CPA Accounting Basics
"Certified Public Accountant," or "CPA," is a legally protected title used by accountants in the United States who have reached a certain standard of professional qualification and experience. The precise qualifications and usage of the name is governed on a state-by-state basis. Although a person doesn't usually have to be certified to offer accountancy services, every state except Arizona, Kansas, North Carolina and Ohio requires this qualification among people offering auditing services.
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Qualifications
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To hold CPA status, a person must pass the Uniform Certified Public Accountant Examination. The exam is broken down into four sections: auditing and attestation; business environment and concepts; financial accounting and reporting; and regulation. Each section is examined on a computer system, which also tests knowledge of relevant software. A candidate can take each section's test once in a three-month period and must pass the tests for all four sections within an 18-month period to earn the CPA qualification.
State Rules
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Each state has its own rules above and beyond the CPA examination. The relevant state's Board of Accountancy sets eligibility rules for candidates to be allowed to take the examination. The most common requirement is the equivalent of five years' full-time study --- undergraduate or graduate --- with an emphasis on accounting.
There are three different policies adopted by individual states: to certify a candidate who passes the examination but not license the candidate until he has one year of professional experience; to issue the certification and the license together once the candidate has passed the examination and attained the experience; or to not require any experience and instead certify and license a candidate as soon as he passes the examination.
A state may also require a candidate to pass a separate professional ethics exam.
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Initials Usage and Licensing
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Generally, an accountant can only use the CPA initials after his name if he meets the specific requirements of a particular state in which he's offering services.
In all but four states --- Arizona, Kansas, North Carolina and Ohio --- an accountant can operate without attaining CPA status, but he's barred from attestation and auditing, the practice of giving a legally qualified opinion that a set of accounts has been put together accurately and in accordance with financial regulations.
Independence
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While specific implementation varies among state laws, there's a general principle that an individual with CPA status who's providing attesting and auditing service to a company should be independent from the company. This often means such accountants can't provide consultancy services to the same company.
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