CPA Requirements – Are You up to the Challenge?

The CPA requirements will be a great indicator of just how badly do you want to become a Certified Public Accountant? They are becoming increasingly difficult. A short statement of fact that highlights the reality behind the premier accounting certification.

We know that accountancy is one of the most secure and stable career fields in any economy.  And, while accountants in general make a good salary, those with CPA credentials made about 33% more in 2012 than their non- credentialed peers according to Accounting Today.

That’s a huge difference but it doesn't come easy. We’re going to delve into what it takes to the CPA requirements – which are a lot. Here’s something to consider.

The main test you take, the Uniform CPA Examination, is arguably one of the most difficult professional licensing exams out there whether you’re a lawyer, doctor or engineer. 

Sadly, about 24% of all CPA candidates eventually give up without passing the exam! Add to that the educational and experience requirements and the need for continuing education to maintain your license and you begin to understand.

Still, the benefits outweigh the challenges.

In order to differentiate yourself, obtain your CPA, and potentially land a highly competitive position at a top accounting firm or a big corporate organization, you need to start preparing early. 

Education – It Starts In High School

CPA requirements dictate that you’ll be going to college/university (more of that below). And it bears re-iterating that well respected undergraduate accounting programs are difficult academically.  So, it’s important to prepare by taking a college preparation path in high school.

Courses such as statistics, higher math, and business law will create a strong educational foundation for you to build on.  If you want to be admitted to a top program, you need to make sure your high school experience includes some key factors.

  • Advanced Placement Courses – not only are you distinguishing yourself and learning in a college-like environment, you’re also earning college credit (when you pass the AP Test) to apply to your undergraduate coursework.
  • Foreign Language Courses – Top universities look at your transcript to find a balanced, well rounded learning experience.  Without exposure to a foreign language your application is missing something!
  • Extra-Curricular Activities – Top Universities want to see demonstrated proof that you can balance multiple activities and still succeed academically.  Student leadership, sports, or fine arts show that you are up to the challenge of University life.

A Bachelor Degree in Accounting is Not Enough

A few years ago the CPA requirements around education were increased.  While someone in your family may have taken the exam with a completed four-year Bachelor’s Degree alone, most states now require 150 college credit hours at minimum.

Most colleges and universities have responded by offering both a traditional accounting path (typically 120 credits) and a more difficult 150 credit CPA path within their undergraduate accounting program.  

As a result, there are basically three ways to meet the educational CPA requirements:

  • Complete 150-credit degree in accounting (CPA path) from a reputable school.  It is close to impossible to do this in a standard four year course of study without applying AP credits earned in high school.  Typically this path requires five years.

  • Complete a traditional Bachelor Degree in accounting from a reputable school.  Continue and complete an MBA with a concentration in accounting from a business school with a strong accounting program.  This path typically requires five to six years, depending upon the MBA program selected.

  • Complete a traditional Bachelor Degree in accounting from a reputable school.  Continue and earn a Master in Accounting from a highly regarded business school.  This path typically requires five years.

Earning a Master in Accounting gives you the best academic preparation for the CPA Exam.  Be selective, though.  Some programs are better than others.  Most business schools publish their CPA exam first time pass rate percentage, a key indicator of the strength of the academic program.

Take the time to review our more in-depth article on a CPA Degree (a misnomer if ever we read one...) for further details on this.
Avoid Test Anxiety – Prepare Properly

The Uniform CPA Exam is a computer based examination with four sections.  The entire exam takes fourteen hours, although most candidates take one or two portions at a time rather than all at once.  The test questions are intense and detailed, covering the following topics:

  • Auditing and Attestation (AUD)
  • Business Environment and Concepts (BEC)
  • Financial Accounting and Reporting (FAR)
  • Regulation (REG)

Most candidates spend months preparing for the exam. 

Only 45-48% of candidates pass a given module the first time according to the American Institute of Certified Public Accountants.  This means the average student will fail the first time.  Head on over to the AICPA website for loads more details on pass rates.

Due to the difficulty of the exam, many candidates prepare by taking a CPA review course specifically designed for the exam.  These courses allow you to take practice exams, focus on one module at a time, and provide feedback and encouragement as you prepare.  

Our CPA Exam article goes into a lot more detail to really get you up to speed.

Experience Requirement

Most states require you to have 1-2 years of work experience in order to be licensed as a CPA.  The requirements vary from state to state, however, so you should be sure and check with your State Board of Accountancy.  In some states, this must be public accounting experience under the supervision of a licensed CPA.  Other states accept relevant accounting experience gained in industry and don’t require the experience be specifically within public accounting.

While it used to be common to work for a public accounting firm while preparing to take the CPA exam, those positions are more competitive now.  Many candidates have difficulty getting these positions until after they’ve passed the exam.  Candidates now find themselves gaining experience working in corporate accounting or fulfilling the experience requirement after they’ve passed the CPA exam.

Certainly getting your education from a top university and passing the exam successfully are your greatest advantage.

Ethics Requirement

Public accountants are held to a high ethical standard, and recent events, such as Enron, have compelled most states to add an ethics requirement to the CPA license process.  You need to check with your State Board of Accountancy to get the details.  Some states require an ethics course.  In many cases a graduate course you completed while at university will qualify.  

Each state outlines a required curriculum.Other states go a step further and  have an ethics exam you are required to take after passing the CPA exam. Either way, you must demonstrate your knowledge of appropriate ethical conduct.  Although not for the ethically challenged, this requirement is considered much less difficult than the CPA exam and should be simple.

Time to think about Continuing Professional Education (CPE)

Congratulations are in order for any newly licensed CPA.  It’s a long path, and when you’ve successfully achieved your goal you may feel ready for some rest and relaxation.  It’s certainly understandable.  

While you are sitting on the beach or on vacation, you may want to start thinking about continuing professional education. 

That’s right!  The CPA requirements don’t end with your license.

You are required to earn 120 hours (in most states) of CPE every three years in order to renew your license.  And, don’t think about waiting until the third year.  Most states require a minimum of 20 hours each year.   You can fulfill this requirement by attending seminars, webcasts, or by independent or online study requiring a test. 

CPA Requirements – Summary

Becoming a CPA requires planning, dedication, and perseverance.  The total path begins in high school and isn’t completed until seven or more years after high school graduation.   

If a CPA license is your goal, familiarize yourself with your state’s CPA requirements and decide to pursue the most academically challenging educational option open to you.  Your success depends on it!