Last Updated: August 13, 2022
What is a CPA Certification?
A CPA/Certified Public Accountant certification is provided within the accounting field. It can be taken by both domestic and international students who wish to practice as a public accountant within the US. The examination is taken by students who wish to enter both government and private sectors. The essential components for earning a CPA certification are considered to be education, examination, and experience. The examination can have an additional component called an ethics examination based on the jurisdiction they are taking the examination from.
Candidates who wish to become certified public accountants will be able to verify whether they meet the eligibility requirements based on their jurisdiction. After this, they will be able to apply through NASBA’s CPA Central portal. The NASBA or the National Association of State Board of Accountancy will provide the eligibility requirements depending on whether the candidate is from within or outside the US.
Eligibility for CPA Certification
The eligibility requirements that one has to meet for being a CPA is dependent on the jurisdiction they are taking the examination from. This generally includes the number of college credit hours one has to complete and the number of years they have to work under a licensed CPA who can verify their work years. Candidates will be able to get their specific eligibility requirements if they visit the official website of NASBA by following the link of their jurisdiction.
The general requirements for taking a CPA examination are-
- Candidates will have to complete 120-150 credit hours of coursework with a concentration in accounting.
- Candidates will generally not have to meet age requirements to take a CPA examination. But a few jurisdictions require candidates to be above 18 or 21 for taking the examination.
- Candidates generally take the CPA examination in the jurisdiction they wish to practice as certified public accountants. But some states will require candidates to be residents for at least 6 months before scheduling the test if they have to choose that particular jurisdiction. For this, they will require a physical residence, a permanent place of business, or at least regular employment in the state of choice.
- Candidates who have cleared all the sections of the CPA examination will sometimes have to also take an Ethics examination before applying for licensure. Candidates will sometimes have to take only the Ethics examination provided by the AICPA or they will also have to take the one provided by their state. A few states like Kentucky, Michigan, Pennsylvania, etc. do not have an Ethics examination.
Course Content for CPA Certification
The content for the CPA exam is rooted in accounting but also focuses on business and finance. The four sections are for-
- Business Environment and Concepts-BEC
- Financial Accounting and Reporting-FAR
This section deals with auditing and ethics. The content provided in the section and the allocation of questions for each area is as follows-
|Area 1||Ethics, Professional Responsibilities, General Principles||15-25%|
|Area 2||Assessing Risk and Developing a Planned Response||25-35%|
|Area 3||Performing Further Procedures and Obtaining Evidence||30-40%|
|Area 4||Forming Conclusions and Reporting||10-20%|
Business Environment and Concepts
This section deals with the field of business and other fields related to the smooth functioning of a business. The content under the section and the allocation of questions for the section are as follows-
|Area 1||Enterprise Risk Management, Internal Controls, Business Procedures||17-27%|
|Area 3||Financial Management||11-21%|
|Area 4||Information Technology||15-25%|
|Area 5||Operations Management||15-25%|
Financial Accounting and Reporting
This section deals with both finance and accounting. It also focuses on the documentation involved in financial accounting. The content provided under this section and the percentage of questions allotted for each section is as follows-
|Area 1||Conceptual Framework, Standard Setting and Financial Reporting||25-35%|
|Area 2||Select Financial Statement Accounts||30-40%|
|Area 3||Select Transactions||20-30%|
|Area 4||State and Local Governments||5-15%|
This section does not exclusively deal with accounting but provides topics on finance and taxation, ethics, law, etc. The content provided under this section and the allocation of questions are as follows-
|Area 1||Ethics, Professional Responsibilities, Federal Tax Procedures ||10-20%|
|Area 2||Business Law||10-20%|
|Area 3||Federal Taxation of Property Transactions||12-22%|
|Area 4||Federal Taxation of Individuals||15-25%|
|Area 5||Federal Taxation of Entities||28-38%|
CPA Exam Format
The CPA examination is divided into four sections. Each of these sections deals with a particular part of accounting and business. The examination is provided in a multiple-choice format and a task-based format. It has a time duration of 4 hours for each section. Candidates will be provided with a total of 18 months to clear all four sections of the examination. Candidates have no compulsion to follow any order in attempting the different sections of the examination.
Candidates will be provided with the MCQ paper first before being given the paper for task-based simulation. The four sections for the examination and the number of questions provided for each are as follows-
|Exam Section||MCQ Questions||Task-Based Simulation Questions|
Cost of Taking CPA Certification
The cost for taking a CPA certification and licensing is dependent on the state in which one is taking the exam. The examination fee is charged per section of the examination with an estimated $208 to be paid for every section. The ethics exam fee, if one has to take it, is around $189. Candidates will also have to pay an application fee of $130 in the beginning.
Applying for CPA Certification
- Step 1: Determine Eligibility- Candidates who wish to take the CPA exam will be able to find the eligibility requirements they are supposed to meet on the official website of NASBA. The eligibility requirements can vary based on the jurisdiction one is taking the examination from and it will also be different for international candidates who wish to practice within the US.
- Step 2: Submit CPA Application- Once the eligibility requirements have been met, candidates will be able to apply for the CPA examination by using the online CPA portal on the NASBA website. During this step, they will be required to upload the necessary documents for verification.
Upon verifying the documents, candidates will be provided with a Notice to Schedule the examination. Candidates will be able to choose a date within the next 6 months after receiving this notice.
- Step 3: Schedule CPA Exam Section- Candidates will be able to schedule their CPA exam by using Prometric. Those who are from the US will be able to schedule their examination for any center in the world but international candidates will have to check for locations that are available to them before scheduling the examination.
- Step 4: Take Examination- Since the CPA examination contains multiple sections, candidates are given a total of 18 months to clear all the sections with the necessary marks. After clearing all four sections, candidates will be able to take the Ethics examination if it is required in their jurisdiction.
- Step 5: Apply for Licensure- Clearing the examinations are not enough for gaining a CPA certification. Candidates will now have to apply for their license by verifying that they have completed the necessary number of college hours in the required field. Candidates will generally require 150 college credit hours with a concentration in accounting and an additional year of experience that has been verified by a licensed CPA.
Validity of CPA Certification
A CPA certification will be valid for the duration of a candidate’s career and will not expire once the candidate has cleared all four sections of the examination. The Ethics examination that one has taken will expire in 24 months depending on the state in which they have taken the examination.
A CPA license on the other hand will expire after a particular duration set by the state after which one will have to apply for its renewal.
Top CPA Certification Prep Programs
While most candidates will choose to prepare for the CPA examination as part of their undergraduate or graduate program, some students will be able to take an additional prep course for the same. A few of the best courses they can choose from include-
- Roger CPA Prep Course
- Surgent CPA Exam Prep Course
- Becker CPA Exam Review Course
- Gleim CPA Exam Course
- Wiley CPA Exam Prep Course
CPA Certification Renewal
Candidates will have to keep track of the expiry date of their CPA license since the date is dependent on the jurisdiction from where they took the exam. The renewal fee is generally between $50 to $150. Candidates will be able to submit an online form for the same. They will have to retake the Ethics examination if this was a requirement for obtaining the license. They will also have to submit proof of completing 40 hours of professional education in the field per year.
Earning CPE Hours for License Renewal
CPE or Continuing Professional Education is one of the requirements for CPA professionals that determine their competency in the field they are working in. Candidates who are required to renew their CPA licensure will have to retake their Ethics examination if mandated by the state. But at the same time, they will have to provide proof of their Continuing Professional Education/CPE in the field for being eligible for license renewal. Candidates are generally required to have at least 40 hours of CPE every year for keeping their license active.
The reporting period for CPAs is generally after every 3 years and by this time duration, they are supposed to have around 120 CPE hours. This number can increase or decrease based on the jurisdiction in which one is practicing.
Candidates can either be part of the NASBA or the AICPA where the former serves the state boards of CPAs and the latter is for individual CPAs. Candidates who are AICPA members will require 120 hours of CPE whereas NASBA members will have to meet different state-mandated requirements.
Calculating CPE Hours
Candidates who are either members of the NASBA or the AICPA will have to meet different credit requirements of CPE education which are dependent on the state within which they are practicing. 1 CPE credit hour is considered to be equal to 50 minutes of continuing professional education and since candidates are required to have an estimated 120 credits in all, this can add up to 6,000 minutes of continuing professional education.
The continuing professional education that one takes can be in the form of university classes, trade shows, in-house training programs, conferences, etc.