In 2008, a financial crisis rippled throughout the economy of the United States and the world. The effects of the crisis have been many and lasting, and while the recovery is now well underway, some changes will continue to remain. One of the lasting effects will be continued demand for professional men and women in the accounting field to assist businesses large and small as well as governments at all levels in their financial planning, auditing, and accounting needs. Many of these key roles will be filled by Certified Public Accountants. The Bureau of Labor Statistics estimates that there will be a 16% increase in demand for accountants and auditors between 2010 and 2020, and the median salary in 2010 was more than $61,000.
Most states require 150 semester hours of education in order to be certified as a Certified Public Accountant. This exceeds the requirements for most Bachelor’s Degree programs, which often require 120 total credit hours in order to receive a degree. This is not an accident. State licensing boards have specifically increased this requirement in recent years to reflect the increasing complexity of the accounting field, with changes in tax legislation and business practices having a ripple effect throughout the field. In addition, the needs of the field itself are changing, with greater demands for professionalism and efficiency. This means that rather than having a large number of persons to perform routine auditing tasks, each individual auditor is being expected to perform at a higher level on their own. Recommended methods to meet the overall education requirements include:
- Obtaining an undergraduate accounting degree plus a master’s degree in a specialized field
- Obtaining an undergraduate degree in a non-accounting field plus a master’s degree in accounting or an MBA with an accounting focus
- Attend an integrated 5 year program which leads to a master’s degree in accounting
In addition to the requirement for the total number of credit hours, most states also require a CPA candidate to have a specific number of credit hours in accounting specific courses.
Once the required education has been obtained, the prospective CPA candidate will need to sit for (and pass!) the Uniform CPA Examination. Passing the exam allows the candidate to receive their CPA Certificate. This is an important step, but it is not a license to practice as a CPA. This exam is divided into four separate sections and takes a total of 14 hours to complete. The sections are:
Auditing (4 hours)
This section covers internal controls, obtaining and documenting information, reviewing and evaluating information and preparing communications and reports.
Financial Accounting and Reporting (4 hours)
This section tests knowledge of standard of financial statements, types of transactions, and accounting and reporting for businesses, government agencies, and non-profit Non Governmental Organizations (NGOs).
Regulation (3 hours)
This covers ethics and responsibilities of CPAs, business laws, and Federal tax regulations, procedures, and accounting issues.
Business Environment and Concepts (3 hours)
This section tests for knowledge of business structures, financial management concepts, and information technology.
Because the exam is uniform throughout the nation, it focuses on the ability of the candidate to refer to universal sources of information that will apply throughout the country, such as the Uniform Commercial Code, or Federal Tax Law.
The exam is scored on a point scale from 0-99, with a standardized score of 75 having been set as the “passing” score.
Each state has different requirements for sitting for the test (see the above link for further).
Completing the rigorous education requirements and passing a fourteen hour test are still not enough to gain recognition and licensure as a Certified Public Accountant, however. States require a candidate to demonstrate successful experience in the industry prior to being granted licensure. Most states require a minimum of one to two years working under a currently licensed CPA prior to being licensed. There may be additional requirements as well, depending on the state and a wide variety of factors, including how many graduate level semester hours the candidate earned, what type of employer(s) his or her experience was with, and what specific type of work was performed (auditing vs. tax advice, for example). In addition to these steps, some states also require a separate ethical examination prior to granting the license to practice as a CPA.
Once the above requirements have been met, candidates are typically eligible to apply to the licensing board of their state for recognition and licensure as a CPA.
But even licensure is not the end of the road. CPAs must continue to keep up with their education through in-service training and professional career development even after licensure. Failure to do so can result in the loss of the license and designation that it took so much effort to gain in the first place. Licensure allows the accountant to practice Public Accounting. This is a often misunderstood term; many non-CPA holders can and do provide accounting services to the public without the CPA designation. But only a licensed CPA can provide public opinions/auditing of financial statements of businesses and governments.
In addition to this important ability, the designation also conveys a number of benefits to the CPA in their field. It is not an easy designation to achieve, and people involved in the financial and accounting industry know it. So, it provides immediate prestige and respect when dealing with persons professionally. CPA’s can also demand higher salaries and benefits than other accountants; their opinion carries more weight, and employers and clients know it. It also provides a greater sense of career and job security, as the professional status granted to CPAs means that their skills are in high demand.
The road to becoming a CPA is a long one, and there are no shortcuts. But if the road were easier, than the end result would not be as valuable as it is. The hard work, studying, exam preparation, and long hours gaining the needed experience have a significant payoff at the end- a professional career that is universally respected.