What Does a CPA Actually Do?

Most people have a misunderstanding about the basic job description of a CPA. The dictionary defines a CPA as follows:

The dictionary defines a CPA as follows:

A certified public accountant, or CPA, is a person who has passed the very difficult CPA Exam and has been licensed by one of the 50 U.S. states (or one of five other jurisdictions). The CPA’s license is renewed if the state’s requirements continue to be met including continuing professional education credits.

While this may sound like a job that could be fairly easy, especially if all you do is crunch numbers all day, you would be mistaken to assume so. CPAs perform several critical business functions; if a CPA fails to perform these functions adequately, there is a very real possibility that the business will fail. Here are just a few of these vital functions:

Prepare Profit & Loss Statements

Preparing profit & loss statements will show your company what is going on with all of its finances from beginning to end. This helps eliminate issues later in the year when a company could come to you asking why their finances are suffering.

Reconcile Reports

As a CPA, it is your responsibility to keep track of all the money that is spent, and also to determine to desirability of all company spending. Money management is a key part of an accountant’s job.

Create & Improve Upon Accounting Procedures

Any time an accounting problem is found within your business it’s probably because of a failing internal procedure. Part of an accountant’s job is to always make sure that they be constantly improving accounting procedures and to develop new procedures when existing ones fail.

Analyze Reports of Profit & Loss

Analyzing reports of profit & loss not only shows where your business is doing well but also where your business is suffering.

Image credit: CafeCredit