What Is the Meaning of CFP in Auditing?
Professionals in the financial industry are crazy about credentials. They signify specialty in a particular area and give recipients a chance to demonstrate expertise. A CPA is a certified public accountant. A CFE is a certified fraud examiner. In the world of finance, a CFP is a certified financial planner.
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Advantages
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Auditors who pursue the CFP designation typically do so to diversify a private practice, to get a new job or because the certification was useful in a previous job. But an auditing background is also useful for financial planners. Auditors help certify that a firm has used generally accepted accounting principles in compiling financial statements. A financial planner with a background in auditing may be able to uncover problematic areas in financial statements -- even audited ones -- and help clients evaluate investments for signs of excessive risk or fraud. Auditor independence is a key concern for financial planners who double as auditors. Guidelines for auditor independence may prohibit offering consulting services to audit clients. The fear is that auditors will soft-pedal a financial audit in hope of reaping more lucrative fees for financial planning.
Qualifications
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To earn the CFP designation, applicants must hold a bachelor's degree in any subject area and a knowledge of key financial planning topics, which may require additional classes. They must sit for an exam and have at least three years of experience directly related to financial planning. After meeting these requirements, the credentialing body asks applicants to disclose past behavior that could implicate the planner's reputation. Some factors, such as filing for bankruptcy within the previous five years, are a bar to certification.
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Work
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Certified financial planners help their clients plan for retirement, save for college and protect assets. CFPs may need knowledge in every aspect of a client's financial life, from income to savings to insurance in case of an emergency. Some CFPs work for insurance and investment companies, and there are some potential conflicts between their duty to act in your best interest and to sell products offered by those companies.
Checking Up
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If you are considering hiring an accountant who is also a certified financial planner, it may benefit you to do some checking. The CFP credential is issued by the Certified Financial Planner Board of Standards. Like many financial credentials, the board is an industry-run regulatory body. It is not associated with government. You can verify that a financial planner holds the credential and review any disciplinary records or suspensions, by visiting the website for the board.
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