CPA Certificate vs CPA License: What’s The Difference?
CPA Certificate vs CPA License: What’s The Difference?
The CPA or Certified Public Accountant is a professional certification that is considered the ‘gold standard’ of certifications in the finance world. Obviously, it does not come easy. After studying for over 100 hours and completing an exam in 4 parts, it is disheartening for students to hear that they are not licensed CPAs. Why does this happen? In this article, we at Orbit Institutes look into the difference between a CPA certificate and a CPA license.
Who Certifies a CPA?
The CPA is offered by multiple countries across the globe. However, in this article we will refer to the US CPA which is globally recognised and offered by every state in USA.
The US CPA exam is administered by the American Institute of Certified Public Accountants (AICPA). Eligibility varies across each state and though a CPA is licensed only in the state they have applied from, multiple reciprocity laws allow them to practice in other states and countries as well.
CPA Certification vs. CPA License
The reason these two concepts exist is because each state in the USA follows their own -system of declaring a person a CPA. Largely states follow either a one-tiered system or a two-tiered system.
In a one-tiered state the terms ‘CPA certificate’ and ‘CPA license’ are used interchangeably. Meaning that a student becomes a licensed CPA the moment they clear the CPA exam.
In a two-tiered state however, a student must not only clear the CPA exam, s/he must also clear additional work-experience, ethics or educational requirements. When students complete the CPA exam, they are given a CPA certification. This document signifies that one has completed the first step to becoming a full-fledged CPA. These certificate holders can only work under the supervision of an already licensed CPA and cannot publically advertise themselves as CPAs. Once they complete the states work requirements they are given their CPA license, which allows them to work unsu pervised and run their own CPA firm if they wish.
CPA CertificationCPA LicenseNo additional requirementsCould need additional work-experience, ethics or educational requirementsCannot use the CPA title on any official or legal reportsLegally recognises a person as a CPA, allowing them to sign even tax returns and audit reportsCannot own a CPA firmCan own or be a partner in a CPA firmRequires a small annual renewal feeRequires a significant annual renewal fee
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