Certified Public Accountant

Business, Legal & Accounting Glossary

Definition: Certified Public Accountant

Certified Public Accountant

Quick Summary of Certified Public Accountant

A designation given to an accountant who has passed a standardised CPA exam and met the government-mandated work experience and educational requirements required to become a Certified Accountant.

What is the dictionary definition of Certified Public Accountant?

Dictionary Definition

A Certified Public Accountant (CPA) is a person licensed by a state board of accountancy to practice public accounting. The primary distinction between a Certified Public Accountant and all other accountants is that only a Certified Public Accountant can issue an opinion on audited financial statements. In most cases, the Certified Public Accountant will issue an unqualified ( or “clean”)opinion that states the company’s financial statements were prepared in accordance with Generally Accepted Accounting Principles (GAAP). But the Certified Public Accountant may also issue a “qualified” opinion describing certain exceptions to GAAP. To become a Certified Public Accountant, an individual must pass the Uniform CPA Examination, which includes sections on financial accounting and reporting, auditing, business environment & concepts, and regulation. State boards of accountancy also demand that a Certified Public Accountant have practical experience. This requirement varies by state, but in many cases, a Certified Public Accountant must have two years of practical experience. The American Institute of Certified Public Accountants (AICPA) plays a primary role in all aspects of the professional life of a Certified Public Accountant.

Full Definition of Certified Public Accountant

Certified Public Accountant (CPA) is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA. In most U.S. states, only CPAs who are licensed are able to provide to the public attestation (including auditing) opinions on financial statements. The exceptions to this rule are Arizona, Kansas, North Carolina and Wyoming, where although the “CPA” designation is restricted, the practise of auditing is not.

Many states have a lower tier of accountant qualification (below that of CPA), usually entitled “Public Accountant” (with designatory letters “PA”). However, the majority of states have closed the designation “Public Accountant” to new entrants, with only about 10 states continuing to offer the designation. Many PAs belong to the National Society of (Public) Accountants.

Many states prohibit the use of the designations “Certified Public Accountant” or “Public Accountant” (or the abbreviations “CPA” or “PA”) by a person who is not certified as a CPA or PA in that state. As a result, in many circumstances, an out-of-state CPA is restricted from using the CPA designation or designatory letters until a license or certificate from that state is obtained.

Services Provided by CPAs

The primary function CPAs fulfil relates to assurance services, called public accounting. In assurance services, also known as financial audit services, CPAs attest to the reasonableness of disclosures, the freedom from material misstatement, and the adherence to the applicable generally accepted accounting principles (GAAP) in financial statements. CPAs can also be employed by corporations – termed ‘the private sector’ – in finance functions such as Chief Financial Officer (CFO) or finance manager, or as CEOs subject to their full business knowledge and practice. These CPAs do not provide services directly to the public.

Although some CPAs serve as business consultants, the consulting role is under scrutiny following the corporate climate in the aftermath of the Enron scandal. This has resulted in divestitures in the consulting divisions by many accounting firms. In audit engagements, CPAs are (and have always been) required by professional standards and Federal and State laws to maintain independence (both in fact and in appearance) from the entity for which they are conducting an attestation (audit and review) engagement. However, most individual CPAs who work as consultants do not work as auditors or vice versa.

CPAs also have a niche within the income tax preparation industry. Most small to mid-sized firms have both a tax and an auditing department. Someone’s CPA is one of that individual’s most trusted experts. CPAs are scattered throughout the business world.

Whether providing services directly to the public or employed by corporations or associations, CPAs can operate in virtually any area of finance including:

  • Assurance and Attest Services
  • Financial Accounting
  • Management Consulting and Performance Management
  • Information Technology, especially as applied to accounting and auditing
  • Corporate Finance (Merger & Acquisition, initial public offerings, share & debt issuing)
  • Financial Planning
  • Financial Analysis
  • Venture Capital
  • Forensic Accounting (preventing, detecting, and investigating financial frauds)
  • Tax Preparation and Planning
  • Estate Planning
  • Corporate Governance
  • Income Tax

While some CPAs are generalists and offer a range of services (especially those in small practices) many CPAs specialize in just one area and do not provide all the services listed above.

CPA Exam

In order to become a U.S. CPA, the candidate must sit for and pass the Uniform Certified Public Accountant Examination (Uniform CPA Exam), which is set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy.

Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically the requirement is a U.S. bachelors degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional 1-year study. This requirement for 5 years study is known as the “150-hour rule” and has been adopted by the majority of state boards, although there are still some exceptions (e.g.California). This requirement mandating 150 hours of study has been adopted by 45 states.

The Colorado State Board of Accountancy allows Chartered Certified Accountants (ACCA), together with Chartered Accountants from eligible jurisdictions automatic eligibility to sit for the Uniform CPA Exam as a Colorado candidate.

Certain overseas qualified accountants seeking to become U.S. CPA may be eligible to sit for the International Qualification Examination as an alternative to the Uniform CPA Exam.

The Uniform CPA exam tests general principles of state law such as the law of contracts and agency (questions not tailored to the variances of any particular state) and some federal law as well.

Other Licensing And Certification Requirements

Although the CPA exam is uniform, licensing and certification requirements are imposed separately by each state’s laws and therefore vary from state to state.

State requirements for the CPA qualification can be summed up as the Three Es – Education, Examination and Experience. The Education requirement normally must be fulfilled as part of the eligibility criteria to sit for the Uniform CPA and the Examination component is the Uniform CPA itself.

Two-Tier States

Some states have a 2 tier system whereby an individual would first become certified as a CPA — usually by passing the CPA exam. That individual would then later be eligible to be licensed once a certain amount of work experience is accomplished. Most states, however, have a 1 tier system whereby an individual would be certified and licensed at the same time when both the CPA exam is passed and the work experience requirement has been met.

Two-tier states include Alabama, Illinois, Montana, Florida and Nebraska. However, the trend is for 2-tier states to gradually move towards a 1-tier system. Since 2002, the State Boards of Washington and South Dakota have ceased issuing CPA certificates, and Illinois followed suit in 2010.

A number of states are 2-tiered, but require work experience for the CPA certificate, such as Ohio.

Work Experience Requirement

The Experience component varies from state to state:

  • The 2-tier states generally do not require work experience for a CPA certificate (it is required for a license to practice).
  • Some states, such as Colorado and Massachusetts, will waive the work experience requirement for those with a higher academic qualification compared to the state’s requirement to appear for the Uniform CPA
  • The majority of states still require work experience to be of a public accounting nature. However, an increasing number of states, including Oregon, Virginia, Georgia and Kentucky will accept experience of a more general nature in the accounting area. This allows persons to obtain the CPA designation while working for a corporation’s finance function.
  • The majority of states require work experience to be verified by a licensed CPA. This can cause difficulties for applicants based outside the United States. However, some states such as Colorado and Oregon will accept work experience certified by a Chartered Accountant as well.


Over 40 of the state boards now require applicants for CPA status to complete a special examination on ethics, which is effectively a Fourth E in terms of requirements to become a CPA. The majority of these will accept the AICPA self-study Professional Ethics for CPAs CPE course, however, some states (notably California) set their own course, or specify a different requirement.

Continuing Professional Education

Most states require attendance for a minimum number of hours annually (often 40 hours annually or 80 hours biannually) for appropriate continuing professional education (CPE) to maintain a CPA license.

Two-tier states do not usually require CPE to maintain a CPA certificate. However, all members of the American Institute of Certified Public Accountants must undertake CPE as a condition of AICPA membership.

Inter-State Practice

An accountant is required to meet the legal requirements of any state in which he wants to practice. Also, the term “practice of public accounting” and similar terms are given definitions that vary from state to state. The practise of public accounting under state law often includes the signing of audit reports and the performance of other services, such as tax or management consulting, while holding oneself out as a CPA.

Most states will grant CPA status under reciprocity to a CPA licensed in another state. CPAs from states with less stringent educational requirements may not be able to benefit from these provisions. This does not affect those CPAs who do not plan to offer services directly to the public. Moreover, most states would grant the temporary practising rights to a CPA licensed in another state.

Practise Mobility

In recent years, practise mobility for CPAs has become a major issue of concern. Practice mobility for CPAs is the ability of a licensee to gain a practice privilege outside of their home state without getting an additional license in another state where they will be serving a client.

Because the electronic age makes conducting business across state borders an everyday occurrence, there is a critical need for states to adopt a uniform mobility system that will allow licensed CPAs to provide services across state lines without unnecessary burdens that do not protect the public interest.

Currently, each state has its own rules, regulations and requirements to allow out-of-state CPAs to provide services in that state, resulting in a patchwork system that is inefficient and increasingly difficult to navigate.

The American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA) have analyzed the current system for gaining practice privileges across state lines and have concluded it simply does not work.

Compliance and enforcement of the existing system is almost impossible, with multiple, cumbersome processes and disparities in requirements and fees. Business realities, including an increase in interstate commerce and virtual technologies require a uniform system that allows fluid practice across state lines.

Implementation of a uniform provision would allow consumers to receive timely services from the CPA best suited to the job, regardless of location, without the hindrances of unnecessary filings, forms and increased costs that do not protect the public interest.

Businesses today are often located in multiple states and have compliance responsibilities in multiple jurisdictions and a uniform process will give CPAs the flexibility to better serve these clients.

Uniform adoption of the substantial equivalency provision included in the Uniform Accountancy Act (the model bill for CPA regulation written and endorsed jointly by AICPA and NASBA) will create a system similar to the nation’s driver license that will provide CPAs with mobility while retaining and strengthening state boards’ ability to protect the public interest.

Prior to 2007, four states (Ohio, Missouri, Virginia and Wisconsin) had practice mobility laws in place for CPAs. In 2007, seven more states (Tennessee, Texas, Illinois, Indiana, Maine, Rhode Island and Louisiana) enacted new practice mobility laws for CPAs. As many as twenty states are expected to consider this type of legislation in 2008.

AICPA Membership

The CPA designation is granted by individual state boards, not the American Institute of Certified Public Accountants (AICPA). Membership in the AICPA is not obligatory for CPAs, although many CPAs do join. To become a full member of AICPA, the applicant must hold a valid CPA certificate or license from at least one of the fifty-five U.S. state/territory boards of accountancy; some additional requirements apply.

State CPA Association Membership

CPAs may also choose to become members of their local state association or society (also optional). Benefits of membership in a state CPA association range from deep discounts on seminars that qualify for continuing education credits to protecting the public and profession’s interests by tracking and lobbying legislative issues that affect local state tax and financial planning issues.

CPAs who maintain state CPA society memberships are required to follow a society professional code of conduct (in addition to any code enforced by the state regulatory authority), further reassuring clients that the CPA is an ethical business professional conducting a legitimate business who can be trusted to handle confidential personal and business financial matters. State CPA associations also serve the community by providing information and resources about the CPA profession and welcome inquiries from students, business professionals and the public-at-large.

CPAs are not normally restricted to membership in the state CPA society in which they reside or hold a license or certificate. Many CPAs who live near state borders or who hold CPA status in more than one state may join more than one state CPA society.

International Context

Many persons from outside the United States obtain the U.S. CPA designation through sitting for the Uniform CPA Exam or International Qualification Examination (IQEX). Due to the size of the U.S. accounting profession and the importance of U.S. accounting rules, many overseas accountants wish to obtain the U.S. CPA designation in addition to, or as an alternative to, a local qualification.

The designation Certified Public Accountant also exists as a public accounting designation in many overseas countries, unrelated to the U.S. CPA designation. These countries include:

  • China: The Chinese Institute of Certified Public Accountants
  • Cyprus: Institute of Certified Public Accountants in Cyprus
  • Hong Kong: Hong Kong Institute of Certified Public Accountants
  • Republic of Ireland: Institute of Certified Public Accountants in Ireland
  • Pakistan: Institute of Chartered Accountants of Pakistan
  • Israel: Institute of Certified Public Accountants in Israel
  • India: Institute of Chartered Accountants of India
  • Japan: The Japanese Institute of Certified Public Accountants
  • Kenya: Institute of Certified Public Accountants of Kenya
  • Korea: The Korean Institute of Certified Public Accountants
  • Malaysia: Malaysian Institute of Certified Public Accountants
  • Malta: The CPA title is given to qualified who have at least 3 years of experience, in accordance to the Accountancy Profession Act.
  • Mexico: The National Federation of Certified Public Accountants, The Mexican Institute of Certified Public Accountants
  • Philippines: Philippine Institute of Certified Public Accountants
  • Singapore: Institute of Certified Public Accountants of Singapore
  • United States: https://www.aicpa.org American Institute of Certified Public Accountants

Synonyms For Certified Public Accountant


Certified Public Accountant FAQ's

What Is a CPA?

In the most general sense, a CPA, or Certified Public Accountant, is an individual who has met certain requirements in education, experience and examination. CPAs are certified to provide a broad range of financial advisory and external accounting services for their clients. Some services provided by public accountants include assurance (audit), tax compliance and advisory, mergers and acquisitions due diligence, and estate and financial planning.

In order to complete the CPA certification process, public accountants must pass the CPA exam and work in public accounting for at least one or two years. CPAs are not only required to pass a professional exam, but they must also meet continuing professional education (CPE) requirements on an annual basis to maintain their license.

Because accounting rules and regulations are continually evolving and changing, CPAs are required to take 120 hours of continuing education courses every three years.

What are the roles of a CPA?

CPAs can perform many different roles. Those who choose to specialize in auditing will provide assurance for users of financial statements. Although CPAs are engaged by their clients to perform auditing services, the first responsibility of an accountant in public practice is to the public.

Investors, banks and regulatory agencies are among the list of parties who are generally the users of a company’s financial statements. The work of the auditor, or CPA, is to guarantee that the financial statements are free of “material misstatements,” or significant misrepresentations.

Because the public relies on the work performed by a CPA, it is very important that CPAs maintain independence from the company they are auditing. For example, a public accountant cannot audit a company for which any of his family members are employed in a top position.

CPAs also cannot make decisions for management, nor can they accept gifts from clients. Basically, a CPA cannot do anything that might appear by the public to impair his or her judgment.

Another area of specialization for CPAs is tax compliance and consulting. Those who choose this area are required to maintain knowledge about the most current tax rules and regulations. CPAs can perform both corporate and individual tax compliance for their clients.

A CPA can also function as a trusted business advisor or consultant. Companies will often elicit the services of a CPA for general business consulting, or for the implementation of new processes or systems. CPAs who act in an advisory role must also be mindful of rules related to independence.

Because they are required to maintain certain measures of independence from those clients in both fact and appearance, CPAs providing consultation services must be sure to maintain certain independence like auditors.

What are the career options for a CPA?

Although a large number of CPAs work in public accounting, there are other career options in the profession as well. Many CPAs work as private or industry accountants and perform internal accounting tasks, services, and functions for a company.

A private accountant may act as an internal auditor and review and verify the company’s financial results, policies, and internal controls. He or she may also work as a staff accountant and perform typical internal accounting duties. Other CPAs choose to use their knowledge and work as a professor at a university. Many CPAs have become entrepreneurs and use their accounting and financial knowledge to start and run their own business.

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Certified Public Accountant. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
January 18, 2022 https://payrollheaven.com/define/certified-public-accountant/.
Chicago Manual of Style (CMS):
Certified Public Accountant. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/certified-public-accountant/ (accessed: January 18, 2022).
American Psychological Association (APA):
Certified Public Accountant. PayrollHeaven.com. Retrieved January 18, 2022
, from PayrollHeaven.com website: https://payrollheaven.com/define/certified-public-accountant/

Definition Sources

Definitions for Certified Public Accountant are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 26th November, 2021 | 8 Views.