No matter what state you live in, one requirement you must meet to attain your Certified Public Accountant (CPA) license is passing the CPA Exam. The prospect of taking a 16-hour professional exam can be daunting, especially when you learn that only about half of first-time test takers earn a passing score. Rather than wasting energy worrying about the test, you can invest your time, effort and money into preparing for the exam as completely as possible and actually improve your chances of passing the difficult test. One of the most important steps you can take is choosing a college program specially designed for students getting ready to take the CPA exam.
Applying for the CPA Exam
If you’re thinking about going for your CPA license, your first step needs to be finding out if you meet your state’s licensing requirements. If not, you might need to go back to school or wait a little longer before you start the exam process. Each state sets its own requirements, but generally, you need at least a bachelor’s degree with a focus on accounting coursework and at least two years of public accounting experience. In most of the U.S., you must also have a minimum of 150 semester hours of study at the college level, according to the Bureau of Labor Statistics (BLS).
This last requirement is a bit trickier, because it translates to an additional year of study beyond what’s required for a traditional bachelor’s degree. Earning a master’s degree in accounting would satisfy this requirement, but so would completing 30 credits of study at the undergraduate level at a community college or four-year school.
Once you confirm that you have met the requirements to sit for the exam, it’s not as simple as merely showing up to a testing center. First, you have to apply to take one or more parts of the exam in your jurisdiction and submit any required documentation, such as transcripts and a photo ID. You must also pay for your exam at this time. It can take one to two months for your application to be verified and for you to receive a Notice to Schedule, or NTS.
Your NTS is only valid for six months, and if you fail to complete all selected parts on time, you forfeit the exam fees you have already paid. You can schedule your exam as late as five days before the test, according to the American Institute of Certified Public Accountants (AICPA). However, the National Association of State Boards of Accountancy (NASBA) recommends scheduling your exam at least 45 days in advance for the highest likelihood of getting your first choice as far as testing location, date and time.
From the time you first apply to the time you complete your final section of the four-part CPA Exam could take up to two years or longer.
What to Study for the Test
The four sections that make up the Uniform CPA Exam are Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR) and Regulation (REG). College coursework, in the form of Master of Accountancy programs and post-baccalaureate certificate programs, can help you prepare for the exam while you meet your 150-semester hour requirement.
Courses such as auditing theory and government accounting and auditing can help you prepare for the AUD section, which tests ethics, general principles, risk assessment, obtaining evidence and reporting audit conclusions. By studying business law, cases in management accounting, accounting information systems and financial statement analysis, you can get ready to pass the Business Environment and Concepts (BEC) section of the exam. These coursework cover the corporate governance, economic concepts and analysis, financial management, information technology and operations management topics you need to succeed on the exam. The FAR section tests conceptual framework of financial reporting and standard-setting, select financial statement accounts, select transactions and state and local governments. Classes in financial accounting, governmental accounting and auditing and financial income taxation can prepare students for this part of the test. The REG section includes questions about ethics and federal tax procedures, business law and federal taxation as it relates to individuals, entities and property transactions. You can prepare by taking classes in corporate taxation, partnership taxation, federal income taxation and business law as it relates to enterprise organization and contracts, torts and property.
If it has been some time since you finished your education – or simply to review and reinforce the concepts and technical skills needed to pass the test – you will likely want to purchase CPA Exam prep materials. CPA Exam review course study materials often include banks of thousands of test questions and may offer different learning formats, such as textbooks, recorded video lectures and simulations.
The FAR section of the CPA Exam is widely considered to be the most challenging, with 60 percent of CPAs ranking it as the most difficult part of the test, according to the AICPA.
The Cost of Becoming a CPA
Preparing for and taking the CPA Exam can be surprisingly costly. There are application fees, registration fees and exam fees that can add up to hundreds, if not thousands, of dollars. Study materials, too, can cost thousands, and that’s not counting the graduate-level tuition needed to earn a master’s degree or certificate. All in all, you should expect to spend $1,200 to $3,000 to take the CPA exam.
The high price tag is worth it. At every level of an accounting career, CPAs earn 10 to 15 percent more than their peers who lack the credential, the AICPA reported. By the end of their careers, this pay difference can add up to an extra million dollars, the Accounting Institute for Success reported.
Many employers pay some of all of the costs of their employees taking the CPA Exam, the BLS reported.