An Accounting firm is a company or an entity that is specialized in accounting related services for individuals or organizations. An accounting firm assists in auditing, preparing accounts, filing a return, conducting Internal audits, income tax assessment work, preparing documents, consultancy services, etc. An accounting firm provides decision-makers with information on recent financial operations, as well as valuable knowledge and guidelines for predicting future events. These Accounting firms usually hire CPA or Certified Public Accountants who are experts in the field of tax, audit, management, and consulting.
Certified Public Accountant known as CPA is a professional financial planner who helps individuals, corporations and other organizations prepare and achieve their financial objectives. CPAs mainly works at both small and large public accounting firms. They are well-reputed business consultants who assist the clients in making decisions on different matters, such as taxation, Auditing, Accounting, and financial management.
In a general view, all CPAs are accountants but all accountants are not CPAs. The major difference between a CPA and an Accountant lies in the educational qualification and experience. A CPA can do two things that an accountant without a CPA license cannot do which is to Prepare audited or reviewed financial statements and file a report with the Securities and Exchange Commission (SEC). In addition to this, A CPA holds a valid license to report on the company's financial statements in compliance with commonly accepted accounting principles.
Certified public accounting firms offer various services such as accounting, auditing, financial and advisory services to consumers, business owners, nonprofit organizations, and government agencies.
Services Provided by CPA firms:
CPA Firms usually provide 2 types of services, these are Attestation Services and Non-Attestation services.
Attestation services include Audits, Reviews, and Compilations. Non-Attestation Services are Internal Audit, Internal Control Design, Tax Services, Management, and Business Consulting, and additional services.
CPA Firms can assist its clients in different forms of auditing. The audit is conducted in order to verify companies’ financial reports so that the reports come out correctly. The evaluation is done by observation, clarification, and having a conversation with the management. Every company is required to have an annual audit and a CPA can assist in doing this task efficiently.
A CPA can review the company's books and records through the results of analytical evaluations, certain analytical procedures, and the measurement of certain financial metrics and ratios. The review is a lesser form of Auditing which is intended to provide the client with fair assurance, rather than the comprehensive verification and reporting standards provided by the Audit. Reviews also include a statement of changes in a financial position and detailed footnotes.
The compilation is a type of attestation service provided by a CPA. The compilation is where the CPA merely compiles the company's books and documents without any formal processes, independent review, or clarification of the balance of the business. The compilation does not require any kind of verification of account balances or statements of profit/loss as it is a mere representation of the company's management.
Internal audits are a preliminary stage to detect any errors and fix them. A CPA can assist provide service to an organization to achieve its objectives by implementing a systematic, disciplined approach to assessing and improving the effectiveness of risk management and governance processes.
Certified public accounting firms also offer service of Internal Control Design. Internal control (IC) is basically an in-house strategy adopted by an entity to be able to screen through and possibly reduce the risk of misrepresentation by inclusion or exclusion of any policies/procedures/actions.
A main service area for the CPA is to file tax returns to guide clients' tax approaches. A CPA can offer to assist in the client's tax planning and preparing strategies to minimize tax liabilities, tax returns, and assist clients to comply with tax laws and regulations. Accounting firms provide service to organizations and individuals to minimize their tax obligations.
CPA also provides consultation services to the client on different financial matters and a variety of consultancy activities. This includes advising on the adequacy of the control system, outlining potential strategic alternatives, developing cash flow models, securing financing, advising on mergers, acquisitions, and divestitures, providing business valuations, etc.
Certified public accounting firms also help to resolve other financial matters related to Bankruptcy and insolvency reorganizations, professional liability claims.