What Is an Accountant?
An accountant reviews and analyses financial records, keeping track of a company's or individual's income, expenditures, and tax liabilities. An accountant may also be involved in project planning, cost analysis, auditing, and financial decision-making. Some specialize in tax preparation and tax planning.
The accountant may work in a large company's accounting department or an external accounting firm.
Accountants are required to meet state-specific educational and testing requirements and are certified by national professional associations.
Key Takeaways
- Accountants are employed by accounting firms or in the accounting departments of large companies. Many choose to open their own practices.
- Their roles include monitoring and recording expenses and income, and projecting the costs of proposed new projects.
- Tax preparation and tax planning are specialized roles for accountants.
- Many accountants choose to become certified public accountants because the CPA designation is considered the gold standard in the accounting profession.
Duties and Skills of Accountants
Accountants work with companies, governments, and non-profits, or set up private practices.
They may perform multiple duties depending on where they work. They may perform account analysis, review financial statements, and other reports to ensure they are accurate, conduct routine and annual audits, review financial operations, prepare tax returns, advise on areas that require efficiencies and cost-savings, and provide risk analysis and forecasting.
An accountant's duties often depend on the type of educational background and designation they receive. Most professionals in the field possess bachelor's degrees and—if employed by a corporation—may require certification to move up within the firm.
Certification requirements vary, with some roles requiring additional educational requirements above the bachelor's degree and successful completion of rigorous examinations. Accountants can have more than one designation. The most common are the certified internal auditor (CIA), certified management accountant (CMA),and certified publicaccountant (CPA).
A certified internal auditor doesn't need a license to practice, nor does a certified management accountant.
There are 672,,587 certified public accountants in the U.S., according to the National Association of State Boards of Accountancy.
Many accountants choose to become CPAs because the designation is considered the gold standard in the accounting profession. In the United States, certification requirements for accountants vary from state to state. But one requirement is universal—the passing of the Uniform Certified Public Accountant Examination. This exam is written and graded by the American Institute of Certified Public Accountants (AICPA).
Ethical Standards and Guiding Principles
Accountants must abide by the ethical standards and guiding principles of the region where they practice, such as the International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP).
The IFRS is a set of rules issued by the International Accounting Standards Board (IASB). These rules promote consistency and transparency in financial statements. GAAP is a set of standards that accountants must adhere to when they complete financial statements for publicly-traded companies in the U,S.
Certified public accountants are legally and ethically responsible to be honest and trustworthy, and to avoid negligence in their duties. CPAs have real influence over their clients, which means their judgment and work can affect not just an individualbut an entire company—including itsemployees, its board,and its investors.
Accountants may be held liable for paying uninsured losses to creditors and investors in the case of a misstatement, negligence,or fraud.
Accountants can be held liable under two different types of law—common law and statutory law. Common law liability includes negligence, fraud,and breach of contract, while statutory law includes any state or federal securities laws.
History of Accountants
The first professional association for accountants, the American Association of Public Accountants, was formed in1887, and CPAs were first licensed in 1896.Accounting grew as a profession during the Industrial Revolution. This was largely due to the growing complexity of businesses and the demands of shareholders and bondholders for evidence of the financial well-being of the companies they invested in.
After the Great Depression and the formation of the Securities and Exchange Commission (SEC), all publicly traded companies were required to issue reports written by accredited accountants. This change further increased the need for corporate accountants. Today, accountants remain a ubiquitous and crucial part of any business.
How Much Money Does an Accountant Make?
The median annual pay for an accountant in the U.S. was $78,000 as of 2022, according to the Bureau of Labor Statistics.
What Is the Difference Between an Accountant and a CPA?
A certified public accountant (CPA) is an accountant who is licensed by the American Institute of Certified Public Accountants (AICPA). The accountant has passed a four-part examination prepared by the AICPA. Prerequisites for taking the exam include a bachelor's degree in a related field and work experience in the field.
How Do I Become a CPA?
A certified public accountant (CPA) is a professional who has passed a four-part examination known as the Uniform CPA Examination, conducted by the American Institute of Certified Public Accounts (AICPA) with input from the National Association of State Boards of Accountancy (NASBA) and state boards of accountancy.
Accountants need both a bachelor's degree in accounting or finance and experience in the field to take the exam. The exam is tailored to each state's requirements and is administered by the state boards of accountancy.
The Bottom Line
Accountants are always in demand because every company of any size needs one or more of them.
They are the ones tracking, analyzing, and auditing the company's income and expenditures. They also have a key role in planning, decision-making, and forecasting, based on their ability to accurately estimate the cost of future projects.
