Not all practicing accountants in the U.S. are designated Certified Public Accountants (CPA), but it remains a sought-after credential for many in the industry. As of 2016, according to the first-ever census of CPAs in the U.S. conducted by the National Association of State Boards of Accountancy, more than 664,000 Americans were actively licensed as CPAs.
Becoming a CPA can open up many new opportunities for accountants, auditors and other financial professionals, but only after a good deal of work, up to and including a graduate degree such as the Master of Science in Taxation online from Northeastern University’s D’Amore-McKim School of Business. If you’re on the way to becoming a CPA or are interested in learning more about the process, here are the key points to know:
What CPAs do
A fully accredited and experienced CPA can find work in a number of roles related to tax practice, accounting, finance and business management. According to the American Institute of Certified Public Accountants (AICPA), these professionals can be found at all levels of business and government, from small accounting practices to multinational corporations.
Financial accounting and reporting is the most common career path taken by CPAs, since it utilizes their core skills and expertise. But they can also find suitable roles as management consultants, financial analysts, treasury management, financial forensics, personal financial planning and much more.
Many of these fields are among the fastest-growing occupations in the U.S., with the Bureau of Labor Statistics projecting an 11 percent growth rate through 2024 for accountants and auditors. The median salary for this industry was just over $68,000 per year in 2016, but this mostly applied to professionals with only a bachelor’s degree and few or no professional certifications. With a CPA or an applicable graduate degree, these professionals can expect to earn as much as 15 percent more, according to the AICPA.
Becoming a CPA
Each state has their own specific requirements that all CPAs must adhere to before working there, but according to the AICPA, they all meet the same minimum criteria:
- ● Attain 150 semester hours of credit in a qualified degree program at a college or university. Exact coursework required varies by state, but it typically emphasizes accounting and finance studies as well as more general business topics.
- ● Pass the Uniform CPA Examination, the test administered by financial regulators in all 50 states as well as the District of Columbia and all U.S. territories. Passing this test will earn participants their CPA certificate, but this is not the same as a license to practice as a CPA.
- ● Finally, CPAs must obtain a license to practice in their state. The requirements for licensure are different for each state, but generally requires one year of professional experience in a public accounting firm, government, private industry or educational institution. To maintain a license, CPAs must also meet their state’s continuing education requirements.
Details on educational requirements
The minimum 150 hours of qualified education can be obtained in a few different ways. The AICPA explained that this threshold could be crossed within the span of a four-year bachelor’s degree in finance, accounting or something similar. Indeed, most states only require a bachelor’s degree that includes a certain number of credit hours in specific courses. However, the AICPA noted that “[in] most cases, the additional academic work needed to acquire the technical competence and develop the skills required by today’s CPA is best obtained at the graduate level”. Therefore, the 150 hour requirement could be met in any one of the following ways:
- ● Combining an undergraduate accounting degree with a master’s degree at the same school or a different one.
- ● Combining an undergraduate degree in another discipline with a master’s in accounting, taxation or business administration with a concentration in accounting.
- ● Enrolling in a five-year degree program that ultimately confers a master’s degree in accounting.
Massachusetts, for example, requires CPAs to obtain at least 18 graduate credits or 30 undergraduate credits in courses including financial accounting, audit, taxation and management accounting, according to the AICPA. This must be combined with 18 graduate credits or 24 undergraduate credits in any business course. With a minimum of 120 hours from a bachelor’s degree, Massachusetts will allow someone to take the Uniform CPA Exam.
Details on the Uniform CPA Exam
If you meet your state’s requirements to sit for the Uniform CPA Exam, be sure to read up on general information and what you will need to prepare. The test is developed, maintained and scored by the AICPA in partnership with the state boards of accountancy, the groups who handle licensing of CPAs.
The Uniform CPA Exam is administered only in authorized test centers via a computer. As of 2017, the test consists of four sections, each of which must be completed within four hours. With 16 hours of total exam time, the test does not need to be taken all at once. Instead, participants may sit for any of the four sections, in any order, within the specified testing window. These testing windows recur quarterly and last about two months each. Once a candidate passes one section, state boards must allow them to complete the remaining three sections within a recurring 18-month period.
The four sections of the exam, which include multiple choice, written portions and task-based simulations, are as follows:
- ● Auditing and Attestation (AUD): Covers knowledge of audits of issuer and nonissuer entities, attestation engagements for issuer and nonissuer entities, preparation, compilation and review engagements, and the skills needed to apply that knowledge.
- ● Business Environment and Concepts (BEC): Covers knowledge of general business environment and business concepts that candidates need to know in order to perform audit, attest, accounting and review services, financial reporting, tax preparation and other professional responsibilities.
- ● Financial Accounting and Reporting (FAR): Covers knowledge of generally accepted accounting principles for business enterprises (public and nonpublic), not-for-profit entities and state and local government entities.
- ● Regulation (REG): Covers knowledge of federal taxation, business law and ethics and professional responsibilities related to tax practice.
Continuing education for CPAs
Once a CPA is officially certified and licensed in their state, they are ready to begin their professional career. However, to maintain their license to practice, CPAs must complete continuing professional education courses as defined by their jurisdiction. Using Massachusetts as an example, CPAs must renew their license by June 30 every two years. Within that timeframe, CPAs must earn 80 hours of qualifying professional education. This can be earned in a number of different ways:
- ● Serving as an instructor or discussion leader for an applicable course. Two hours of preparation time is allowed for each hour of presentation.
- ● Authoring or contributing to published research materials.
- ● Self-study programs.
- ● University or college credit.
CPAs may also earn credit from attending courses and other events sponsored by their state’s accountancy board, or there may be other methods of earning credit that vary from one jurisdiction to another.
By keeping all of these requirements and qualifications in check, CPAs can continue to work in service of their clients and business partners, who can be secure in the knowledge that their accounting and financial needs are being met by someone held to a high professional standard. For more information on Northeastern University’s Online Master of Science in Taxation program and your path toward a CPA role, contact an enrollment advisor today.