The Difference between CPAs and Accountants: A Comprehensive Guide

It's not uncommon to mix up the roles of Certified Public Accountants (CPAs) and Accountants. Although they may sound similar, the two professions are different in terms of their expertise, training, and the services they provide. In this article, we'll delve into the key differences between CPAs and accountants, and the specific things that a CPA can do that an accountant can’t.

CPAs VS Accountants: An Overview

Before diving into the differences, it's important to understand the basic distinction between CPAs and accountants. While all CPAs are accountants, not all accountants are CPAs. A CPA is a certified professional that has passed a multi-part exam and is authorized to perform a range of accounting services for individuals and businesses.

What Can a CPA Do that an Accountant Can’t?

Here are four key areas where CPAs are authorized to perform services that general accountants are not:

Interact with the IRS on Your Behalf

One of the most significant differences between CPAs and accountants is the legal right to represent taxpayers in front of the IRS. With Form 2848, CPAs have the authority to defend tax returns, handle audits, claim refunds, and provide clarifying information to the IRS on behalf of their clients. Unlike CPAs, general accountants do not have the legal standing to interact with the IRS on client’sients' behalf.

Sign Your Tax Returns

Under government law, taxpayers must sign their tax returns when they file their taxes. However, in specific conditions where a taxpayer is unable to sign their returns (e.g. due to being outside the US or suffering from a disease or injury), a third party can sign on their behalf. While a general accountant cannot legally sign a taxpayer's returns, a CPA holds the authority to sign tax returns and legally represent their clients.

File Reports with the SEC

The Securities and Exchange Commission (SEC) is responsible for promoting transparency and accountability in the financial market. Public companies are required to prepare financial reports according to GAAP standards and file them with the SEC. A CPA can audit and review these financial statements and provide reports to the SEC, a responsibility that general accountants cannot perform.

Audit a Public Company

General accountants can conduct in-house audits for privately held companies, but for public companies, only a CPA can perform an audit. This is due to the high level of accountability and the number of stakeholders involved with public companies. In addition to auditing financial statements, a CPA is authorized to attest to the accuracy and reliability of financial reports, a responsibility that general accountants cannot perform.

Offer More Comprehensive Services

CPAs offer a wider range of services beyond basic accounting and bookkeeping. They are equipped to provide business advice, tax planning, and other financial services, making them a more comprehensive solution for individuals and businesses.

In conclusion, while both CPAs and accountants play important roles in handling financial transactions and records, there are specific tasks that only a CPA can perform. Understanding the differences between the two professions is important in making informed decisions about your financial needs.