Table of Contents
- What Is an Accountant?
- Key Takeaways
- History of Accountants
- Duties and Skills of Accountants
- Ethical Standards and Guiding Principles for Accountants
- How Much Money Does an Accountant Make?
- What Is the Difference Between an Accountant and a Certified Public Accountant?
- How Do I Become a Certified Public Accountant?
- The Bottom Line
What Is an Accountant?
Let me tell you directly: an accountant is a financial professional who reviews and analyzes financial records, keeping track of a company's or individual's income, expenditures, and liabilities. You might find them involved in project planning, cost analysis, auditing, and financial decision-making. Some focus specifically on tax preparation and planning. They work for large companies or external firms, and they have to meet state-specific educational and testing requirements, getting certified by national associations.
Key Takeaways
Accountants serve as financial professionals in firms or company departments, monitoring and recording expenses and income while projecting costs for new projects. They often specialize in tax preparation and planning. Many pursue the certified public accountant designation, which is seen as the gold standard in the field.
History of Accountants
The first professional association for accountants, the American Association of Public Accountants, formed in 1887, with CPAs first licensed in 1896. Accounting expanded during the Industrial Revolution due to business complexity and investor demands for financial transparency. After the Great Depression and the SEC's creation, publicly traded companies had to issue reports by accredited accountants, boosting the need for them. Today, accountants are essential in every business.
Duties and Skills of Accountants
Accountants work with companies, governments, non-profits, or in private practices. Their tasks include account analysis, reviewing financial statements for accuracy, conducting audits, preparing tax returns, advising on efficiencies and cost-savings, and providing risk analysis and forecasting. Duties vary based on education and designations. Most have bachelor's degrees, and corporate roles may require certification for advancement. Certifications like certified internal auditor (CIA), certified management accountant (CMA), and certified public accountant (CPA) are common, with CPA being the top choice. In the U.S., certification varies by state but always requires passing the Uniform CPA Examination from the AICPA. As of August 2024, there are 671,855 certified public accountants in the U.S., according to the National Association of State Boards of Accountancy.
Ethical Standards and Guiding Principles for Accountants
You need to know that accountants must follow ethical standards like International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP) in their region. IFRS promotes consistency and transparency in statements, while GAAP applies to U.S. publicly traded companies. CPAs have a fiduciary duty to be honest, trustworthy, and avoid negligence, influencing entire companies. They can face liability under common law for negligence, misrepresentation, fraud, or breach of contract, and under statutory law for failing services or bad advice.
How Much Money Does an Accountant Make?
The median annual pay for accountants in the U.S. was $79,880 in 2023, per the Bureau of Labor Statistics.
What Is the Difference Between an Accountant and a Certified Public Accountant?
Accountants and CPAs differ: all CPAs are accountants, but not vice versa. Accountants usually have an accounting degree and handle reconciliation, analysis, budgeting, and reporting without needing a license. CPAs are licensed, adhering to standards, codes, and continuing education; they also conduct audits and file SEC reports, among other duties.
How Do I Become a Certified Public Accountant?
To become a CPA, you must pass the four-part Uniform CPA Examination from the AICPA, with input from NASBA and state boards. You'll need a bachelor's in accounting or finance, field experience, and the exam tailored to state requirements, administered by state boards.
The Bottom Line
Accountants are always in demand since every business needs them to track, analyze, and audit income and expenditures. They play key roles in planning, decision-making, and forecasting by estimating project costs accurately.
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