What is a Certified Public Accountant (CPA)?
– A CPA is a licensed accounting professional who has met education and experience requirements and passed a standardized exam administered under state boards of accountancy. The Uniform CPA Exam is developed under guidelines from the American Institute of Certified Public Accountants (AICPA). CPAs carry legal authority in areas—most importantly, signing audit reports—that many non‑CPA accountants cannot.
Key facts (short)
– Typical entry requirements: bachelor’s degree (often in accounting, finance, or business), 150 semester hours of college coursework, and roughly two years of public accounting experience.
– Exam format: 16 total hours, four sections of 4 hours each. The exam contains three core sections plus one discipline section chosen by the candidate.
– Passing score: 75 (on the 0–99 CPA scale) for each section. All four sections must be passed within an 18‑month window.
– Maintenance: CPAs must complete continuing professional education (CPE) hours to keep a license current and follow a professional code of ethics.
What CPAs do (responsibilities)
– Prepare, review, and maintain financial statements and related records.
– Prepare and file tax returns and advise on tax planning and compliance.
– Perform and sign audits and reviews of financial statements (a legal requirement for many public‑company filings).
– Specialize in areas such as auditing, forensic accounting
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What CPAs do (continued)
– Specialize in areas such as auditing, forensic accounting, tax planning, management accounting, valuation, and information systems assurance. Each specialty emphasizes different skills: for example, forensic accountants focus on fraud investigation and dispute support; valuation specialists estimate business or asset values for transactions or litigation.
– Advise on internal controls, risk management, and financial reporting processes to help organizations meet regulatory and business needs.
– Serve as trusted business advisors: CPAs translate financial data into actionable insights for managers, boards, lenders, and investors.
Common CPA employment settings
– Public accounting firms (Big Four, national, regional, local): audit, tax, consulting services.
– Corporate/industry finance (controller, CFO’s office, internal audit, tax department).
– Government agencies (federal, state, local auditing and financial roles).
– Nonprofit organizations (grant accounting, compliance, financial reporting).
– Education and professional services (teaching, training, consulting).
Licensing, regulation, and ethics
– License authority: state boards of accountancy set specific education, exam, and experience requirements and issue CPA licenses.
– Professional conduct: AICPA’s Code of Professional Conduct and state boards govern ethics; public-company audits are additionally regulated by the PCAOB (Public Company Accounting Oversight Board).
– Ongoing obligations: maintain required continuing professional education (CPE), complete ethics coursework as required by some states, and comply with peer review or quality-review requirements in firm practice.
Typical path to the CPA license — checklist
1. Education: obtain the required college hours (commonly 150 semester hours; specifics vary by state). Verify accepted coursework with your state board.
2. Examination: apply and pass all four CPA Exam sections (Auditing and Attestation — AUD; Business Environment and Concepts — BEC; Financial Accounting and Reporting — FAR; Regulation — REG) within the state’s rules (most states require all sections passed within an 18‑month rolling window).
3. Experience: complete required supervised accounting experience (commonly 1–2 years; details depend on state).
4. Apply for licensure: submit documentation of education, exam scores, and experience to your state board.
5. Maintain license: meet CPE requirements, renew license per state schedule, and follow ethics and practice standards.
Study planning example (illustrative)
– Candidate goal: pass all four sections within 12 months.
– Typical candidate study time per section: many report 300–400 hours total per section. (Individual needs vary by background.)
– Example schedule:
– Month 1–3: Study and sit FAR (300 hours over ~12 weeks → ~25 hours/week).
– Month 4–5: Study and sit AUD (300 hours → ~15–20 hours/week for 12 weeks).
– Month 6–7: Study and sit REG.
– Month 8–9: Study and sit BEC.
– Keep the 18‑month rule in mind: ensure the first passed section’s date and the last passed section’s date fall within the permitted window.
Worked numeric example — meeting the 18‑month rule
– Suppose you pass FAR on March 15, 2025. The 18‑month window closes September 15, 2026.
– You must pass AUD, REG, and BEC on or before September 15, 2026, for your four sections to count together toward licensure.
Career progression and compensation (high level)
– Entry-level: staff accountant or associate in public accounting; responsibilities include fieldwork, routine tax returns, and supporting audits.
– Mid-level: senior accountant, manager — greater project management and client supervision.
– Senior: director, partner, CFO — strategic leadership and business development roles.
– Compensation varies by geography, sector, firm size, and experience. For current median pay and occupational outlook, consult Bureau of Labor Statistics and professional surveys (see links below).
Practical tips for candidates and early-career CPAs
– Confirm state-specific rules early (education credits, experience definitions, ethics requirements).
– Budget for exam costs (application, exam fees, review courses) and time off for study and testing.
– Keep careful records: transcripts, work verification letters, and exam score reports are required for licensure applications.
– Network and seek
– Network and seek mentors — join your state CPA society, alumni associations, and relevant LinkedIn groups; attend local chapter meetings and industry conferences. Mentors can help with career choices, documentation required for licensure, and interview prep.
– Build a documentation checklist for licensure applications (keep originals and digital backups):
1. Official transcripts showing degree/product of required credit hours (year, institution, GPA if required).
2. Exam score reports for each passed section (dates and scores).
3. Employment verification letters (see sample below).
4. Ethics exam certificate (if your state requires one) and continuing professional education (CPE) records.
5. Notarized application forms and required identification.
6. Fee receipts for application and initial license.
– Sample employer verification letter (short template you can ask HR to provide):
– On company letterhead, dated.
– Employee name, job title, full-time/part-time status.
– Start and end dates (or “present”).
– Description of duties that show the type of experience your state requires (e.g., general accounting, financial reporting, attest/audit experience if applicable).
– Supervisor name, title, contact info, and signature.
Note: Some state boards require a supervisor to sign under penalty of perjury; check the exact wording your board needs.
– Plan study time with a realistic schedule. Typical guidance:
– Total recommended study hours per CPA exam candidate: 300–450 hours across all four sections.
– Suggested breakdown: 60–120 hours per section, depending on background.
– Example timeline for a four-section approach: sit one section every 6–8 weeks; complete all four in 6–8 months if studying part‑time, or faster if you can dedicate full-time study.
– Estimate and budget for common costs (state-dependent):
– Notice-to-schedule and exam fees, application fees, and international testing surcharges when applicable.
– Review course materials or live classes (many candidates spend several hundred to a few thousand dollars).
– Travel and time-off costs if you must travel to a testing center.
Always verify current fee amounts with your state board and NASBA before budgeting.
– Understand experience requirements and how they differ by path:
– Public accounting path: experience often must include attest or audit work supervised by a licensed CPA.
– Industry (private business) path: some states accept supervisory accounting experience that is non-attest.
– Government or nonprofit: some boards accept this experience but may require additional documentation.
Check your state board for the number of months or hours required and whether the experience must be post-exam, pre-licensure, or include a CPA supervisor.
– Maintain competence with continuing professional education (CPE):
– State boards set CPE hours and reporting cycles (commonly 40 hours per year or 80 hours every two years for many states—confirm locally).
– Keep certificates for seminars, webinars, and self-study in a single folder or cloud storage for audit purposes.
– Consider specialties (for example, governmental accounting, forensic accounting, or tax) and enroll in focused CPE to grow niche skills.
– Consider complementary credentials and when they make sense:
– CMA (Certified Management Accountant) for cost accounting and corporate finance.
– CFA (Chartered Financial Analyst) for investment analysis and portfolio management — note this has a heavy finance focus and a multi‑year exam pathway.
– EA (Enrolled Agent) for federal tax representation before the IRS.
Weigh costs, study overlap, and career goals before pursuing additional designations.
– Typical career progression and practical negotiation points:
– Early-career (0–3 years): Seek roles providing broad technical exposure; ask for mentorship, clear performance metrics, and feedback schedules.
– Mid-career (3–7 years): Document leadership of projects and measurable results (e.g., closed-quarter audit cleanups, tax savings, process automations) to support promotions or salary increases.
– Senior (7+ years): Track client acquisition, revenue influence, or strategic initiatives to justify director/partner compensation discussions.
When negotiating, use concrete comparisons from salary surveys and cost-of-living adjustments; bring documented achievements, not just market data.
– Common pitfalls and how to avoid them:
1. Missing state-specific nuances — review your state board requirements before you start the exam process.
2. Poor recordkeeping — scan and timestamp documents as you receive them.
3. Underestimating study time or work-study balance — use a timed calendar and build contingency buffers.
4. Waiting to get employment verification — ask supervisors for letters early, as turnaround can be weeks.
– Quick decision checklist before you apply for the CPA exam:
– Do you meet the educational credit requirements for your state?
– Have you mapped whether experience must be post-exam or if pre-exam experience counts?
– Do you have a budget and study-plan for the exam sections?
– Have you identified at least one mentor or supervisor who can verify experience?
– Have you confirmed application and exam fees and filing deadlines?
Educational disclaimer: This information is educational only and is not individualized financial or legal advice. For decisions about licensure, taxes, or career moves, consult your state board, a licensed CPA in your jurisdiction, or a qualified career counselor.
Sources
– American Institute of CPAs (AICPA) — CPA Exam and licensing resources: https://www.aicpa.org
– National Association of State Boards of Accountancy (NASBA) — state board directory and exam services: https://www.nasba.org
– U.S. Bureau of Labor Statistics — Accountants and Auditors occupational outlook: https://www.bls.gov
– Investopedia — CPA overview and career information: https://www.investopedia.com/terms/c/cpa.asp