In this guide

  1. The short definition
  2. The CPA examination
  3. State licensing and reciprocity
  4. Scope of practice
  5. Continuing professional education
  6. When a CPA is the right choice
  7. How to verify a CPA
  8. What CPAs typically charge

The short definition

A Certified Public Accountant (CPA) is a state-licensed accounting professional authorized to perform the full scope of public accounting services in the issuing state — including audit and attestation, tax preparation and planning, financial-statement compilation and review, and management advisory services. The CPA license is the broadest credential in US accounting practice and the only one that authorizes audit work.

The CPA examination

The Uniform CPA Examination is administered by the AICPA in coordination with the National Association of State Boards of Accountancy (NASBA). The exam has four sections: Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR), Regulation (REG, which is the tax-and-business-law section), and a discipline section the candidate selects from Business Analysis and Reporting, Information Systems and Controls, or Tax Compliance and Planning. Each section is a four-hour computer-based test.

Candidates must pass all four sections within an 18-month rolling window with a score of 75 on each section. The passing rate per section runs in the 45–55 percent range, making the CPA examination one of the more difficult professional examinations in the United States.

State licensing and reciprocity

Although the underlying examination is uniform, individual state Boards of Accountancy set their own education and experience requirements for licensure. The standard pathway is 150 semester hours of college coursework (typically a bachelor’s plus 30 additional hours, often satisfied through a Master of Accountancy), passing all four CPA sections, and one to two years of supervised work experience under a licensed CPA. Some states require an additional ethics examination.

CPAs who want to practice in another state must comply with that state’s mobility provisions. Most states honor “practice mobility” for out-of-state CPAs providing limited services, but firm registration may still be required for any CPA who establishes a physical office in the state.

Recommended: a deeper background read on tax-professional credentialing →

Scope of practice

CPAs are the only professionals authorized to issue audit and attestation reports on financial statements. This is the credential’s defining scope and the reason CPAs are typically engaged by businesses that need audited financials for lenders, investors, or regulators. Beyond audit, CPAs perform tax preparation and planning, bookkeeping, payroll, financial-statement review and compilation, internal-control consulting, and management advisory work.

For tax practice specifically, CPAs hold the same unlimited representation rights before the IRS that Enrolled Agents and tax attorneys hold. They may prepare any federal return, e-file with the IRS, and represent clients in audits, collections, and appeals.

Continuing professional education

CPA continuing professional education (CPE) is administered by individual state Boards of Accountancy. The typical requirement is 40 hours per year, with specific minimums in ethics and, in some states, in audit-related topics. CPAs must complete CPE through NASBA-approved providers and report compliance to their state board annually or biennially.

When a CPA is the right choice

Hire a CPA when your situation involves accounting work alongside the return — a small business that needs bookkeeping cleanup, a partnership that needs both Form 1065 and audited financials, a high-net-worth family with year-round controllership needs, or any taxpayer who values having one professional manage both sides of the books. For tax-only matters with no accounting component, an Enrolled Agent typically delivers equivalent representation rights at a lower fee.

How to verify a CPA

Two independent verifications are appropriate. First, the IRS Return Preparer Office’s public directory at irs.treasury.gov/rpo/rpo.jsf confirms current PTIN status and credential. Second, the issuing state’s Board of Accountancy maintains a public license-lookup tool that confirms license number, status, and any disciplinary history. NASBA also operates a national CPA verification tool at cpaverify.org that pulls from most state boards in a single search.

What CPAs typically charge

National Society of Accountants surveys consistently show CPA fees running 20–40 percent above the median preparer fee. The most recent survey put the average CPA fee for a Form 1040 with itemized deductions and a state return at roughly $400; complex returns with Schedule C businesses, K-1s, rental properties, or multi-state filings typically run $750 to $1,800. Year-round engagements (bookkeeping, payroll, tax planning) are generally billed monthly.

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