If you want to become a Certified Public Accountant (CPA), one of the biggest obstacles you will face in the pursuit of your CPA license is passing the professional credentialing exam. The four-part Uniform CPA Examination, developed and scored by the American Institute of Certified Public Accountants (AICPA), is notoriously difficult. Only around half of first-time test takers, most of whom have more college studies than required for a bachelor’s degree, earn a passing score. However, overcoming the challenges of the CPA exam is possible with plenty of preparation and education.
What to Expect From the CPA Exam
The first thing you need to know about the CPA Exam is what requirements you must meet to be eligible to take the test. Each state sets its own requirements for CPA licensure. Generally, candidates need a bachelor’s degree that includes formal studies in accounting content, an additional 30 semester hours of study at the college level and a minimum of two years of accounting work experience. Once you meet these requirements, you need to apply for the exam and pay the fees before you get a Notice to Schedule (NTS) and can reserve your seat at your first exam. From applying to sitting for your first exam, the process can take a few to several months.
Though licensing requirements vary from state to state, every state in the U.S. administers the same test, the Uniform CPA Examination, to CPA candidates. The four parts of the Uniform CPA Exam are Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR) and Regulation (REG). Each part includes a combination of medium-difficulty and difficult multiple-choice questions and task-based simulations, or case studies, candidates must respond to in order to pass the exam. The Business Environment and Concepts section is unique in that it also includes written communication tasks. Each section of the CPA exam allows test takers four hours, putting the overall time to complete the exam at 16 hours. Once a candidate begins the process of taking the exam, he or she must complete all four sections in 18 months, the BLS reported.
In 2017, the CPA Exam became “more difficult” as the time to complete the exam increased from 14 hours to 16 hours and multiple choice questions were reduced in favor of moretask-based simulations that require higher-level problem-solving skills.
Passing Scores on the CPA Exam
In the CPA exam, what counts as a passing score is any score of 75 or higher on each section of the exam. Though this score is out of a possible 99 points, it doesn’t refer to either a percentage or a percentile point but instead a scale score based on the difficulty of the questions. The CPA exam uses a testing process known as multi-stage testing (MST), in which test takers who do not perform well on their first, medium-difficulty testlet within a testing section get a second medium testlet rather than a difficult testlet next. While it may not seem fair that some test takers receive harder questions than others, the scoring of this exam takes the difficulty of the questions into account.
You must pass all four sections of the CPA exam to pass the test as a whole and move forward with attaining your CPA license. This is no easy task. The pass rate for each section of the exam is typically only in the 40s and 50s. In the first half of 2018, 58.45 passed the BEC portion of the test, 53.09 passed the REG section and 52.14 passed the AUD section. Only 45.47 percent of test takers earned a passing score on the FAR section of the exam. Nationwide, the percentage of test takers who passed the CPA Exam was just 52.9.
Only getting the multiple-choice questions right is not enough to pass the CPA Exam. You must correctly answer task-based simulations, and the written communication component of the BEC section, as well as the multiple-choice questions to get a passing score.
Succeeding at the CPA Exam
Just because the test is difficult and exam pass rates are somewhat slim doesn’t mean that you should give up. More than 664,000 American accountants have passed the exam and attained their CPA licenses already. There are plenty of ways you can help yourself succeed.
First, choose wisely when finishing your last 30 semester hours of college. Taking courses that will help you succeed on the CPA Exam – or better yet, choosing a certificate or master’s degree program intended for aspiring CPAs – can make a big difference in your readiness to take the exam and your ability to succeed.
Don’t make the mistake of thinking that since you earned a degree, you don’t really need to study for the CPA exam. Using reliable exam preparation materials can improve your chances of doing well enough to pass the exam. The AICPA offers Exam Blueprints, sample tests and tutorial topics, but students typically purchase expensive but effective CPA review course study materials to help them pass the exam, as well.
Earning a passing score on all four parts of the CPA exam isn’t easy, but the rewards of a career as a CPA are well worth the time, cost and hard work. CPAs can advance to senior management and partner roles, and they earn wages 10 to 15 percent above what accountants without the license would earn, according to the AICPA.
Between the application fee, exam fees and study materials, the cost of the exam adds up. You should expect to spend between $1,200 and $3,000 on the CPA Exam, but many employers pay for part of the cost of their accountants attaining their CPA license.