Discussion:CPA responsibilities as private company employee Pros and Cons to employer

When performing audits on private companies how do you weigh these issues when evaluating the effectiveness and competence of the companies accounting staff, vs the potential cost of the CPA? How do you view credentials like CMA (certified management accountant) and CIA (certified internal auditor), and the credential I hold of CCIFP (certified construction industry financial professional). My interest pertains both to my continued long term plans toward seeking further credentials, and to a present job opportunity.

If it's like law, only a lawyer can work as a principle in a law firm. Make sense to me that, for instance, a CPA could not have a lawyer as partner in his practice OF public accoutancy UNLESS the other lawyers were CPAs.

Some lawyers hold the designation of CPA and lawyer, IF they were practicing public accountancy in such a firm, all lawyers would have to be CPA-attorneys, as mentioned above.

Now, a CPA who is also a lawyer can be in a firm of lawyers with those other lawyers NOT having the CPA designation, but that CPA could not practice public accountancy with the firm in my opinion.

I have tried to craft the above sentences where they have to be read carefully to have their proper meaning.

State Boards in each state is where you would go for a definitive answer I believe.

P.S. I think there is also a limitation on what a CPA can put on his letterhead if he is in public accounting. Joe's Convenience Store & CPA Office as one entity would not be permitted, I don't think. lol.

Let me clarify my interest. I do accounting as an employee for a private company. I do not have a CPA. I do have accounting education, and industry (construction) specific financial professional credentialing. I assist my employer in producing the company financial statements. As I understand it, what I do for my employer and the financial statements "we" produce do not constitute the practice of public accountancy.

The company, my employer hires a CPA firm to audit and attest to the conformance or lack of conformance with GAAP. The hired CPA firm or individual practices public accountancy, and must be licensed.

Interest 1) As the CPA auditing my employers financials how much does it matter to you if I or any of my fellow financial employees at the company have a CPA if the financial statements conform to GAAP and the company uses appropriate internal controls. Given that both the CMA, and the CIA as described above are four part 4hr per part exams, require the credential holder to abide by a similar code of ethics or suffer revocation of the credential, require CPE, and require the credential holder to have practiced either management accounting, or internal auditing respectively for a minimum two years, how much are you the CPA willing to accept those credentials in lieu of a CPA in evaluating the competence of the company's accounting staff and system? Given that I have read probably 1000 job postings for bookkeeping/accounting/controller positions with construction companies in the last year, and many claim they prefer a CPA even when duties described, size of the business, or salary being offered suggest the employer is not publicly traded, and does not understand that at this point one cannot in most places achieve a CPA with only a bachelor's degree anymore.

Until the rules were recently re-changed and loosened up, you couldn't even sit for the exam unless you had 30 semester credit hours of accounting, and 150 credit hrs overall. Introductory or principles of accounting courses can not be counted toward your 30 hrs. I have reviewed some accounting BS or BA programs which do not meet this 30 credit hr requirement if you exclude the Principles of Financial/Managerial Accounting courses which usually make up 8 hrs of the underclassman accounting course work. Under the recently relaxed rules here in Virginia, one may now sit for the exam with only 120 semester hrs of bachelor's or graduate level work, but still need the full 150 hrs for certification. In addition they appear to have relaxed the definition of a major in accounting to being only 24 cr hrs. accounting (again excluding introductory/principles courses) plus 24 other business of which only 6 can be accounting.

I have a bachelor's (not in accounting) and AAS in Accounting, and a CCIFP, and years of experience both in the field and in the office in construction. (For anyone who doesn't know, an AA (Associates of Arts) in Accounting usually is a program designed for individuals who intend to transfer to a BS/BA in accounting program and usually doesn't include accounting course work beyond the introductory/principles level whereas, an AAS (Associates in Applied Science) in Accounting is usually a program designed for people like myself who already have a bachelors in another field, or who wish to immediately enter the job market and therefore includes coursework at the intermediate level, as well as courses in tax, auditing, and cost accounting. I have 23 semester hrs of accounting, somewhere around 20 to 23 hrs of other business courses, depending what does and doesn't count, and 160 cr hrs of overall education. 8 of the accounting courses are principles/introductory courses and I believe the do not count. Therefore, to even sit for the exam I need 10 to 15 cr hrs depending on what does and doesn't count. Given that either the CMA or the CIA program would require no additional schooling, and test knowledge more relevant to accounting within companies it seems to me what matters is the knowledge and ability to interpret and apply GAAP not the CPA credential. If you were auditing a construction firm who employed me as their primary producer of financial statements would you care about my lack of CPA? How much weight if any would you ascribe to my CCIFP? Would a CMA or CIA as additional certification reassure you if the CCIFP does not?

Interest 2) In the threads which occasionally pop up about CPA's issuing financial statements, the CPA's on the site have indicated that the AICPA practice rules require them as license holders to observe more formalities than might apply to a non license holder? Are any of those requirements a potential negative to a private company issuing financial statements?

If you were auditing a construction firm who employed me as their primary producer of financial statements would you care about my lack of CPA? I would care none, letters do not equal competency, I think the majority of the accounting staff @ Enron had their CPA license. Interest 2) research the Auditing Standards [[1]], financial statements are always the responsibility of management.

TexCPA 22:55, 22 October 2009 (CDT)

BTW, understanding the intent of Crow leads to intelligent quandary.

Thank you for the post and the link.

I had a similar matter in town. A local real estate property management company had internal accountants and cpas performing accounts payable, receivable functions and preparing monthly financial statements for owners, partners, banks, and other interested and forseeable third parties who were relying on the statements. Even though cpas were running the show, they did not have to undergo peer review, prepare checklists, or do any other sort of due diligence like I have to do because they were not a cpa firm. They are a "management company."

So, the lesson to me was that if my wife owned a bookkeeping company that hired me to sign her monthly client financial statements, I no longer have to go through the Board for peer review. Hers is not a public accounting firm. It's a management company. I'm not issuing financial statements as a cpa, but as her employee.