A Guide to Becoming a Licensed CPA
Many people who enjoy accounting or finance courses in school and want to work in one of those fields get a CPA license after they graduate. CPA stands for Certified Public Accountant and obtaining this license qualifies you for many interesting and lucrative career options.
The process to get a CPA license involves meeting certain education requirements and passing the Uniform CPA Examination. This exam was developed by the American Institute of Certified Public Accountants (AICPA) and is administered in conjunction with the National Association of State Boards of Accountancy (NASBA). The AICPA also scores the exams.
For the most part, the exam is the same for every state. However, your state may have certain additional requirements to complete before you obtain a license.
Background about the CPA License
The very first CPA exam was held in New York in 1896, and the CPA certification is currently held by more than 650,000 accountants nationwide, according to NASBA. If you ever question whether someone has an active CPA license, you can visit your state’s Board of Accountancy to verify their license status.
Some think that the CPA exam is only for those with a high college GPA, but your performance in college does not necessarily dictate how you will perform on the CPA Exam. Your performance in school is a culmination of many things: tough professors, heavy class loads, late nights, and other factors. You can approach the CPA Exam with a structured study schedule or review course, and as long as you stick with it, you can pass the exams.
Why Should You Get A CPA Certification?
According to NASBA, the CPA license can set you up for many advantages such as the following:
Prestige and Respect
The CPA license is often seen as a prestigious designation, garnering respect from peers, clients, and the general public. It says that you have achieved a level of expertise in your field that far exceeds that of the standard accountant. Many people are aware that getting a CPA involves rigorous education, passing the difficult CPA exam, and performing analytical, challenging work.
If you have a CPA, you will be a standout among the crowd with potential employers. Many others apply for the same types of jobs but won’t have the same, valuable credentials. Even with years of relevant experience, those without a CPA license still may not be able to hold certain jobs.
Achieving the CPA shows a commitment to the profession, and highlights your potential for management and leadership roles. In fact, it’s often a requirement for higher levels of responsibility and authority within a company.
Demand for CPAs continues to increase for a few different reasons. The Sarbanes-Oxley Act, passed in 2002, has created a bigger need for more CPAs to help companies stay current with their financial reporting practices and enforce other higher accounting standards within publicly held companies. Additionally, baby boomers are retiring and leaving a gap in the workforce.
The employment opportunities for a CPA have expanded to include highly specialized work in business consulting, auditing, management consulting, tax advisory services, information technology (IT), international financial reporting, and forensic accounting, among others.
The wide variety of jobs in various fields gives CPAs a chance to choose jobs and companies that give back to society, which creates more job satisfaction as they can see the results of their efforts.
If you ever wanted to work for the FBI, as a CPA you can serve as one of the FBI’s 2,000 or so special agents investigating tax fraud and evasion. The entertainment industry also hires plenty of CPAs. In fact, a team of CPAs works more than 1,700 hours each year counting all of the Academy’s votes, by hand.
Work with Other Multi-Talented Colleagues
Companies have become more global and CPAs have many opportunities to travel for work. This has created a need and many job opportunities for CPAs who speak multiple languages and have a multicultural background.
Money and Benefits
After job passion, surveys indicate that salary and benefits rank as the next most important and desired career features. According to salary studies, CPAs make about 10% to 15% more than accountants without the designation.
CPAs can work for private industry, government, public companies, and non-profit organizations. The diverse options for CPAs can take your career to places you might never have imagined.
General Things to Know
The amount of time it takes to get from starting a review course to passing the exam varies. You must first apply to take the exam, and it could take several weeks just to receive your approval notice to schedule your first exam section.
It could take you up to seven years to become a CPA; this includes four years of undergraduate classwork, plus an additional year of coursework if you didn’t complete all of the requisite classes while pursuing your degree. You must have 150 total course credits in accounting, business, finance, related classes.
Additionally, once you pass the exam, in most states you need to work for 12 full months under a licensed CPA performing audit and other specific types of work in public or private accounting firms. You can complete your work experience before, during, or after passing your exam.
Once you sign up to take the CPA exam, the time to complete it varies based on the length of your review course, how many sections of the exam you choose to take and when, and whether you need to retake any sections that you didn’t pass the first time. You can take just one section in any testing window, or all four sections, or anything in between.
The test is given by the American Institute of Certified Public Accountants (AICPA), and it’s called the Uniform Certified Public Accountant Exam.
The CPA certificate that you receive upon passing all parts of the exam does not function as a license to practice. In some states, you also need to pass an Ethics exam.
Once your license is active, you must maintain it by completing a certain number of Continuing Professional Education (CPE) credits each year.
CPA Success Traits
Aside from an ability with numbers, success as a working CPA also requires strength in the following skill areas:
- Analytical, problem solving and research – CPAs often need to solve unstructured problems and apply creativity while researching, analyzing data, and consulting with clients
- Interpersonal skills – You will need to work well as part of a team and be able to lead and motivate teams as well.
- Ability to listen and strong communication – CPAs must be able to present their analysis and results persuasively, and explain, discuss and defend their views
- Knowledge of emerging technologies – You will need to be well-versed in software solutions for workflow, e-commerce, and other applications, as well as having deep experience with spreadsheets, databases, and accounting software among others.
- High ethical standards – You will be performing work of a fiduciary nature, and businesses rely on the data you provide. Honesty, integrity, and solid credibility are key attributes.
- Focus on clients and marketing – Focusing on customers, both internal and external, plus the ability to market, will help you serve any company’s changing needs.
- Strong project management – Conflicting deadlines and demands, time pressure, unexpected client requirements, and being available for family and personal obligations are just a few of the stressful situations you will need to judge, prioritize, and organize to meet deadlines.
- Broad perspective on business – CPAs add value by staying abreast of current business events and trends, and your accumulated experience will help you make strategic recommendations based on your knowledge and understanding of business operations, competitive factors, policies, and procedures.
Do I Need a Degree?
Yes, you must have a degree with 150 completed credits, typically in accounting, finance, or a related subject. If your undergraduate degree is in a different discipline, you must complete additional coursework to meet the educational requirements.
This may vary by state, as some states do require an accounting or finance degree, while others don’t. In Maine, for example, you only need to have 15 credits of accounting classes, but as a trade-off, you must complete a minimum of 4,000 hours of CPA-supervised work experience before you can get your full certification.
Some states allow you to sit for the exam within a set number of days before completing your education requirements.
Preparing for the Exam
Once you have applied and received your notice to schedule your CPA exam sections, you can take CPA test preparation courses online. However, the CPA exam is given at specific in-person testing sites, and no online option for taking the actual exam exists.
The CPA Exam does not test your intelligence as much as it tests your discipline. Many CPA review course instructors will tell you this. The AICPA provides independent study materials, so you do not have to pay for a review course. However, many of the courses offer online teaching, practice tests, and tidbits of wisdom on test-taking strategies.
Many people prepping for the CPA Exam do not realize that they could be hindering their success if they use outdated books, lectures, or practice question banks. New pronouncements are released twice each year and if you take a review course, you can request updates for your study materials.
The study schedule can be quite grueling because of the volume of material you need to cover, understand, and commit to memory. Expect to study for at least 100 hours per section. Many students report that the FAR section, Financial Accounting and Reporting, is the toughest section to pass because it covers so much information.
Taking The Exam
You cannot schedule your exam until you apply to take the CPA exam through your state’s Board of Accountancy. You will then receive verified eligibility status and a Notice to Schedule (NTS). Once you receive this, you have six months to schedule your first exam section. You must pass all sections within 18 months and score a 75 or above on each.
You no longer need to take the test sections in exam windows. You can now take all four exam sections at once or space them out, as long as you complete all of the sections within the 18-month timeframe. If you do not pass a section, you can now immediately retake it, whereas you used to have to wait for the next testing window.
The exam is computer-based and composed of four sections. Each test lasts for four hours, so the entire exam takes 16 hours.
The sections are as follows:
- Auditing and Attestation (AUD)
- Business Environment and Concepts (BEC)
- Financial Accounting and Reporting (FAR)
- Regulation (REG)
Each of the four sections consists of five individual testlets, each with sets of questions.
The only section that contains written communications is BEC. All four sections contain multiple-choice questions and task-based simulations. Some states require you to take an ethics exam as well, so check requirements for your particular state.
Once you complete a section, AICPA will release your scores to NASBA within about eight days. You can check the AICPA website for a score-release schedule, which may vary depending upon what month you completed your exam. The BEC exam score may take longer because of the additional analysis required to score the written sections. Once you get your scores, this will help you schedule the remaining sections of your exam.
After taking all four sections, you will find out if you passed or failed. If you don’t pass the exam, do not be discouraged. Learn from it, keep studying, and try again. If you passed, congratulations! Check to see if there are any further requirements, such as the ethics exam or continuing education annually. Above all, celebrate your progress: you are well on your way to a successful accounting career.