Choosing the Best Investment in Financial Professionalism

Author: James Carnell

CPAs are the most sought-after financial professionals in the US because of their superior knowledge and capabilities

A business owner knows only too well that finances are the lifeblood of his business, and that his business will thrive only with great financial management. As the saying goes, “Behind every good businessman, there is a great accountant.”

Furthermore, in a corporate world where terms like Certified Public Accountants (CPAs), accountants and bookkeepers are loosely thrown around, a smart businessman understands he needs to choose the right professional to take charge of his company finances.

The task of bookkeepers is to manage the day-to-day finances of a company, while general accountants and CPAs are financial professionals who are the experts for all matters financial in a company. All accountants, generally, have a Bachelor Degree, but becoming a CPA requires more than a Bachelor Degree. One becomes a CPA only after completing specific educational and work requirements, and passing an exam, over and above the Bachelor Degree.

In fact, 150 semester hours of college education have to be completed by a student seeking eligibility to sit the CPA certification exam, which is acknowledged as one of the most difficult professional certification exams. As aspiring students know, the CPA Exam consists of four, four-hour sections that includes Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR) and Regulation (REG). In order to become a CPA, a student has to get through all four sections within 18 months, with a minimum score of 75 on each part. As results show, about half the students who sit the exam fail to score the minimum requirement of 75 points per section.

An analysis of the CPA exam structure shows that the four main exam sections are further split into five smaller sections called “testlets.” The testlets include Multiple-Choice Questions (MCQs) and Task-Based Simulations (TBSs). The BEC section includes three written communication tasks, while the AUD, FAR and REG sections include at least one research question.

The FAR section has the largest volume of information for study, which has been challenging for many students. To overcome this, most students take several classes relevant to the FAR section, during their Bachelor Degree program, for the facts to be relatively fresh in their minds.

The AUD section includes the entire audit process, plus other services including compilations, reviews and attestation engagements, and the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct.

The REG section is a combination of federal taxation and business law, and includes ethics and professional responsibilities.

The BEC section is challenging because of the complexity of course material that includes operations and strategic management, economics, financial management and information technology. Also, a significant component of the BEC exam is the three written communication tasks.

Moreover, this weighty CPA Exam focuses on testing the knowledge of accountancy of candidates, and their ability to apply their knowledge in real life situations, as CPAs. This is what the Board of Examiners (BOE) committee of the AICPA sets out to do as the responsible entity and the public face of the CPA exam. The BOE committee, while setting policy for the exam, monitors scoring, ensures accuracy and relevance of exam content, and collaborates with individual state boards of accountancy. Furthermore, in preparing the exam, the AICPA deliberately sets the bar very high, to ensure CPAs have the expertise and the knowledge to fulfill their professional commitments.

This apart, once becoming a CPA, the professional has to continue meeting annual education requirements to keep the CPA license valid. Accordingly, a licensed CPA is qualified by the “Four Es” – Education, Experience, Examination and Ethics.

With all these rigorous requirements to remain relevant, CPAs are respected more than financial professionals with general accounting degrees. Being mandatorily well-informed about the latest tax laws and practices, CPAs are considered more trustworthy than non-CPAs, and many tasks they perform, such as compliance with federally-mandated audit regulations, can only be legally handled by CPAs. As Elvis Presley once said, “I have no use for bodyguards, but I have very specific use for two highly trained Certified Public Accountants.”

Therefore, among the things to know about CPAs, is the predominant fact that they are highly valued for services they can provide their employers. These include legally representing a business and its owners before the Internal Revenue Service (IRS), creating audit reports and review reports, and adhering to a strict code of ethics. Moreover, CPAs can be decision makers and business advisors as well as tax and accounting consultants for their company.

According to the National Association of State Boards of Accountancy (NASBA), the U.S. currently has at least 658,267 actively licensed CPAs, which is less than the demand for them. In fact, the U.S. Bureau of Labor Statistics recently reported that unemployment for accountants and auditors is less than 2%. Furthermore, President and CEO of American Institute for Certified Public Accountants (AICPA), Barry Melancon, said that there were “record numbers” of students majoring in accounting in recent years, but the numbers sitting for the CPA exam is static, creating, as he says a “CPA gap.” The reason for this is the absolute commitment and dedication to continued learning that is required of CPAs, and which, many financial professionals are not able to live up to.

Yet, one thing stands undisputed. That is, the assessment of accounting capabilities of individuals through CPA scores is absolute and conclusive. And there could be no proof more certain of reliability than a CPA’s ability to maintain a valid CPA license. As one of America’s founding fathers, Benjamin Franklin, said, “An investment in knowledge pays the best interest.”

This article does not necessarily reflect the opinions of the editors or management of EconoTimes