
• Answerable to IRS: For taxpayers and companies, queries regarding tax returns are answered and handled through CPAs.
• Managing audits: External audits are always conducted by CPAs.
• Dealing with SEC: File reports to the Security and Exchange Commission to display honest conditions and performance of the company to the investors.
• Update policies: CPA duties also include changing the company’s policy according to any new updates given by the industry or government regulations.

CPA vs. Accountant: Key Differences You Need to Know

A CPA, accountant, auditor, and bookkeeper are often mistaken for sharing the same roles in their jobs, but this is not the case. If we compare CPA vs Accountant or CPA vs bookkeeper, with a comprehensive knowledge of accounting practices, here is what CPAs do:

Whereas both CPAs and accountants somewhat perform similar accounting duties, CPA responsibilities also include conducting regular audits to ensure correctness in the financial reports, appearing for businesses during bankruptcies, monitoring tax payments and returns, and with their proficiency in accounting as certified professionals they also assist the company with their financial advice.

On the other hand, accountants are responsible for looking after financial documents ensuring their accuracy per laws and regulations, and preparing financial statements from them. 

The role of bookkeepers is crucial at the initial stage of accounting, as they record the financial transactions including costs and sales, and present them to the accountants, who later interpret it. 

The reliability of this interpretation is verified by an auditor who makes sure that the accounting methods are performed precisely.  

All of these are well-reputed professions that have various accounting roles, so if you are interested in setting a career in these, you should surely consider them.

However, if your busy schedule is not allowing you to start your academic journey, you can always take advantage of services like pay someone to take my online accounting class.

What Aspects of Accounting Does a CPA Cover?

So what are the actual CPA duties that misinterpret them as accountants? Let’s have a look:

• CPA responsibilities consist of performing tax preparation and planning to generate financial reports for audits.
• CPAs look after audits to ensure financial statements comply with regulations.
• CPAs perform an in-depth financial analysis and consult the company regarding money-spending decisions and the utilization of assets. 
• CPAs take part in the formation of budgets. 
• CPAs can give management advisory services to improve the efficiency of businesses. 
• CPA duties also include composing and presenting financial statements to the executive boards.

Tasks CPAs Don’t Handle: When to Consider Other Professionals

CPA vs. Accountant? Which profession should be considered when you are a small business, looking for someone to manage your daily financial tasks?

Where CPAs are more suitable for large firms with their ability to handle complex situations and represent them in front of the IRS, an accountant is a cost-effective option if you are looking for someone to handle finances on a small level.

Here are the tasks that CPAs do not handle:

Basic bookkeeping tasks: 

CPA responsibilities do not include recording and updating daily financial progress such as sales, purchases, and payments. This is usually performed by bookkeepers or junior accountants.

Filling the ledger is the primary step in the formation of financial statements. Adding data in the ledger, which is a record-keeping book regarding all the transactions, is also done by bookkeepers and no data entry is included in the certified public accountant tasks. 

Reconciling the bank account details to confirm their accuracy with the company’s records.

CPA duties regarding bookkeeping are only to keep an eye on these processes and ensure that the process is going smoothly. 

Payroll management: 

Managing the employees, particularly with their wages, and bonuses, issuing timely salaries, and the deduction of taxes are performed by bookkeepers. Also, the completion of work hours alongside availed benefits is monitored by them.

Whereas a CPA only advises regarding these matters, ensuring the correct calculation regarding taxes while issuing the wages has been done. 

Accounts payable and Accounts receivable: 

Accounts payable and accounts receivable both include administrating invoices, issued by the vendors and the ones that need to be sent to the clients, respectively. 

Bookkeepers look after making on-time payments to the vendors and ensuring full payment is received from the clients. Recording of these payments is another essential process performed by bookkeepers.

When to Keep other professions in mind: 

• As a small business: So in situations where you are a startup business, with a limited budget and are looking for someone to handle your daily financial transactions, a bookkeeper or an accountant is a more appropriate option for you. 
• For basic accounting procedures: As a startup, you will have simple tax regulations and there won’t be any need to hire a CPA as they deal with complex matters regarding accounting.

 Accountants can assure you of proper management of your financial records, provide you with plans contributing to the financial health of the company, and monitor employee progress as well.

In the early stages, you need well-organized cash flow reports and accountants can manage those for you. Whereas for these basic accounting services, a CPA will be overqualified and expensive. 

But If you are someone who is fascinated by taking charge of things and challenging accounting work is what captivates you, then you should take the road to becoming a certified public accountant.

However, if personal commitments are acting as a hurdle for you to embark on your journey as a CPA, you can always avail services like Take A Class For Me and let the experts handle it all for you.  

Choosing the Right Professional: When to Hire a CPA

Selecting the right profession from CPA VS bookkeeper is essential to ensure that your business’s financial demands are fulfilled effectively. Where accountants and bookkeepers  manage daily tasks, there are certain situations where hiring a CPA is necessary:

CPAs have excelled in the domain of accounting and are well aware of rules, regulations, and methods that are applied during the decision-making process of the company. 

To maintain their license, CPAs are always either continuing their education or polishing their experience skills. This makes them proficient enough to handle accounting procedures. To protect their license they carry out tasks with full liability, applying the ethical considerations they abide by as a certified public accountant. The major roles of a CPA are played in these situations:  

Merger or shutdowns: 

During major structural changes such as mergers or selling your business, a CPA ensures that correct financial records are prepared that determine the accurate valuation of your company which helps to prove its economic value.

Tax disputes:

If your business is questioned regarding taxes during investigations and audits, CPAs represent in front of the IRS for you and settle any tax disputes that may arise. Preparing your tax reports, filing tax returns, and decreasing your tax liabilities are some of the major CPA duties. 

They also ensure your compliance with tax laws and possible consequences from changes in the tax codes. 

Managing audits:

One of the CPA’s responsibilities includes performing audits. If your business is assigned for an audit, hiring a CPA will allow you to have financial statements that are rigorously studied and adhere to the regulatory standards. Their approval also builds more reliability in your reports, which is an essential quality to attract potential investors. 

Conclusion:

In conclusion, certified public accountants are not just limited to basic accounting practices, instead, it is a highly skilled profession that is achieved by taking numerous courses, exams, and training. 

Their competence is more valued in complex financial situations such as mergers, audits, and managing tax liabilities. However, for daily record-keeping and financial tasks, bookkeepers and accountants are a more suitable and affordable option.

Whether you are a business owner or a student, identifying the different professions and their role is necessary. As a business, opting for the correct role is essential for the way you need your finances to be managed, leading to the growth of your business. 

As a student, If you are thinking of growing a career in the world of accounting, you can always get assisted by paying someone to take your online accounting classes.