What You Should Know About CPA Requirements
Accounting is one of the most lucrative career paths in business. With a degree in accounting, you can practice in the public and private sectors. There are various forms of accounting, and they could teach in a single degree program or to students specializing in certain areas. However, having diverse skills and knowledge of all accounting concepts plays a significant role in your employment. Before selecting an accounting degree program, you should analyze the coursework involved to ensure you get the right training. Selecting an accounting discipline requires close attention. Consulting career experts will help you make the right choice of discipline to major in.
Before you can practice as an accountant, you have to satisfy certain requirements. These include examinations from the professional accounting boards. One of the essential tests and training you must undergo is the CPA exam. A CPA training program equips students with the skills they need to function as professional accountants. The course work involves mathematical concepts of accounting and the general skills needed in the workplace. There are several levels of CPA. The intensity of training and CPA exams depends on the level you enroll in.
Having a CPA certification after attaining your degree in business-related courses gives you an advantage over other job seekers. However, you must fulfill various conditions before being admitted to a program or getting licensed to practice as a public accountant. To understand CPA requirements and benefits further, we explore the following:
- Education required to become a Certified Public Accountant (CPA)
- Training needed to become a CPA
- Required CPA certifications
- CPA exams requirements.
Education Required to Become A Certified Public Accountant (CPA)
Like any other profession, you must fulfill specific educational requirements to be a licensed public accountant. Academics gauge your ability to execute certain tasks as an accountant in your career. Some academic thresholds that you must meet to be a certified public accountant include:
- Bachelor’s degree- To be a certified accountant, you must have a bachelor’s degree in accounting or a related course. A bachelor’s degree makes it easier for you to understand certain concepts during CPA training sessions.
- GPA requirements- GPA requirements apply where you don’t have a bachelor’s degree to show for admission, which is mostly the case with individuals who want to branch into accounting or learn accounting as an extra skill. Most CPA programs require a minimum GPA of 2.8. Additionally, you must display high performance in certain subjects such as mathematics.
Being a certified public accountant requires the completion of 150 credits. While you can complete these credits in a CPA training program, degree programs take care of a significant portion of them. The 128 units completed in accounting and other related degree programs allow you to complete the CPA training in a shorter period. In states that require completion of 150 units, you have an option of going for a master’s degree or branching to complete the tests for your CPA licensure.
There are many tests that you will go through before getting licensed as a CPA. These exams are standard irrespective of the program you choose. Whether you graduate from an online accounting degree program or on-campus learning, you have to go through these tests. The CPA certification exam is divided into four parts. These are:
- Auditing and Attestation
Auditing and Attestation, AUD, exams examine your ability to think critically and make sound decisions in the auditing profession. AUD exams ensure that you as a student and future accountant can ethically perform auditing tasks. This exam consists of two sections; the first section has multiple choice questions and task-based simulations. The multiple-choice section has 72 questions, with 12 pretest questions that don’t count on the final score. Task-based simulations require you to write answers as explanations. They may be in the form of research questions, journal entries, among others.
- Business Environment and Concepts
Business Environment and Concepts, BEC, is the next part of the CPA exam. It tests your understanding of the roles of certified public accountants in the business environment and covers a wide section of the business environment, including areas such as operations and corporate governance. Excellence in this part of CPA exams means you can work internally within an organization or an external accounting firm. This exam is divided into three sections, that is multiple-choice questions, task-based simulations, and written communication tasks.
- Financial Accounting and Reporting
This section is the most comprehensive and also most challenging part of the CPA exams. Financial Accounting and Reporting, FAR, covers a wide range of topics. These include generating financial statements and calculating depreciation and appreciation. In this test, you must display the ability to carry out numerical calculations with accounting significance. FAR has two sections, a multiple-choice questions section, and task-based simulations. Like in AUD, 12 multiple choice questions of this exam are pretest and don’t count on the final score. One question out of the eight in the task-based simulations is also considered a pre-test question and doesn’t count in the final score.
Regulations, REG, is a part of CPA exams that covers the operations of certified public accountants. To pass REG, you must have a clear understanding of the ethics, legal procedures, and federal taxations involved in accounting. Most institutions have high pass rates for REG tests, implying that you can excel in this test, irrespective of the institution you enroll in. However, you must prepare adequately as some concepts require more effort to master.
Certified Public Accountant exams form the basic recruitment requirement for accountants within the country. If you wish to pursue a career in accounting, you should be mentally and financially prepared to go through all the CPA training and examination. The study period for obtaining CPA certification varies depending on various factors. If you enroll in a part-time program, you might take longer to complete your certification process.
Training Needed to Become A CPA
Becoming a certified accountant is a great achievement for accounting professionals. The process of getting an accounting certificate could take up to seven years, with an exam at the end of each one. CPA certification requires a total of 150 semester hours. That is 120 hours of study with an additional 30 credit hours. In some cases, a bachelor’s degree in accounting or related courses is required. However, this is not a compulsory requirement since you learn accounting concepts in the CPA program itself.
The training you receive equips you with a critical skill set for operations in the accounting field. To be certified, you must display mastery of the skills acquired through the four sets of exams during the CPA program. Some of the skills you need to be a licensed accountant include:
- Fundamentals of accounting- Accounting is one of the fundamental skills you need to be a certified public accountant. Mastering the fundamentals of accounting places you in a position to understand and execute accounting-related tasks with ease. Under the fundamentals of accounting, you will learn to record financial transactions and prepare income statements. Additionally, this skill allows you to study and understand financial statements and make conclusions and recommendations for real-world problems. With the fundamentals of accounting, you evaluate the financial health of an organization, prepare cash flow reports, and assess company valuations.
- Auditing- The auditing skills you acquire in CPA training programs prepare you for work as an auditor in the industry. Auditors are mainly involved in profit-making ventures. However, they are also involved in non-profit organizations to establish how well financial resources are used. In CPA training, auditing emphasizes the professional standards required to operate as an auditor. You also learn the risks that come along with being an auditor for various firms. As an auditor, you will be in a position to understand the professional operations of various agencies. Additionally, you will be tasked with creating internal monitoring systems and ensuring the accuracy of financial data.
- Taxation- CPA training provides the basic knowledge of taxation concepts and terminologies. In most programs, you learn taxation in a survey course to familiarize yourself with the structure of the taxation system. Taxation skills place you in a position to comfortably prepare various taxation forms. You also get to understand tax laws and how they apply to individuals and businesses. Mastery of the taxation process allows you to write off expenses and complete property transactions without breaching taxation laws.
- Personal finance- Personal finance skills allow you to manage finances for yourself or clients seeking financial management. In most cases, individuals seek financial management services in preparation to pay taxes. Personal finance skills attained in CPA training prepares you for accountant roles such as budgeting and creating saving plans. You will work with individuals seeking to purchase homes or make other personal investments. Personal finance skills place you in a position to give sound financial advice on the best methods to pay for items without incurring too much taxation and not breaking the law. Such scenarios include when one wants to purchase an insurance cover or is looking for a retirement plan.
In cases where you don’t enroll in a CPA training program, you can use your degree in accounting to become a certified accountant. However, you are subject to professional exams set by the accountants licensing board. Advancing your degree to a higher level can get you certified without having to sit for CPA exams. A master’s degree and Ph.D. in accounting equips you with all the skills needed to operate as an accountant. Therefore, you might not need to sit for the four-part CPA exams. Some of the skills you acquire from advancing your accounting studies include:
- Advanced managerial accounting- Managerial accounting involves studying costs in business operations and setting up controls. Advanced managerial accounting emphasizes proper analysis of expenditure data within an organization. With this skill, you can design and manage accounting procedures and incorporate information technology into the accounting process.
- Advanced business law- A CPA training program equips you with the basics of business law and taxation. Advancing your education gives you a broader view of business law concepts and how they are applied. With this skill, you can create and analyze contracts, complete commercial transactions, and broker debtor-creditor relations. You can easily navigate accountant liability in business transactions if you master advanced business law.
- Information systems and control- Thanks to technological advancements, business transactions are moving to online platforms. This shift implies that you need information systems management and control skills to survive in the job market. Advancing to higher accounting degrees exposes you to the use of technology for accounting purposes. Understanding information systems allows you to implement security and cost management protocols in organizations.
- Tax strategy- Taxation is one of the essential elements of business operations. In accounting, you must understand the taxes you are exposed to draw a conclusive income flow system. Tax strategy prepares you to make calculated and ethical moves in business when developing taxation plans. With tax strategy skills, you can master online research software and techniques for tax preparations. You will also have a clear understanding of tax arbitrage and implicit taxes, allowing you to strategize on the best ways to pay taxes for both individuals and corporations.
There are many other skills you acquire from being an accounting professional. Personal attributes such as critical thinking and problem-solving skills are common among individuals that go through CPA training programs. After being certified, you must maintain high standards of professionalism. Malpractice could lead to the withdrawal of your accounting certificate even if you excel in your CPA exams. You have to complete the required semester hours before applying for CPA exams. If you feel the program could take longer than you need, you can enroll in a full-time program, which implies that you channel all your concentration to the training since you will cover a lot more within a shorter period.
Required CPA Certifications
Operating as an accountant requires several certifications. The accounting profession plays a pivotal role in the global economy. For this reason, authorities have to ensure those practicing are well qualified for their roles. The most important certificates needed for you to work as a certified public accountant are:
- A Certified Public Accountant Certificate
To be an accountant, you must be verified by the relevant professional body. A CPA certificate indicates that you meet all the legal and personal requirements to work as a professional accountant. To get this certificate, you must sit for the Uniform Certified Public Accountant exams. The exams are set by the certification body and sat by all students within the country. In some cases, the exam applies to residents of specific states.
- Ethics certification
Ethical practice is one of the core values of the accounting profession. To be certified, you must provide proof of ethical conduct during your time of practice. Ethical certificates are mostly required when you want to renew your certification. To get an ethics certificate, you might be subjected to an audit by relevant authorities.
- Other accounting certifications
Other than a certificate from the professional body, you should have additional certificates to work as an accountant. These include a graduate accounting certificate obtained from a trade college. You can obtain an accounting degree from any institution. The tests involved in accounting degree programs depend on the institution you enroll in. That is, they are not standardized, and how technical they depend on what your tutor sets. Higher degrees such as master’s and Ph.D. allow you to work in managerial positions of corporations. The skills you get from advancing your education allow you to lead and formulate policies to serve accounting purposes for the company you work for.
CPA certification exams are technical. To secure your certificate, you must adequately prepare for the tests you will sit for. Prior preparation makes it easier to achieve your degree within the shortest time possible. Here are some preparation tips if you intend to sit for a CPA exam.
- Understand candidate requirements- Candidate requirements might vary slightly depending on the jurisdiction. Most institutions require educational and experience qualifications. However, some require additional qualifications, such as ethical certificates. These requirements depend on the level of examination you are preparing to sit for. For instance, those expected to sit for financial accounting and reporting exams might face stringent requirements.
- Know the content to be tested- CPA exams are classified into four parts, with each one carrying specific topics. Understanding the parts you are going to sit for helps you prepare adequately for the exam. You can familiarize yourself with the expected exam content using previously tested questions. These questions are found in online libraries of institutions you might enroll in.
- Form a support network- As a candidate, it normal to find some concepts hard to understand. You can understand these concepts by brainstorming with other candidates preparing for the exams. People have different mental capacities. This implies that a topic you might find hard to grasp is easy for someone else. Therefore, networking with other candidates is essential. You can interact with other candidates through online platforms or face-to-face discussions.
- Manage your time- It takes up to 18 months of training before you sit for an exam. Therefore, you should make good use of the time in preparation for the exam. Having a scheduled time to study for the exams keeps you alert with concepts that might be tested in the oncoming exam.
There are many job opportunities for certified accountants. One of the most lucrative ones is working as an enrolled agent. Others include financial management positions in corporations and non-profit organizations.
CPA Exams Requirements
As mentioned earlier, the CPA examination is divided into four parts. Each part has different regulations depending on the state regulations. Advanced academic levels such as MBA might attract less stringent requirements to sit for these exams. Additionally, they give you an added advantage as the set questions revolve around concepts you might have covered in your degree program. In preparations for your CPA examination, you must ensure your eligibility matches the paper. Different states have different criteria for determining eligibility for CPA exams. However, some eligibility requirements cut across all states. These include:
- Citizenship requirements
Most applicants of CPA training programs and exams are American citizens, which makes citizenship a less popular requirement for certification exams. However, one is supposed to be a citizen to sit for the examination. Foreign candidates are also allowed to apply for the CPA certification program. However, they face additional requirements such as proof of mastery of English. Some institutions might require you to submit your active social security number. This requirement is meant to verify the authenticity of your residence.
- Age requirements
Licensing jurisdictions require you to be at least 18 years to sit for the CPA certification exams. Even if you have the mental capacity to sit for the examination, you won’t be allowed if you fail to meet the age requirement. At 18 years, one can work since they are considered adults. Ownership of an accounting license is only viable if one can use it for practice. Under 18-year-olds are considered minors by all the 55 licensing jurisdictions.
- Educational requirements
CPA educational requirements vary across states. However, it is a standard requirement that you must complete at least 150 semester hours. Thirty hours out of the 150 semester hours are considered credit hours. The 120-college semester hour requirement might not apply if you have a bachelor’s degree in accounting or any other related course.
Other eligibility requirements for CPA exams depend on the institution you enroll in. Several private and public institutions offer CPA training and act as examination centers for the uniform test at the end of programs. No work experience is needed when applying for CPA examinations. However, it is a requirement for obtaining a license to practice as a certified public accountant. You will gain work experience after passing your exams.
The cost of obtaining an accounting license varies depending on the state and institution you obtain it from. However, the difference is not huge as the procedures and requirements are almost identical in all the states. Knowledge of the expected expenses is important in your exam preparation process. The costs are categorized as follows:
- Application fees- These are expenses incurred when applying for the CPA training and examination. The fees depend on the institution offering the training and exams. In most cases, application fees are a form of commitment to discourage those who might not be seriously interested in the program. This payment is also used to facilitate the initial registration process in pursuit of the CPA certificate.
- Examination fees- This payment takes care of your examination needs. The payments depend on the part of the examination you are taking. Examination fees also vary from state to state. To register as a candidate for the exam, you must pay the examination fees.
- CPA exam ethics fees- Many states have ethics certificates as a licensing requirement for accountants. Sitting for and passing an ethics exam is not a big deal. However, the process is not free. You sit for the ethics exam after completing your CPA exams.
- CPA licensing fees- This is the main payment you incur in the licensing process. After completing and passing your CPA exams, you have to pay a certain amount to the licensing board. The amount to be paid varies depending on the state you apply to be licensed in. Other expenses incurred will be for the renewal of the license.
Accounting is one of the essential professions in the business field. It provides a wide range of career opportunities and allows you to work in the public and private sectors. However, you cannot practice as a professional accountant without certification from relevant licensing bodies. You must undergo various tests and training programs to be licensed. The training equips you with the skills to ethically execute accounting tasks at your workplace. The quality of training depends on the institution you enroll in. Being in a top institution for CPA training programs places you at an advantage since tests are standardized depending on the state regulations.
The costs of CPA certifications vary from one state to another. It is hard to quantify the exact amount of money you might spend to complete a CPA program as it is attached to other hidden expenses. However, standardized payments such as registration and examination fees are usually affordable. It is rarer to find institutions that offer financial aid for CPA programs. For this reason, you must properly plan your finances to avoid constraints during your study period. CPA exams are divided into four parts. Therefore, you must sit for all the exams to be considered eligible for licensing. Thanks to technological advancements, you can now access CPA training and reading materials through online platforms. This makes it easier for practicing professionals to acquire and renew their practicing licenses.
After obtaining your CPA certificate, it is important to keep updating your skillset. Being up to date with the changing technology and trends in accounting helps maintain your relevance in the workplace. As an accountant, open-mindedness allows you to identify and explore ideas while practicing.