You've probably heard about CPAs in the past but you're not quite sure what they do. You think they're accountants or do something related to numbers. You've heard it's hard to pass the exam but really you don't know exactly what it is.
Let's start by reviewing what's out there and look at a bookkeeper, an accountant and a CPA.
What is a bookkeeper?
According to accounting coach, a bookkeeper records and processes large volume of transactions, such as: sales, purchases, payroll, accounts receivable and payable.
The primary role is data entry and practicing it does not require any licensing.
What is an accountant?
This is the next level. The accountant would usually book the adjusting entries which could include different accruals, depreciation, pre-payments and deferred revenue; generally speaking, managing the assets and liabilities. After this, the accountant would prepare the financial statements as well as an analysis for management so everyone understands the numbers.
What is a CPA?
CPA in Canada stands for “Chartered Professional Accountant”. It’s a designation earned after satisfying a Bachelor’s degree in accounting (or related field – must be approved by CPA), going through a 6 module-professional-program and then finally writing a 3-day exam also known as the CFE (Common-Final-Examination). In addition to this, the candidates must prove that they’ve earned 30 months of professional experience where there’s been progress in their depth and breadth in different areas. Once the designation has been obtained, CPAs must maintain it by completing 120 hours of professional development every 3 years.
Some CPAs have been exposed not just to the financial side of a business but also to operations and strategy which increases their value to the shareholders. They can assist businesses by doing regular in-depth performance analysis, recommend on changes to pricing or quantity (sensitivity analysis) and pinpoint other areas for improvement. They can contribute to IT, HR and payroll and have valuable input while tying everything back to financial implications on the business’ performance. Lastly, they can do tax planning and preparation.
Not all businesses need a CPA or are ready for one. It depends on the size of the business, the financial understanding of the owner and what they're looking for in terms of growth. Not sure whether or not your business is actually ready for a CPA? book a free 30-minute consultation and find out.