A CPA, or Certified Public Accountant, is an accountant who holds a state-issued license earned by completing specific education, passing the Uniform CPA Examination, and working under a licensed CPA for a required period. The license carries legal authority that ordinary accountants and bookkeepers do not have: a CPA is the only professional who can sign an audit opinion on financial statements, and a CPA holds unlimited rights to represent taxpayers before the IRS. That combination is what makes the credential one of the most recognized professional licenses in the United States.
What a CPA Can Do That Others Cannot
Three legal powers separate a CPA from an unlicensed accountant or general tax preparer.
Signing Attest Reports
Only a licensed CPA can perform and sign attest engagements. That category includes financial statement audits, reviews, prospective financial information reports, and agreed-upon procedures. When an investor, lender, or regulator relies on an audit opinion attached to a company’s financials, the opinion has legal weight because a CPA signed it.
For public companies, this authority sits inside a federal framework. Section 13(a) of the Securities Exchange Act of 1934 requires issuers to file annual reports certified by independent public accountants, and the Sarbanes-Oxley Act of 2002 added the Public Company Accounting Oversight Board, which any firm auditing a public company must join.1PCAOB. Information for Auditors CPA firms doing attest work also go through mandatory peer review every three years, in which an outside reviewer examines the firm’s quality management and a sample of engagements.2AICPA & CIMA. Peer Review: A Vital Component in Audit Quality
Full Representation Before the IRS
Federal regulations expressly authorize CPAs to practice before the IRS. Under Circular 230, any CPA not under suspension or disbarment may represent taxpayers before any IRS office or employee after filing a written declaration of qualification.3eCFR. 31 CFR 10.3 – Who May Practice
In practical terms, a CPA can handle audits, negotiate payment plans, argue cases before IRS Appeals, sign offers in compromise, and extend the statute of limitations on your behalf.4Internal Revenue Service. Publication 947 – Practice Before the IRS and Power of Attorney Unenrolled preparers cannot do most of these things.
Limited Tax Advice Privilege
Communications between you and a CPA about tax advice carry a limited federal privilege under Internal Revenue Code Section 7525, similar to attorney-client privilege.5Office of the Law Revision Counsel. 26 USC 7525 – Confidentiality Privileges Relating to Taxpayer Communications The privilege has real boundaries. It applies only in noncriminal tax matters before the IRS and in noncriminal federal court proceedings involving the United States. It does not cover return preparation, general accounting work, or communications tied to promoting a tax shelter, and it disappears in criminal investigations. For matters where broader privilege matters, an attorney is the safer choice.
CPA vs. Enrolled Agent vs. Unenrolled Preparer
The tax preparation industry includes several kinds of professionals, and the differences in what each can legally do for you are significant.
An Enrolled Agent, or EA, is licensed directly by the IRS after passing a three-part Special Enrollment Examination on federal tax. Like a CPA, an EA has unlimited representation rights before the IRS and can represent you during audits, appeals, and collections regardless of who prepared the return.6Internal Revenue Service. Understanding Tax Return Preparer Credentials and Qualifications The difference is scope. An EA’s credential covers federal tax only. A CPA license authorizes a much wider range of financial services, including auditing, attestation, financial reporting, and consulting, none of which an EA can perform. If you need strict tax representation, an EA is capable. If you also need someone who can audit books or issue a formal financial opinion, that requires a CPA.
Unenrolled preparers, meaning people who prepare returns without a CPA license, EA designation, or law degree, face the tightest restrictions. They can represent you only during examination of a return they personally prepared and signed, and only before revenue agents or customer service representatives. They cannot appear before appeals officers, sign closing agreements, or extend the statute of limitations for you.4Internal Revenue Service. Publication 947 – Practice Before the IRS and Power of Attorney
What CPAs Do in Practice
CPAs work across the financial world, and the roles fall into a few broad categories.
Tax preparation and planning is where most people encounter a CPA. The work goes beyond filling out returns: a CPA looks at your full financial picture to identify deductions, structure transactions, and build multi-year strategies that reduce what you owe while keeping you compliant with federal and state law.
Audit and assurance work is the area where CPAs have a legal monopoly, covering audits, reviews, compilations, and agreed-upon procedures for public and private companies. Forensic accounting involves investigating financial discrepancies, embezzlement, and fraud, and forensic CPAs often serve as expert witnesses. Business valuation, closely related, determines what a company is worth during mergers, acquisitions, divorce, and estate planning.
Many CPAs also consult on risk management, internal controls, retirement planning, and corporate strategy. Some specialize further with AICPA credentials such as the Personal Financial Specialist for wealth management, Certified in Financial Forensics for fraud work, Accredited in Business Valuation, and Certified Information Technology Professional for accounting and cybersecurity work.7AICPA & CIMA. Propel Your Career With a Credential
How Someone Becomes a CPA
Education
Nearly every state requires 150 semester hours of college coursework, about a year beyond a standard bachelor’s degree, with a concentration in accounting covering financial accounting, auditing, taxation, and business law. Many candidates pursue a master’s degree to reach the 150-hour mark.
In 2025, the AICPA and NASBA approved an alternative pathway allowing candidates to qualify with a bachelor’s degree, passage of the CPA Exam, and two years of professional experience in place of the additional 30 credit hours. The traditional path remains available. Each state has to enact the update through its own legislation, so what your state accepts depends on whether it has adopted the new model law.8NASBA. New CPA Licensure Pathways and CPA Mobility
Most states also require a separate ethics examination covering the AICPA Code of Professional Conduct, independence rules, and conflicts of interest.9AICPA & CIMA. Professional Ethics: The American Institute of Certified Public Accountants Comprehensive Course (For Licensure)
The Uniform CPA Examination
The exam is a 16-hour, four-section test taken by every candidate regardless of licensing state. After the 2024 CPA Evolution overhaul, the exam has three mandatory Core sections covering auditing, financial accounting and reporting, and regulation, plus one Discipline section the candidate chooses from business analysis and reporting, information systems and controls, or tax compliance and planning.10AICPA & CIMA. Everything You Need to Know About the CPA Exam Passing score is 75, and most states give candidates a 30-month rolling window to pass all four sections after the first one is passed.11NASBA. CPA Exam Transition FAQs
Experience
Passing the exam is not enough on its own. Every state requires supervised professional experience under a licensed CPA, generally one to two years depending on the jurisdiction, and some states allow part-time hours. The work has to involve accounting tasks such as auditing, tax preparation, financial analysis, or consulting, and the supervising CPA must hold an active, unrestricted license.
In states that separate attest from non-attest authority, the type of experience determines what services the new CPA can sign off on later. Candidates who want to sign audits usually need a minimum number of supervised hours on attest engagements. Skipping this step still leads to a license, but with restrictions on audits and reviews.
Keeping the License
Most states require roughly 40 hours of Continuing Professional Education each year covering accounting, auditing, tax, ethics, or specialty areas. State boards enforce this; letting CPE lapse can suspend a license. AICPA members also follow the AICPA Code of Professional Conduct, which requires integrity, objectivity, independence for audit work, due care, and confidentiality. A CPA performing an audit cannot hold financial interests in the client, work for the client, or maintain any relationship that would compromise objectivity.12AICPA & CIMA. Professional Responsibilities
State boards of accountancy have broad discipline power. Violations can lead to reprimand, mandatory education, probation, practice restrictions, fines, required restitution to clients, or license revocation. Specific penalties vary by state.
CPAs who stop practicing can generally move to inactive or retired status, which waives renewal fees and CPE. The trade-off is that an inactive CPA cannot use the title, sign reports, or hold themselves out as a CPA. Returning to active practice usually requires making up back CPE and paying reinstatement fees.
Practicing Across State Lines
All 55 U.S. accountancy board jurisdictions meet the standard of substantial equivalency under the Uniform Accountancy Act, so a CPA licensed in one state can generally practice in another without a second license.13NASBA. Substantial Equivalency The 2025 model law update shifts mobility from a state-based test to an individual-based test tied to the CPA’s own education, exam results, and experience, and states are adopting that change on their own timelines.8NASBA. New CPA Licensure Pathways and CPA Mobility
Mobility is not total. Attest work, especially financial statement audits, usually triggers a notice or firm registration requirement in the state where the client sits. Tax and consulting work moves across state lines with minimal friction; signing an audit opinion for an out-of-state client usually does not.