Accountant – Definition: (dictionary.com)
- A person whose profession is inspecting and auditing personal or commercial accounts.
- A person concerned with the maintenance and audit of business accounts and the preparation of consultant reports in tax and finance
- A person whose job is to keep or inspect financial accounts.
An Accountant is…
An “accountant” is an individual who is qualified and trained in bookkeeping, preparation, auditing and analysis of financial accounts. An accountant will prepare financial reports and statements to aid in planning and decision making. Accountants also tend to have a good understanding of tax laws and can advise and assist in tax strategy. Although they have a basic understanding of tax consequences, they are not certified in offering tax advice, planning or preparation, such as a CPA or EA.
The primary function of an accountant
The primary function of an accountant is to prepare and examine financial reports. They will usually review what a bookkeeper has done and ensure that the bookkeeper’s records are accurate and that taxes have been addressed properly [REFER TO THE BOOKKEEPER BLOG].
The accountant role is similar to that of a bookkeeper, where there is no hard requirement to being an accountant. There is no requirement to be a licensed bookkeeper or accountant to operate as one. However, many employers will not consider an individual for an accountant position without a minimum of an associate’s degree and some base level experience in the field of work. Many accountants start as bookkeepers and work their way into an accountant position. Unlike a bookkeeper, the accounting field has much more opportunity for growth.
General to Specialized
Typically, accountants start out in a general accounting function. Over time accountants tend to become more specialized. There are many growth opportunities for an accountant, they can either grow into a specialization, such as a tax specialization, international tax specialization, sales tax specialization or move up a notch with a certification such as an Enrolled Agent, CPA or CMA.
Certified Public Accountant (CPA)
Many accountants will work their way towards becoming a CPA, or Certified Public Accountant. A CPA licensure is one of the most, if not the most, difficult professional licenses to obtain with an average attrition rate of 55%, 12-18 months to complete four, (4) hour exams. An accountant will not be able to sit for the CPA exam without a set amount of college courses, which can equate to a master’s degree, which is why you will find most CPA’s also have Masters Degrees in Accounting. They also will need at least (1) year of public accounting experience that is signed off by an active licensed CPA.
Enrolled Agent (EA)
Though, not a typical route for an accountant, an accountant who specializes in tax may go down the route of becoming an Enrolled Agent. An Enrolled Agent is a tax advisor who is a federally authorized tax practitioner. The Enrolled Agent credential is the highest credential awarded by the Internal Revenue Service (IRS) and is recognized across all 50 states, whereas the CPA license is licensed state by state. An Enrolled Agent can also represent clients directly in front of the IRS with claims against the taxpayer.
Certified Management Accountant (CMA)
The IMA’s Certified Management Accountant certification is geared towards the specialization in management accounting and financial management fields. In order to sit for the CMA, the individual must have a Bachelor’s Degree and two continuous years of experience employed in the management accounting roles. Individuals that hold the CMA are proficient in making strategic business decisions based on financial data. Typically many CMA’s grow into roles such as Vice President of Finance, Controller, Chief Financial Officer or Chief Executive Officer.
In many ways, the bookkeeper position can be a starting position for an aspiring accountant, however, many accountants that want to become CPA’s may not desire the type of work a bookkeeper does as it can be seen as taking a different path. In many cases, those starting out at a junior accounting position will move into the EA or CPA side of the house dealing with compliance such as tax and auditing. You will also see that individuals who thrive in the bookkeeper positions may find themselves going for the CMA where they can continue operating in the same type of atmosphere.
This publication is designed to provide information of federal tax and accounting laws and/or regulations. It is presented with the understanding that the author is not rendering legal or accounting services.
This text is not intended to address every situation that arises or provide specific, strategic tax and/or accounting planning advice. This text should not be used solely to answer tax and/or accounting questions and you should consult additional sources of information, as needed, to determine the solution to tax and/or accounting questions.
This text has been prepared with due diligence. However, the possibility of mechanical or human error does exist and the author accepts no responsibility or liability regarding this material and its use. This text is not intended or written by the practitioner to be used and cannot be used by a taxpayer or tax return preparer, for the purpose of avoiding penalties that may be imposed.