It’s easy to get very confused over the numerous degrees, designations, licenses, and certificates, that can be brought to bear in the financial world. And when you throw into the mix the issue of what diplomas and licenses are required to do what jobs, and what of these are simply nice to have, it can become almost incomprehensible. For those who are Certified Public Accountants, also called CPAs, and who want to know if this will help them to become a Chief Financial Officer, also called a CFO, this article will help to clear the air.
What is a CPA?
First off, a CPA is not a degree. It is a license that is granted by the state in which a person practices. A CPA license is probably the highest level of professional achievement in the accounting business, but in its bare bones, it is good for one thing and one thing only: public accounting.
To earn a CPA license, a person must have satisfactorily completed a prescribed number of courses in accounting. They are not required to have a degree in accounting, but it’s what is most often done. Normally, at the same time a degree is being earned, a CPA candidate must pass a comprehensive examination given by the state’s board of accountancy. This exam is comprised of three parts: accounting theory, accounting practice, and business law. Finally, a CPA candidate must complete a 1-year internship in public accounting, which means that they must work for a firm which does work for the general public. After all of this is completed, the person is granted a CPA license by the state.
But What About the CFO?
To a great extent, a CFO is something entirely different. A CFO, as its name implies, is the chief financial officer of a business or organization. It is not necessary to be a CPA in order to become a CFO. In fact, a company can hire virtually anyone to become its CFO, but in many cases the CFO is a CPA or at least one whose license is inactive.
The greater part of a CPA’s responsibility is for the attestation function of financial records. This means that when a CPA completes a review of a company’s financial reports, he is qualified to attest to the accuracy of the records and to state that the methods used to render those reports comply with what are called GAAP, or “Generally Accepted Accounting Principles.”
When a person becomes a CPA, he or she can be professionally capable of a certain high standard of ethics and ability to render financial judgements. It is because of these certified abilities that companies and organizations often ask a person to have a CPA license among their credentials. It is not, however, a requirement for the job.
Since a CPA license is not required to become a CFO, what other qualifications are often accepted? Many CFOs, although not CPAs, have considerable accounting and finance experience in their resumes. They are also often attorneys by profession.
For those who aspire to become a CFO, a CPA license is not required. It is often, however, a good start. There are other excellent backgrounds that a good CFO can earn that will equally prepare him or her for a good career in the field.