The CPA Journey
Have you ever wondered what an accountant does and why their profession is one of the most important in the financial world? Often, you might hear about lawyers and their firms, and what they do for various people.
You probably do not hear what the big four accounting firms are doing unless there is a major scandal. One reason is that it may not be important to you or your personal affairs.
I am here to tell you about accounting and CPAs and why they provide great value in the world we live in today. I will first answer the question, “What is a CPA?” Then, I will go into some detail on the pathway that candidates have to go through to become a CPA in Ontario.
What is a CPA?
In the accounting profession, CPA stands for Chartered Professional Accountant. When a person is a CPA, they have gone through rigorous training and practice to become a member.
In Ontario, our governing body is CPA Ontario. Other provinces may have their own provincial bodies, or be governed by CPA Canada. I am registered as a CPA Candidate with CPA Ontario.
It’s important to note that there are other accounting designations beyond CPA, and their governing bodies can be found in all parts of the world with different designations. These designations have platforms where you can verify that your accountant is operating a registered firm, is in good standing with their governing body, and is operating above board.
In this article, I will be talking about the CPA designation within Canada and Ontario. Now that we know what CPA stands for, what do they actually do?
What is Accounting?
As defined by the CPA Canada Learning Library (CPA Canada, 2024), accounting is the “systematic process of recording, summarizing, and presenting financial information to users”.
In layman’s terms, accounting describes how the business is doing and answers questions that include: Is it making a profit?; Does it own a lot of resources?; How much debt do they have?; Or what are their earnings per share?
Accounting can be broken up into several different viewpoints. In this article, I will discuss Financial Reporting and Managerial Accounting.
Financial Reporting
Investors, creditors, and lenders are only a few of the users of financial statements who care about the financial reporting of an entity. In the definition, “Financial reporting is the process of measuring the financial performance of an entity using standard conventions to create a set of financial statements” (CPA Canada, 2024).
In Canada, there are four sets of standards:
Accounting Standards for Private Enterprises (ASPE), the International Financial Reporting Standards (IFRS), Accounting Standards for NPOS, and Accounting Standards for public government.
Designated CPAs have access to this information by using the CPA Handbook. Parties outside of the company use these financial statements to make effective decisions.
Therefore, the accuracy and consistency in their reporting are vital to making business decisions based on accurate data.
Management Accounting
CEOs, CFOs, COOs, employees, and other internal stakeholders care about the management accounting of an entity. Management accounting “takes financial information and non-financial information from a business and uses it to make short-term and strategic long-term decisions to help the business reach its goals” (CPA Canada, 2024).
Most goals an entity creates are SMART (Specific, Measurable, Achievable, Relevant and Time-bound).
This type of accounting includes budgeting, cash flow control, capital financing decisions, job costing, CVP (Cost-Volume-Profit) Analyses, and any other internal activity that affects the entity.
Before the United CPA designation came to Canada, there were three, and one of those designations was the CMA (Certified Management Accountant).
Other Areas of Accounting
CPAs not only care about the external and internal environments of an organization, but they also care about whether their financial statements are reasonably free from material misstatement, tax implications of certain transactions, equity, and debt financing, and how the entity is governed.
The other areas of accounting include audit and assurance, tax, finance, and strategy and governance. These six technical areas define a CPA and what they can do.
The Pathway to Becoming a CPA
What’s Involved?
In Canada, the pathway to becoming a CPA is complex, and challenging and will require courage, willingness to work hard, and a significant financial investment to succeed.
First, a person has to become a student of accounting by either attending a post-secondary institution or completing the CPA’s prerequisite requirements through study or work experience.
I attended the University of Guelph and completed a bachelor’s degree in commerce with a major in accounting. My major was qualified by CPA Ontario and that allowed me admission into the next step of becoming a CPA: The Professional Education Program (PEP).
After a student completes the initial requirements, they must apply to be a CPA Candidate through CPA Ontario and have their transcripts assessed if they chose the post-secondary path.
Parallel to the PEP, a CPA candidate must also gain two and a half years of practical experience and must report it using the practical experience reporting tool.
The Professional Education Program
The PEP consists of six courses with four exams and one common final exam (CFE). The first two courses, Core 1 and 2, develop a candidate’s breadth in each of CPAs six technical competencies.
The next two courses are electives and there are four a candidate can choose from: Assurance, Taxation, Performance Management, and Finance.
If a candidate wishes to practice publicly in the future, they are required to take Assurance and Taxation as their electives. Any elective chosen develops a candidate’s depth in that competency.
The final two courses are called capstones, and they develop the soft skills a candidate needs to be an effective CPA. The final project in capstone one is a team worked written report and oral presentation. Capstone two prepares the candidate for the CFE.
The Common Final Exam (CFE)
This is the last step for a candidate as part of the education process in becoming a CPA. The CFE is a three-day cumulative exam that tests a candidate in each of the six competencies from their experiences throughout the PEP. The exam consists of only case studies which differ from the core and elective courses since they have a multiple choice component.
Looking Ahead
Becoming a CPA in Canada is a challenging but rewarding journey that prepares candidates to have the strong foundation of knowledge and skill to handle important financial functions. CPAs are essential for creating accurate financial reports helping businesses make informed decisions. Strict standards are followed to ensure CPAs work ethically and professionally.
By partnering with trusted professionals, you can focus on growing your business while knowing that your financial health is in good hands. KATA Accounting is dedicated to providing reliable support, guiding businesses through the challenges of financial management.
References
CPA Canada. (2024). CPA Canada Learning Library: Financial reporting volume – 2024 edition. UWorld. VitalBook file.