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7-4 Accounting [CH 7

Types of Accountants
Accountants are employed in a variety of areas in business firms, government
agencies, and nonprofit organizations. Many are self‑employed. Approximately 25%

of accountants work for accounting, auditing, and bookkeeping firms. Accountants can
be classified by the type of certification they achieve, either as a certified public
accountant (CPA) or a certified management accountant (CMA). They are also
classified as public and private accountants.
certified public
accountant (CPA) A certified public accountant (CPA) proves his skills by meeting the state's
Accountant who has passed requirements for education and experience, successfully completing a number of
a comprehensive rigorous tests in accounting theory and practice, auditing, and law. The CPA exam,
examination covering law, prepared by the American Institute of Certified Public Accountants, is administered
accounting theory and
practice, and auditing. four times a year nationally, and in most states requires two years of account
experience.
CPAs enjoy the same professional status within their field as attorneys and
physicians do in theirs. Although the CPA certificate is not a requirement, only CPAs

can officially express an opinion on whether a firm's financial statements fairly and
accurately present that company's financial position.
certified management The certified management accountant (CMA) must meet education and
accountant (CMA) experience requirements similar to the CPA. The CMA certification exam is
Accountant who has met
specific educational and administered by the Institute of Management Accounts (IMA) and has two parts. The
professional requirements first focuses on financial reporting and planning, while the second covers financial
and has passed a series of decision making. For each part, test takers get four hours to answer 100 multiple
examinations established choice questions and write two essays.
by the National Association
of Accountants. CMA typically works as a private accountant with management responsibilities.
CMAs hold positions at all levels in the organization, from staff accountant to
vice‑president of finance.
Accountants are also classified as either public or private accountants.

Public Accountants

public accountant A public accountant will typically work for a firm that provides accounting services
Professional who to individuals or businesses for a fee. Their services may include the preparation of tax
provides accounting statements, independent audits and examinations of financial records, management
services to other
businesses and consulting, assistance in filing securities registration papers and loan applications, and
individuals. the design of accounting systems.
Auditing, the oldest area of practice, remains the largest for many firms. An audit
is a CPA’s examination of a company’s financial statements in order to express an
Audit
An examination of a opinion about the soundness of those statements. Since an auditing accountant is not an
company’s financial employee of the firm for which they are providing services, public accountants are in a
statements to determine the position to provide honest, unbiased advice about the firm's financial condition.
fairness of the statements in A very common area of practice for accounting firms is tax consulting and
accordance with generally
accepted accounting preparation. Public accounting firms help devise strategies to minimize a company’s
principals. income tax liabilities; and may even be responsible for preparing a firm’s tax return.
Good advice can save a firm large amounts of money simply by knowing the ever-
changing tax code.

Another major area of practice for the public accountant is management consulting.
Activities in this area may include computer systems analysis, design, and
implementation; employee benefits and compensation; risk analysis; and litigation
support.

private accountant Private Accountants
Accounting professional The private accountant performs the same training as the public accountant and
employed by a for profit or will function similarly. However, the private accountant is an employee of a business
nonprofit business, or a that is not a public accounting firm such as any for profit or non-profit business or a
government agency; a
business other than a government agency. The private accountant is responsible for collecting and recording
public accounting firm. financial transactions and preparing financial statements used by the firm's managers
in decision making. Private accountants will prepare the financial statements and
provide the interpretation for their reports.

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