Your Complete Guide to Becoming a Licensed CPA

calculatorThe CPA designation provides assurance to the public, the government, and the business community that CPA licensees have obtained the education and relevant work experience necessary to perform specialized accounting, auditing, and reporting services within a strict code of professional ethics.

There are certain services that only licensed CPAs are legally allowed to perform. The ability to file reports with the Securities and Exchange Commission (SEC) is chief among these. Additionally, auditing and attestation services can only be provided by CPAs, or non certified public accountants (PAs) who have been grandfathered the authority to practice as auditors before changes were made that restricted these functions to certified public accountants exclusively.

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Many public accounting firms and law offices will only hire CPAs because of their expanded practice rights and privileges. A number of specialty designations within the financial services industry are also more accessible to certified public accountants. This makes the CPA a tremendously diverse credential that allows those who hold it to draw from their advanced knowledge of accounting without necessarily devoting themselves to careers strictly related to accountancy.

Want to learn more about what a CPA does on the job?  Click here to see if becoming a CPA is right for you.

CPA Certification

Why Should You Get A CPA Certification?

CPA Degree Programs and Courses

The Uniform CPA Exam: How to Prepare and What to Expect

The Traits of a Successful CPA

Frequently Asked Questions About the Uniform CPA Exam

Do I Need a Degree?

Yes, all states and other licensing jurisdictions require a bachelor’s degree at minimum and a total of 150 semester hours of college credits. Each state sets its own requirements for how many of those credits need to be specific to accounting, business and finance.

If you’re gearing up to become a CPA, you would naturally gravitate toward a bachelor’s in accounting, but degrees in business and finance are also perfectly acceptable to most state licensing boards as long as you meet the specified requirements for the number of accounting credits.

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Since your typical bachelor’s degree is only comprised of about 120 semester hours, those 30 additional hours are typically earned through a master’s in accounting (MAc, MAcc, MAcy, MS in Accounting, or similar option).

Although not very common, you will find some schools offering 5-year CPA track bachelor’s degrees in accounting specifically designed to get you the 150 semester hours of college credit you need to be eligible to sit for the CPA Exam.

As a sometimes-quicker and more cost-effective alternative to earning a master’s, you’ll also find post-baccalaureate certificates in accounting specifically designed to meet CPA education requirements.

CPA Certification

Certified public accountants are licensed by state and jurisdiction regulatory and licensing boards. All 50 states, as well as five additional jurisdictions, have their own Boards of Accountancy that grant CPA certification and licensure. Through the joint efforts of the National Association of State Boards of Accountancy (NASBA) and the American Institute of Certified Public Accountants (AICPA), the Uniform Accountancy Act was drafted. The Act has brought a great deal of uniformity to CPA licensing, with 53 of the 55 U.S. jurisdictions maintaining requirements considered substantially equivalent.

Accountants earn their CPA once they have passed the Uniform Certified Public Accountant Examination and met state or jurisdiction-specific education and experience requirements. Although CPAs in every state and jurisdiction must follow the same general outline of education, examination, and experience, known as the “Three Es,” there is considerable variance in the licensing process and specific requirements within the general outline. Requirement and process variation between boards has to do with how credit hours are distributed among accounting, business, ethics, and law classes; qualifications necessary to sit for the CPA Exam; and unique stipulations for fulfilling experiential requirements.

CPA license renewal through all state and jurisdiction boards is contingent upon taking part in continuing professional education courses. State and jurisdiction boards require ongoing education in an effort to ensure their CPAs are being kept abreast of the latest changes in laws and reporting requirements.

Is the CPA right for you?

A review of studies evaluating the personality characteristics of accounting students, working accountants, and accounting program professors published in The Accounting Educators’ Journal showed how the predominant personality type for accounting and business students was ESTJ, which represents the characteristics of extraversion, sensing, thinking, and judging. However, many of the other studies reviewed showed strong results for the STJ type (sensing, thinking, judging). The differences between studies begged the fascinating question: Do accountants truly tend to be more introverted than extroverted?

One study suggested that the extrovert was more likely to become a supervisor while the introvert would probably become an investigator or researcher. However, some senior business partners were reported to have the qualities of introversion and intuition. This led the investigators to conclude that introversion and intuition were attributes just as valuable as extroversion and sensing for upper management and executive positions.

According to the AICPA, several skills help to ensure that a person will make a good accountant. They suggest good leadership abilities, an understanding of good business practices, communication skills, and an aptitude for computer technology.

Why Become a Certified Public Accountant?

Becoming a CPA is an excellent career choice for many reasons. CPAs enjoy a high degree of job security and are still in high demand across the country, especially as more companies strive to meet financial reporting standards. In fact, the job outlook for accountants and auditors has a growth projection of 7% in the ten-year period leading up to 2020 according to the Bureau of Labor Statistics.

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.

Why Should You Get A CPA Certification?

handshakeAccording 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.

Career Development

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.

Career Security

Demand for CPAs continues to increase for a few different reasons. From the Sarbanes-Oxley Act to Dodd-Frank, a more intense regulatory environment 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.

Job Satisfaction

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.

The places where you can ply your accounting skills as a CPA are almost limitless – everything from investigating fraud and tax evasion, to being the personal finance and tax law point-person to wealthy individuals and families.

Work with Other Multi-Talented Colleagues

In the global economy of the 21st century, a CPA license can even be your ticket to see the world. There is a huge demand right now for CPAs who speak multiple languages and have multicultural backgrounds.

Money and Benefits

Salary and benefits rank just behind job satisfaction on the list of things that draw people to the accounting profession.

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.

CPA Degree Programs and Courses

Undergraduate Curriculum
All state and jurisdiction Boards of Accountancy require CPA candidates to have a bachelor’s degree at minimum with 150 semester hours of credit. An ideal undergraduate curriculum will include courses in general accounting, computerized accounting, cost accounting, taxation, auditing, business statistics, business administration, business communications, financial management, budget management, principles of economics, capital management, business law, government accounting, risk analysis, international finance, information technology, and business ethics.

Accounting program graduates need to acquire a thorough understanding of the primary functions within the arenas in which they will work. CPAs who decide to work in public accounting will need to identify their target clientele and become knowledgeable of their accounting and finance needs. Corporate accountants and auditors will need to understand their employers’ accounting practices, as well as how the business operates in terms of functions related to marketing, purchasing, production, and human resources.

Graduate Curriculum
Additional education beyond the bachelor’s degree and CPA certification can be acquired in a variety of ways. While it is certainly beneficial to gain as much on-the-job experience as possible, many positions will require additional study accomplished through advanced degrees or specialty certifications.

Certain management and key employment positions in private accounting require a Master of Science (MS) or Master of Arts (MA) degree. In addition to a degree in accounting or financial management, business degrees like a Master’s in Business Administration, Economics, or Information Systems can be valuable. Specialty degrees could include a Master’s in Taxation, Public Administration, or Forensic Accounting.

Some universities offer a five-year combined undergraduate and graduate degree option in accounting to help relieve the burden of the 150 credit hours required for CPA licensure.

Curricula in advanced degree programs will vary greatly because course concentration is always based on the focus or specialty area. Courses will typically include advanced work that emphasizes theory, research, and policy within the specialty area.

The results of a study published by the American Accounting Association’s journal, Issues in Accounting Education, show that a Ph.D. in accounting can provide a lucrative return on the educational investment. While positions in academia may be the obvious career choices for those with doctorates, there are also many research opportunities within industry and government for CPAs who hold a Ph.D. related to accounting and statistics.

The Uniform CPA Exam: How to Prepare and What to Expect

testingIt 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. And at the end of it all there is still one big hill to summit before earning the privilege of being able to put those three beautiful letters after your name that signals to the world that you are among an elite few in the accounting field. That final test is the Uniform CPA Exam.

The amount of time it takes to get from starting a review course to passing the Uniform CPA Exam varies. After applying to take the exam, it could take several weeks just to receive your approval notice to schedule your first exam section.

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 CPA certificate that you receive upon passing all parts of the exam does not function as a license to practice. Only your state board of accountancy can grant that license. 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.

How to Prepare for the CPA 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 available for purchase online do offer direct teaching and support, practice tests, and some pretty valuable tips on test-taking strategies.

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 to pass because it covers so much information.

What to Expect from the CPA Exam

In most states, you’ll submit your application take the exam through your state’s board of accountancy since it’s your state that determines whether you’ve met the eligibility requirements. 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.

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:

  1. Auditing and Attestation (AUD)
  2. Business Environment and Concepts (BEC)
  3. Financial Accounting and Reporting (FAR)
  4. Regulation (REG)

Each of the four sections consists of five individual testlets, each with sets of questions.

All four sections contain multiple-choice questions and task-based simulations. The only section that contains written communications is BEC.

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

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!

Celebrate your progress: you are well on your way to a successful accounting career.

The Traits of a Successful CPA

Aside from an affinity for numbers, there’s a number of traits that all successful CPAs seem to have:

  • 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 among the things you will need to juggle, prioritize, and organize to meet deadlines.
  • Broad perspective on business – CPAs add value by staying abreast of current business trends, and your accumulated experience will help you make strategic recommendations based on your knowledge and understanding of business operations, your competition, and the regulatory environment of your industry.

Frequently Asked Questions About the Uniform CPA Exam

working at deskNow, if you still have some questions on things we haven’t covered, you’re likely to find the answers here.

What Score Do You Need to Pass the CPA Exam?

The average score needed to pass the CPA Exam is 75. Passing scores vary by state, so be sure to check with your board of accountancy for more information on requirements to become a CPA.

How Does CPA Exam Scoring Work?

The CPA Exam is scored in a scaled format, meaning that the difference between passing and failing can be as little as one point on an individual section.

Who Scores the CPA Exam?

The Association of International Certified Public Accountants or (AICPA) is an international professional organization for CPAs that owns and oversees the CPA Exam and grading process.

When Are CPA Exam Scores Released?

CPA Exam scores are typically available within two weeks of taking the exam.

What Types of CPA Exam Questions Are There?

There are four sections and 300+ questions on this exam. Sections include Auditing and Attestation, Financial Accounting and Reporting, Regulation or Business Environment, and Accounting Systems. Each exam section has different types of questions.

Auditing and Attestation include multiple-choice, true/false, and essay questions that test your knowledge of auditing standards.

Business Environment and Concepts tests knowledge of specific governmental regulations or the Business Environment.

Financial Accounting and Reporting has more than 60 multiple-choice items to test how well you understand income statements, balance sheets, and other financial statements.

Regulation covers everything from ethics and professional responsibilities to federal tax law and business law.

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