What kind of services can a CPA provide?

As discussed in part one of this article series, a CPA is a professional who has demonstrated an in-depth knowledge of financial accounting, tax, business law, auditing, and general business. There are four main types of services a CPA provides: Assurance, Accounting, Taxes, and Business Consulting.

Assurance

Assurance services include auditing and reviews. Auditing seeks to provide reasonable assurance, through testing, that financial statements are free from errors. All publicly traded companies in the United States are required to undergo an annual audit. Audits also can be required when a company takes a bank loan, receives a government grant, or when mandated by a company’s Board of Directors. Audits can be very expensive due to the time required of the accountant and can only be performed by a licensed CPA.

The second assurance service is called a review. Reviews are often required by banks who provide business loans, or by those who invest in a company. As with audits, reviews can only be performed by a licensed CPA. This service provides less assurance than an audit as to the company’s financial statements being free from error, and a review takes less time to complete.

A third service in the Assurance category is a compilation. Compilations provide no assurance as to the validity of financial statements and are used to arrange financial statements in a conventional way.

Accounting

Accounting is the broadest area where a CPA might function and includes day–to–day bookkeeping, fixed asset management, and cash flow analysis. CPAs can handle any task that relates to the financial performance of a business including filing appropriate paperwork with state and local governments.

Tax

This is the service most closely associated with the CPA. CPAs are licensed to perform all tax services and are allowed unlimited practice rights in front of the IRS. This means that if you hire a CPA for any tax related issue the CPA can represent you as a lawyer would do in a court of law. Taxes are highly intertwined with the day–to–day operations of a company and generally CPAs who provide accounting services during the year will also handle all tax matters.

Business Consulting

This is where the CPA can provide their clients with expertise in a wide array of topics that will help to improve the financial health of the business they own. This may include advice on how to structure a business, valuation services for a possible sale of the business, and even hiring decisions.

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Read the next installment in our Article Series:
Certified Public Accountants: What’s the difference?

Part Three: Do I need a CPA?
Many individuals and business owners often find themselves asking whether or not they should hire a CPA. For individuals this always seems to happen between February and April (tax time!). Business owners and/or managers may find this question creeping into their thoughts throughout the year as they deal with day-to-day operational finances, such as bookkeeping, payroll, and banking. When deciding if you need to hire a CPA, start by asking yourself the following five questions. Read more ...


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