Are you in search of a dependable finance expert to oversee your company’s financial affairs? If that’s the case, it’s vital to grasp the distinctions between a Certified Public Accountant (CPA) and an accountant.
What is CPA Accounting and What is an Accountant?
While both can handle basic accounting tasks, CPAs have additional training and qualifications that make them better suited for specialized jobs.
Knowing the difference between a CPA and an accountant can ensure that the financial professional you choose has the correct qualifications for your needs. If you match a CPA with the right job, it will be a good use of their expertise and your money.
Let’s explore the differences between CPAs and accountants in Canada, including their education requirements and areas of expertise. We will also discuss why working with a CPA may be beneficial for businesses in Canada.
Qualifications and Education
In Canada, CPAs must pass the National Knowledge Exam (NKE) offered by the Canadian Institute of Chartered Accountants. This exam tests a professional’s knowledge in financial reporting, assurance services, legislation, taxation, and other specialized topics related to their field. The test is challenging, and candidates must prove their knowledge in all areas before becoming certified. Therefore, CPAs have extensive knowledge and experience in specific areas.
Once they have passed the examination, they must complete the CPA Professional Education Program (CPA PEP), which covers financial statement analysis, tax planning and preparation, and strategic management. The program typically takes two to three years to complete, depending on the CPA’s prior education and experience.
In contrast, accountants must have a bachelor’s degree in accounting or a related field. They may also have additional certifications and qualifications, though they are optional to pass the NKE or CPA PEP.
When compared to CPAs, accountants have less specialized knowledge. However, many accountants work with CPAs, allowing them to learn from their more experienced colleagues.
Depending on your business’s needs, you may hire an accountant instead of a CPA or vice versa. We’ll continue to explore the differences between a CPA and an accountant in detail below.
Codes and Ethics
CPAs are subject to rigorous ethical standards the Canadian Institute of Chartered Accountants set. This includes adhering to the CPA Code of Professional Conduct and abiding by all provincial laws and regulations. CPAs must also maintain their professional qualifications, take continuing education courses, and abide by a professional code of conduct or ethics.
Accountants are expected to adhere to similar ethical standards but may be less heavily regulated. It is important to understand the qualifications and certifications of a potential accountant before you hire them.
Job Roles and Responsibilities of CPAs
CPAs are often responsible for more complex tasks than accountants. These may include:
Preparing Financial Statements
CPAs can help you create financial statements that accurately reflect your business’s financial position. This includes creating balance sheets, income, and cash flow statements.
Auditing and Assurance
CPAs are qualified to provide assurance services, meaning they can review a business’s financial records and attest to their accuracy. Assurance involves reviewing financial records and attesting to their accuracy, which may be done regularly or as part of an audit. Assurance services may also include issuing a report on the internal control systems of a business, and accountants do not provide these services.
Tax Planning and Preparation
CPAs are also qualified to provide tax planning and preparation services, helping businesses ensure that their taxes are promptly filed. They can also help businesses understand the federal, provincial, and local taxes they must pay and how to reduce their tax burden. For large organizations, CPAs may also be involved in corporate tax planning.
Consulting Services
CPAs can also be hired as consultants, providing businesses with advice and guidance on various business topics, such as financial management, risk management, and strategic planning. Accountants may need help to provide these services.
Generally, CPAs are better suited for businesses that need more complex financial services because of their specialized knowledge and experience.
Job Roles and Responsibilities of Accountants
Although accountants’ roles are less specialized than CPAs, they can still provide valuable services for businesses. These may include:
Bookkeeping and Record-Keeping
Accountants can manage the day-to-day financial operations of a business. This includes recording financial transactions, preparing and analyzing financial reports, reconciling bank statements, and more. Bookkeeping and record-keeping are essential for companies of any size to ensure that their financial records are accurate and up-to-date.
Financial Planning and Analysis
Accountants can also provide businesses with insights into their current financial situation. They may do this by analyzing past data or forecasting future trends. With these insights, companies can make informed decisions about their finances. Unlike CPAs, however, accountants may not be able to provide assurance services.
Tax Planning and Preparation
Like CPAs, accountants are also qualified to provide tax planning and preparation services. They can help businesses understand their tax obligations, plan for future taxes, and file them promptly.
Overall, accountants can provide a range of financial services and can be helpful to businesses that need help with more straightforward tasks.
Benefits of Working with a CPA
In Canada, the CPA designation is the gold standard for financial professionals, meaning that CPAs have a higher level of expertise and knowledge than other financial professionals. Working with a CPA has numerous benefits, such as:
Specialized Knowledge and Experience
As we mentioned earlier, CPAs have specialized knowledge and experience that accountants may need to gain. Businesses can trust their advice and financial decisions more than other professionals. Additionally, CPAs must complete continuing education courses yearly to stay up-to-date on the latest laws, regulations, and financial practices.
Higher Level of Service
CPAs are expected to adhere to a higher standard of service by following professional standards, ethical guidelines and keeping up-to-date with the latest financial trends. This helps ensure that businesses are getting the best advice possible.
Access to Professional Resources
CPAs may also have access to exclusive resources such as databases and industry tools. These can help them analyze data quickly and make more informed decisions for their clients. Furthermore, CPAs can provide access to grants, loans, and other financial incentives that are only available to CPAs. Businesses can leverage these resources to their advantage.
Benefits of Working with an Accountant
Accountants can provide valuable services for businesses that need help with more straightforward tasks or don’t require a CPA’s specialized knowledge. Here are some of the benefits of working with an accountant:
Cost Savings
Because accountants generally charge lower fees than CPAs, businesses can save money using their services. This can be especially beneficial for smaller businesses with tighter budgets.
Simplified Financial Processes
Accountants can help simplify the financial processes of a business by keeping accurate records, analyzing data, and preparing financial reports. This helps companies understand their finances better and make informed decisions. Instead of having to handle these tasks in-house, they can trust their accountant to do it for them.
More Time and Energy
Hiring an accountant can also give businesses more time and energy to focus on other aspects of their operations, which is especially important for busy business owners who need more time to manage their finances. With an accountant handling their finances, business owners can dedicate more time to growing their businesses.
Streamlined Tax Preparation
Finally, accountants can provide tax planning and preparation assistance for businesses, including understanding their tax obligations and filing taxes on time. Overall, working with an accountant can help companies to save costs while still getting quality advice on the financial aspects of their operations.
Which Type of Professional is Right For Your Business?
Businesses of all sizes can benefit from the services both CPAs and accountants provide. CPAs have specialized knowledge and experience that make them the preferred choice for complex financial tasks, while accountants are better suited to more straightforward tasks.
Both professionals can help businesses stay on top of their finances and ensure accurate records. Ultimately, which professional you choose will depend on your specific needs and budget.
Here are a few criteria to consider when deciding which type of financial professional is right for your business:
The Complexity of the Task
If you need help with a complex financial task, such as tax planning or business succession, then you will likely need the services of a CPA. However, if your task is simpler, an accountant can help you.
Your Financial Resources and Budget
An accountant may be better if you have limited financial resources and a tighter budget. Accountants generally charge lower fees than CPAs, so you can save money while still getting quality advice. On the other hand, if you have a higher budget, you can afford the services of a CPA. The budget aside, your investment will also depend on the complexity of the accounting service you need and whether a CPA is essential for your business.
The Level of Service You Require
CPAs are expected to adhere to higher service standards, so they may be better if you require more complex services like assurance or public accounting. However, accountants can provide more specific services such as bookkeeping and data analysis if that is all you need. Businesses should weigh the amount of service they require against their budget when deciding which type of financial professional is right for them.
Your Level of Comfort
Finally, choosing a professional you feel comfortable working with is important. You should feel confident that you are getting the best advice for your specific needs and budget. Take the time to research and compare professionals in your area to find one you are comfortable with.
When choosing a financial professional, you must consider your specific needs and budget. CPAs and accountants can provide valuable business services, so choose the right one. With the proper guidance and support, businesses can save costs while still getting quality financial advice.
When in Doubt, Schedule a Consultation
If you’re unsure which option is best, you should get a consultation from both professionals to ask questions and discuss your specific needs. Then, you can make an informed decision about which type of financial professional is right for your business.
Here are a few questions to consider asking:
- What services do you provide?
- How long have you been in business?
- Are there any additional fees or charges?
- What type of experience do you have with companies like mine?
- How often will we need to meet or communicate?
Finding the right professional can save you a lot of stress and money in the long run. With the right financial advice and guidance, businesses can ensure their finances are in order and stay on top of their operations.
Looking For a Reputable CPA in Vancouver?
Contact us at Pivot Advantage Accounting and Advisory Inc if you’re looking for a reputable and experienced CPA in Canada. We have over 15 years of experience helping businesses of all sizes with their financial and accounting needs. Our accounting experts are here to answer any questions for your business. To learn more, contact us for a free consultation.