CPA Defined. A Certified Public Accountant (CPA) is an accountant who has met the requirements of California state law and has been issued a license to practice public accounting by the California Board of Accountancy. CPAs audit financial statements of both publicly and privately held companies, including homeowner associations. To verify a CPA's license, check online with the Board of Accountancy.
Financial Services. CPAs may provide financial services to a community association within the scope of his or her license in addition to the preparation of reviewed and audited financial statements and the preparation of the community association's tax returns. (Bus. & Prof. § 11501(b).)
Peer Review. Starting July 1, 2011, California CPAs are subject to mandatory review of their auditing and accounting practices. The peer review report is then available to clients who request it. For more information about CPA peer reviews, see California's Board of Accountancy website. In addition, see Replacing SAS 70 in the August 2010 edition of the Journal of Accountancy.
Definitions. Following are a few important definitions:
- AICPA: The American Institute of Certified Public Accountants is an organization that develops concepts and standards for financial accounting and reporting for organizations and businesses; these standards are recognized as authoritative by the Securities Exchange Commission and the American Institute of Certified Public Accountants. The AICPA creates and administrates the nationwide uniform CPA exam.
- FASB: The Financial Accounting Standards Board (FASB) is an organization that develops concepts and standards for financial accounting and reporting for organizations and businesses; these standards are recognized as authoritative by the Securities Exchange Commission and the American Institute of Certified Public Accountants.
- ASC: Accounting Standards Code. The accounting “laws” to which all GAAP-compliant work products must conform with one major exception. If, when applying the applicable ASC code, the result is misleading or fails to reflect economic reality, the CPA is required to modify the reports to satisfy those two tests. Explicit permission is required for the CPA to exercise professional judgment.
- GAAP: General Accepted Accounting Principles are a widely accepted set of rules, conventions, standards, and procedures for reporting financial information which are established and administered by the AICPA and FASB.
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