We often hear candidates discussing whether a Certified Public Accountant (CPA) or a Certified Public Tax Accountant has a superior skillset. This may also be a pertinent question for clients who may be planning to onboard for either of these positions.
In this article, we take a look at the differences in the roles and salaries of Certified Public Accountants and Certified Public Tax Accountants, and outline some of the key points to consider in your planning process.
Opinion: Certified Public Accountant or Certified Public Tax Accountant?
As mentioned, it’s not simply a matter of saying, “X is better than Y.” We must assess differences between Certified Public Accountants and Certified Public Tax Accountants, to determine criteria for comparison of these two occupations.
Within this framework, let’s look at examination scores and certification requirements to provide insight. In fiscal 2021, the pass rate for the Certified Public Accountant examination was 9.6%, while the pass rate for the Certified Public Tax Accountant examination was 18.8%. The data suggests it is more difficult to qualify as a Certified Public Accountant. In addition, it is important to note that a Certified Public Accountant can register as a Certified Public Tax Accountant, but not vice-versa.
As of 2020, there were approximately 39,000 registered CPAs, and approximately 79,000 Certified Public Tax Accountants.
The data strongly suggests a Certified Public Accountant may be regarded as having a higher value than a Certified Public Tax Accountant. As a potential recruiter, however, it is important to recognize that the roles of a Certified Public Accountant and a Certified Public Tax Accountant differ, and that they are quite different occupations.
What are the key differences between a Certified Public Accountant and a Certified Public Tax Accountant?
We have outlined the key differences between a Certified Public Accountant and a Certified Public Tax Accountant below.
Key difference 1: examination content and registration methods
While both Certified Public Accountants and Certified Public Tax Accountants must pass national examinations, the examinations have different eligibility requirements, and the course content differs.
|
Certified Public Accountant*1 |
Certified Public Tax Accountant*2 | |
|
Eligibility requirements |
None |
Detailed eligibility criteria covering education, qualifications, and job history |
|
Examination requirements |
The candidate must take and pass four multiple-choice tests and six essay tests |
The candidate must pass tests on two compulsory subjects, and choose and pass three out of 11 elective subjects |
|
Validity period |
Pass credits for both multiple-choice and essay subjects are valid for two years |
Pass credits are valid indefinitely |
|
Registration criteria |
Practical experience of two years or more Completion of professional accountancy education program Completion of final assessment |
Practical experience of two years or more |
*It was mentioned above that a Certified Public Accountant can also register as a Certified Public Tax Accountant; the reason? The Certified Public Accountant examination includes a course section on tax.
Key difference 2: exclusive roles
There are work processes that can only be executed by qualified Certified Public Accountants and those that can only be executed by Certified Public Tax Accountants.
CPAs are permitted to audit and certify a company’s financial documents.
Certified Public Tax Accountants are permitted to prepare tax documents, or work as tax accountants or tax consultants.
Both CPAs and Certified Public Tax Accountants are involved in financial affairs; however, it may be helpful to think of CPAs as specialists in auditing, and of Certified Public Tax Accountants as specialists in tax affairs.
*1Source: CPA Profession, The Japanese Institute of Certified Public Accountants
How much do Certified Public Accountants and Certified Public Tax Accountants earn?
Broadly speaking, CPAs earn more than Certified Public Tax Accountants.
A “big 4” exists in both the auditing and the tax accounting industry. At these “big 4” auditing firms, the average annual salary is approximately 10 million yen; at the “big 4” tax accountant offices, the average annual salary is approximately 8 million yen. A difference of 2 million yen between the two industries on average.
Of course, annual salaries will vary significantly according to the position, age, and other factors... For this reason, it’s not always the case that a CPA will earn more than a Certified Public Tax Accountant. Recruiters must view the salaries states above as benchmarks in the planning process.
A more detailed estimate for the average salaries of various occupations is available to view free of charge at the link.
What demand is there for Certified Public Accountants and Certified Public Tax Accountants on the job market?
Due to the level of expertise they possess, there is consistent demand for both Certified Public Accountants and Certified Public Tax Accountants on the job market, from auditing firms, accounting firms, and tax accountant offices.
Recently, there has been growing demand for Certified Public Accountants and Certified Public Tax Accountants from non-specialist companies. The reasons are twofold:
- In order to align Japanese accounting standards with international accounting standards, listed companies have been required to adopt a new Accounting Standard for Revenue Recognition since 2021
- Companies that are preparing to execute M&As, enter overseas markets, or list on the Tokyo Stock Exchange need to strengthen their accounting and finance departments.
Strengthening internal audits and internalizing tax affairs—including tax consulting and overseas tax activities—delivers both time and cost benefits. Such considerations may have also contributed to the recent growth in demand for Certified Public Accountants and Certified Public Tax Accountants.
Due to these factors, CPAs and Certified Public Tax Accountants are highly prized by non-specialist companies, since they can provide both day-to-day work processes and highly specialized auditing and tax affairs. Competition for experienced CPAs and Certified Public Tax Accountants is fierce, with some companies luring candidates with the offer of roles as Chief Financial Officers (CFOs).
In summary, demand remains steady for CPAs and Certified Public Tax Accountants from specialist companies such as auditing firms and tax accounting firms; yet there is also increased demand from non-specialist companies.
What are some of the key points to consider when recruiting CPAs?
There has been a growth in the number of “in-house” accountants in recent years. Typically, these accountants have acquired experience at auditing and other specialist firms, and then moved mid-career to major non-specialist companies and start-ups.
In addition to carrying out typical Certified Public Accountant work processes, these in-house accountants are tasked with a wide variety of other roles, including general accounting and finance, IR, and in-house consulting. These in-house accountants audit the company from the inside rather than from the outside—and this connection they share with the company likely gives rise to a greater sense of job satisfaction. If these accountants can speak English, they will also be able to engage in direct negotiations with overseas companies, further broadening the potential scope of their work.
Certified Public Accountants are specialists in accounting, and their knowledge of accounting in general, including accounting standards and auditing, is greater than that of a standard employee. As a consequence, recruiting a Certified Public Accountant will increase the capabilities of your entire accounting and finance department.
As recognition of the importance of CPAs increases and as the entire accounting industry is revitalized, demand for in-house accountants will only increase.
Since everyone is eligible to take the Certified Public Accountant examination, it is a job that is relatively popular among younger generations. However, just because a candidate has qualified as a Certified Public Accountant, it does not follow that they will be able to perform the tasks you require of them. Even if a candidate has outstanding specialist knowledge, they may not have strong management skills. When it comes to recruitment, two key points to verify are: whether their past experience is in keeping with their age; and whether they are suited to the roles you wish them to carry out.
For example, if you are recruiting for the position of CFO, then you will likely want candidates who have wide-ranging experience and comprehensive management skills; or, if you wish them to negotiate with overseas companies, you will want them to have a thorough knowledge of international accounting standards and strong English-language skills.
On the other hand, if you are seeking to recruit a young accountant to work at your company for many years, it might be wise to focus on their future potential rather than their existing skillsets.
When recruiting a Certified Public Accountant, you must therefore determine what skills you require of your candidate, verify the experience they have accumulated thus far, and choose the candidate who is best suited to the position you wish them to fill at your company.
What are some of the key points to consider when recruiting Certified Public Tax Accountants?
Statistics from the Certified Public Tax Accountant examination in 2021*3 show that approximately 70% of candidates were aged 31 or older, and 38% were aged 41 or older. Older generations evidently account for the majority of Certified Public Tax Accountant candidates.
The average age of Certified Public Tax Accountants is high for a number of reasons. In contrast to Certified Public Accountants, for example, Certified Public Tax Accountants must take separate examinations for each of their five subjects, and often require several years to qualify; the average age of examinees is also rising. The number of younger Certified Public Tax Accountants on the job market is therefore relatively small.
At non-specialist companies, Certified Public Tax Accountants in their 30s and 40s will likely be seen as reasonably experienced job seekers; in the tax accounting industry, however, Certified Public Tax Accountants in their 30s and 40s are classed as young.
Companies wishing to recruit Certified Public Tax Accountant are therefore encouraged not to evaluate a candidate’s eligibility simply according to their age, but to consider various other factors including where they have worked previously, which roles they were assigned, and what skills they possess.
You should also exercise caution in the case of candidates who registered as Certified Public Tax Accountants after qualifying as Certified Public Accountants. The Certified Public Accountant examination tests examinees on their knowledge of all aspects of accounting—it is not designed to test them on specialist tax affairs. For this reason, such candidates may not be particularly well-versed in tax affairs and, in a worst-case scenario, this may hamper their ability to carry out the roles you require of them.
In principle, the key points to consider for recruiting Certified Public Tax Accountants are similar to those for Certified Public Accountants: that is, you will be best served by choosing the candidate who is most suited to the position you wish them to fill at your company.
*3Source: Statistics on the FY2021 (71st) Certified Public Tax Accountant Examination, National Tax Agency
Summary
Both CPAs and Certified Public Tax Accountants are specialist occupations, and there are work processes that only each can execute. In addition, since they engage in entirely different fields—auditing on the one hand, and tax affairs on the other—there is no way of assessing which occupation requires superior skillsets.
When it comes to recruiting both CPAs and Certified Public Tax Accountants, you must choose the candidate who possesses the experience and skillsets most suited to the work processes you wish them to carry out.
Register with Robert Half and let us match you with highly skilled candidates with expertise in the fields you require. If you are a company that is looking to recruit a Certified Public Accountant or Certified Public Tax Accountant, please do not hesitate to contact us.
