Difference between CPA and non-CPA
Certified Public Accountants (CPAs) and non-CPAs are both professionals in the field of accounting. However, in the context of CPA vs non-CPA, the primary difference between the two is that while the former practices the profession with a license, the latter doesn’t.
Since a license is not mandatory to practice the accounting profession, non-CPAs also qualify to be called accountants. Hence, an accountant is an all-encompassing term that includes both CPAs and non-CPAs. However, the CPA certification adds greater credibility to accountantsAccountantsAn accountant is a finance professional responsible for recording business transactions on behalf of a firm, reporting the firm’s performance and issuing financial statements. Thus, an accountant plays an important role whether it is a small domestic entity or a large multinational company. and also expands their scope of work.
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CPA vs non-CPA Comparison Table
|Definition||A state board-issued accounting credential earned after passing the AICPA-administered exam and fulfilling the education and experience requirements.||An entry-level accounting designation.|
|Eligibility Criteria||Uniform CPA ExaminationCPA ExaminationThe CPA Exam assesses accounting professionals not just on their financial knowledge, but also on their ability to review and seek out key abilities., Bachelor’s degree (150 credit hours), 1-3 years of Work Experience (may vary as per state board)||Bachelor’s Degree in accounting or related field (not mandatory)|
|Job Responsibilities||Briefing management on the firm’s financial state and suggesting improvements Forensic accountingForensic AccountingForensic accounting employs a mix of accounting, auditing, and investigative acumen by recording accounting documents, preparing reports, and performing financial analysis for use in legal proceedings. Thus, it provides an accounting analysis from a litigation perspective., Budget development, Strategic planning, Preparing and upgrading accounting records (physical & digital), Tax preparation and filing, Auditing, Forecasting revenues, Analyzing financial records, Supervising daily bookkeeping activities||Preparing financial reportsFinancial ReportsFinancial Reporting is the process of disclosing all the relevant financial information of a business for a particular accounting period. These reports are used by the stakeholders (investors, creditors/ bankers, public, regulatory agencies, and government) to make investing and other relevant decisions. , budgets, or documents Reporting findings to managers or other senior officials Financial consulting, Ensuring regulatory compliance Discussing business policies and opportunities with managers, Verifying the accuracy of records, Conducting financial auditsFinancial AuditsFinancial audit is an independent examination of the financial statements of an entity irrespective of its size. It is done by auditors or audit firms who provide an opinion regarding the accurate and fair view of the facts & figures mentioned in the financial statements. Calculating tax details|
|Career options||Financial advisor Risk and Compliance Professional Accounting software developer, Finance Director, Senior Financial Analyst, Corporate controller, IT Accountant, Chief Financial OfficerChief Financial OfficerThe full form of CFO is Chief Financial Executive, and he or she is a top level executive of the firm who is responsible for the firm's overall finance functions and has the authority to make financial decisions for the organization. (CFO)||Government accountants, Management accountants, Public accountants, CPAs (after fulfilling the licensing requirements), External auditors, Internal auditors, IT auditors, Senior staff accountant|
|Industries they work for||Financial forensics, Consulting, IT consulting, Government agencies, Non-profit organizationsNon-profit OrganizationsA not-for-profit organization refers to a legal entity that isn't created to generate profits or revenue for its owners but aims at social, educational, religious or public welfare and service. Such an organization is tax-exempted and run through donations or any other income it makes., Educational institutions||Finance & Insurance, Government agencies, Corporate Educational institutions, Hospitality Healthcare|
|Required Skills||Peoples skills, Communication skills, Technology know-how, Project management skills, Top ethical standards, Analysis, research, and decision-making skills||Listening skills, Computing skills, Problem-solving skills, Critical thinking skills, Organizing skills, Research skills|
|Benefits of the credential||Career growth, Job Satisfaction, Professional Reputation, Job Security, Better career opportunities, Higher salary||Flexible work environment, opportunities for growth through specializations, Enhanced understanding of Business Law & Taxation, Stable & ever-growing job sector, Different specializations|
|Professional status||High status||Lower professional status as compared to CPAs|
|Projected Job Growth||22% (2020-2028)||4% (2019-2029)|
|Average Annual Salary||$119,000||$73,560 (May 2020)|
What is a CPA?
A CPA is a state board-issued accounting license acquired by a candidate after passing the Uniform CPA exam and fulfilling the educational and experience requirements. The American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA) supervise the entire process to gain a CPA credential.
Prerequisites for a CPA license
To acquire a CPA license, you have to meet all the following four E’s:
- Exam – Qualify the Uniform CPA Exam
- Education – Bachelor’s Degree with 150 credit hours and necessary coursework
- Experience – 1-3 years
- Ethics Exam (only if required by the state board)
Apart from the Uniform CPA exam, all other requirements vary by state boards. Besides the above prerequisites, you must also fulfill the Continuing Professional Education (CPE) requirements to retain your license.
Uniform CPA exam
Passing the Uniform CPA exam is the most crucial step in the attaining the license. The AICPA coordinates with the State Boards of Accountancy and NASBA to administer this exam.
The exam consists of four sections to be taken one at a time. You must clear all the four exam sections within 18 months of passing the first section. Please note that you need at least a 75 on a scale of 0-99 in every section to pass.
Roles and Responsibilities
The rigorous preparation for the license infuses a strong set of accounting and managerial expertise in CPAs. With their seasoned skills and unique judgment, they easily adapt to the contemporary needs of the dynamic business world. Some of the key job responsibilities of a CPA are as follows:
- Preparation and analysis of financial records
- Auditing and reviewing financial statementsFinancial StatementsFinancial statements are written reports prepared by a company's management to present the company's financial affairs over a given period (quarter, six monthly or yearly). These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all levels.
- Financial and management consulting
- Tax planningTax PlanningTax planning is the process of minimizing the tax liability by making the best use of all available deductions, allowances, rebates, thresholds, and so on as permitted by income tax laws and rules imposed by a country's government. It contributes to better cash flow and liquidity management for taxpayers, as well as better retirement plans and investment opportunities., preparation, and filing
- Financial data management
- Compliance to regulations
- Financial planning, reporting, and budgetingBudgetingBudgeting is a method used by businesses to make precise projections of revenues and expenditure for a future specific period of time while taking into account various internal and external factors prevailing at that time.
- Forensic accounting
CPAs are most valued for their advisory role. With their extensive knowledge of all aspects of finance, they are ideal for guiding you through all your growth plans. From starting a new office or planning a multibillion-dollar mergerMergerA merger is a voluntary fusion of two existing entities equal in size, operations, and customers deciding to amalgamate to form a new entity, expand its reach into new territories, lower operational costs, increase revenues, and earn greater control over market share., they are the right pick to achieve your desired milestones.
The exclusive skills and broad scope of work of CPAs makes them eligible for higher pay packages. CPAs earn nearly 10%-15% higher than their non-certified counterparts. Besides that, they also enjoy a stable career, numerous job opportunities, immense respect, and a professional edge over non-CPAs.
Moreover, as per the Accountancy Licensee Database (ALD), there are 658,267 actively licensed CPAs across the United States. This number is expected to grow further in the coming years. The US Bureau of Labor Statistics (BLS) has reported a 22% employment growth for CPAs during 2021-2028.
Exclusive rights of CPAs vs non-CPAs
CPAs are usually in much demand in all business sectors. However, they are particularly sought after by large corporations and public limited companies. This is due to some exclusive rights they enjoy owing to their license.
Under federal law, public limited companies (PLC) have to offer audited financial statements to their stakeholders. They are also often faced with complex financial and tax concerns and have dealings with the Internal Revenue Service (IRS).
CPAs offer them dedicated services in the following areas:
- Writing audited financial statements
- Filing a report with the US Securities & Exchange Commission (SEC)
- Signing their tax return as a paid preparer
- Issuing an opinion on reviewed, compiled, or audited financial statements
Being an Accountant might be good; however, being a CPA is even better. Though it calls for countless hours of dedicated learning and training, the rewarding outcome is worth every bead of sweat on your forehead.
What is a Non-CPA (General Accountant)?
A general accountant is an accounting professional entitled to record, examine, analyze, and report financial transactions. Their key responsibility is to ensure the accuracy of financial records and compliance to accounting principlesAccounting PrinciplesAccounting principles are the set guidelines and rules issued by accounting standards like GAAP and IFRS for the companies to follow while recording and presenting the financial information in the books of accounts.. In addition, they strive to assess and eliminate as many risks as possible to help the business run efficiently.
To be an accountant, you need to have at least a bachelor’s degree in accounting or a related field like business or finance. However, candidates with an associate degree having relevant experience can also work as junior accountants.
Moreover, accountants can also specialize in management, public, or government accounting to improve their job prospects.
Duties and responsibilities
Some of the job responsibilities of non-CPAs are as follows:
- Preparing financial reportsFinancial ReportsFinancial Reporting is the process of disclosing all the relevant financial information of a business for a particular accounting period. These reports are used by the stakeholders (investors, creditors/ bankers, public, regulatory agencies, and government) to make investing and other relevant decisions. , budgets, or documents
- Reporting findings to managers or other senior officials
- Financial consulting
- Ensuring regulatory compliance
- Discussing business policies and opportunities with managers
- Verifying the accuracy of records
- Conducting financial auditsFinancial AuditsFinancial audit is an independent examination of the financial statements of an entity irrespective of its size. It is done by auditors or audit firms who provide an opinion regarding the accurate and fair view of the facts & figures mentioned in the financial statements.
- Calculating tax details
Of late, general accountants have also started leveraging updated technologies like Robotics Process Automation and Artificial Intelligence to assist them in their tasks.
Accountants work in almost every business sector, from thriving government agencies, non-profit organizations, and corporations to the budding start-ups.
According to the BLS, jobs in the accounting profession are likely to grow by 4% during 2019-2029. So, it is expected to keep enjoying a reasonable market demand in the future.
However, average salary and low prestige compared to CPAs act as an impediment to attaining career stability in this profession. Therefore, accountants must strive to get certified to bridge this gap and ensure sustained professional growth.
CPA vs non-CPA Choice
Despite sharing a similar job profile, accountants still lag behind CPAs due to their lack of in-depth knowledge, formal training, and relevant experience. The absence of certification also puts them at a disadvantage. They are not licensed to deal with government agencies like SEC and IRS directly or sign tax returns or audited financial statements.
With their niche knowledge and skill, CPAs are well-equipped to offer valuable financial insights, contribute to budgeting processes, and design effective strategies. Though with experience, non-CPAs too can do these.
However, their competency and credibility are debatable. Accountants are generally better suited to perform the basic accounting tasks like bookkeepingBookkeepingBookkeeping is the day to day recording of financial transactions such as purchases, sales, receipts, and payments, and it is the first step in the accounting process. It can be prepared in two ways: single-entry and double-entry; however, the double-entry approach is more widely used and recognized in most countries., handling common tax issues, and maintaining business accounts.
Moreover, with a regulatory body looming overseeing their practice, the quality and integrity of a CPA’s work is rest assured. However, there are no professional bodies governing non-CPAs. Hence, the onus of choosing the right accountant lies on the clients.
Finally, the choice between a CPA and a non-CPA boils down to a client’s circumstance or situation at hand. Generally, small businesses with relatively lower budgets and less complex financial and tax issues opt for non-CPAs. On the other hand, large corporations or PLCs favor CPAs as they provide exclusive and reliable accounting services.
CPA vs Non-CPA Infographics
This has been a guide to CPA vs. Non-CPA. Here we discuss the difference between CPA and Non-CPA along with infographics and a comparative table. You can learn more from the following articles –