CPAs in Government
CPAs in Government:Brief Description about CPA, is the title of qualified accountants in numerous countries in the English-speaking world. In the United States, the CPA is a license to provide accounting services directly to the public. It is awarded by each of the 50 states for practice in that state. Additionally, almost every state (49 out of 50) has passed mobility laws in order to allow practice in their state by CPAs from other states. Although state licensing requirements vary, the minimum standard requirements include the passing of the Uniform Certified Public Accountant Examination, 150 semester units of college education, and one year of accounting related experience.
Continuing professional education (CPE) is also required to maintain licensure. Individuals who have been awarded the CPA but have lapsed in the fulfillment of the required CPE or have requested to be converted to inactive status are in many states permitted to use the designation “CPA Inactive” or an equivalent phrase. In most U.S. states, only CPAs are legally able to provide to the public attestation (including auditing) opinions on financial statements. Many CPAs are members of the American Institute of Certified Public Accountants and their state CPA society.
State laws vary widely regarding whether a non-CPA is even allowed to use the title accountant. To illustrate, Texas prohibits the use of the designations “accountant” and “auditor” by a person not certified as a Texas CPA, unless that person is a CPA in another state, is a non-resident of Texas, and otherwise meets the requirements for practice in Texas by out-of-state CPA firms and practitioners.
CPA Overview: Services provided
The primary functions performed by CPAs relate to assurance services. In assurance services, also known as financial audit services, CPAs attest to the reasonableness of disclosures, the freedom from material misstatement, and the adherence to the applicable generally accepted accounting principles (GAAP) in financial statements. CPAs can also be employed by corporations—termed “the private sector”—in finance functions such as Chief Financial Officer (CFO) or finance manager, or as CEOs subject to their full business knowledge and practice. These CPAs do not provide services directly to the public.
Although some CPA firms serve as business consultants, the consulting role has been under scrutiny following the Enron scandal where Arthur Andersen simultaneously provided audit and consulting services which affected their ability to maintain independence in their audit duties. This incident resulted in many accounting firms divesting in their consulting divisions, but this trend has since reversed. In audit engagements, CPAs are (and have always been) required by professional standards and Federal and State laws to maintain independence (both in fact and in appearance) from the entity for which they are conducting an attestation (audit and review) engagement. However, most individual CPAs who work as consultants do not also work as auditors.
CPAs in Government
Like their counterparts in public accounting and industry, CPAs in government have responsibilities in the areas of auditing, financial reporting and management accounting. In addition, CPAs in government have the opportunity to evaluate the efficiency of government departments and agencies at the federal, state, and local levels as well as advise decision makers in the use of entity resources.
Federal Government: At the federal level, some examples of where CPAs work include the Federal Bureau of Investigation, the Internal Revenue Service, Department of the Treasury and the General Accounting Office. Responsibilities may include:
- Investigating white-collar crime
- Managing financial statement audits for government agencies
- Performing research and analysis on financial management issues
- Testifying before a legislative committee on an audit or on the impact of pending tax legislation
State & Local Government: At the state and local level, CPAs are involved in conducting financial, performance or compliance audits which may include:
- Analyzing a school district’s ability to remain viable
- The propriety of expenditures for constructing prisons
- The effectiveness of the workers’ compensation system
- The regulatory compliance of hazardous waste programs.
Below are some of the types of audits performed by CPAs in all levels of government:
Performance Auditing: Performance auditing is an independent evaluation of an organisation’s operation with an eye towards making it work better, faster, and cheaper. Along with these streamlining efforts, a performance audit may also determine whether management is fulfilling its promises to the taxpayers by effectively providing services intended to meet its goals and objectives.
Financial audits: Financial audits include financial statement and financial-related audits or reviews. The primary focus of a traditional financial statement audit is the examination and verification of information provided through an entity’s financial statements. This may result in an opinion on the “fairness” of the information presented in the financial statements or determine whether the entity has adhered to specific federal and financial compliance requirements. These audits may involve a review of the internal controls over financial operations and typically result in a letter to management identifying any weaknesses and recommending corrective action.
Compliance Audits: Compliance audits determine whether the organisation is following provisions of laws, regulations and contractual grant or loan agreements. The purpose of compliance auditing is to identify instances of significant deviation from specific requirements and to seek corrective action. State compliance audits review compliance with specific state laws and regulations, and federal compliance audits review compliance with the legal and regulatory requirements mandated as a condition of receiving federal grants and aid.
Investigative Audits: Investigative audits are performed as a result of reported allegations related to improper activities by government employees or agencies. The allegations are received mainly through a toll-free hotline for reporting fraud and abuse in government. An investigation may also result when auditors, while on another assignment, become aware of inappropriate or suspicious activity that may fall under the Reporting of Improper Governmental Activities Act.
Positions are available as an Audit Committee Chair or Audit Committee Member for government organisations.
CPAs in Government
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