Why Become a CPA?
In the accounting profession, CPA stands for Certified Public Accountant. It is a professional accountant license certified by a state board of accountancy in the U.S. Becoming a CPA is an indicator of credibility and expertise in the field of the accounting.
A CPA can hold all sorts of positions in the financial domain. With their extensive knowledge of accounting and ethics, they can work as reliable financial advisors, business consultants, accountants, auditorsAuditorsAn auditor is a professional appointed by an enterprise for an independent analysis of their accounting records and financial statements. An auditor issues a report about the accuracy and reliability of financial statements based on the country's local operating laws., and tax professionals. They can even hold high-level executive positions.
In the business world, the CPA designation instills confidence and trust. CPAs enjoy higher salaries, wider acceptance in the global workforce, better career opportunities, greater job security, and immense respect in public.
Prerequisites for a CPA License
To obtain the coveted CPA license or certification, you must:
- Qualify the Uniform CPA Examination. The American Institute for Certified Public Accountants (AICPA) conducts this exam in coordination with the National Association of State Boards of Accountancy (NASBA).
- Meet educational standards specified by your State Board of Accountancy.
- Fulfil professional experience specified by your State Board of Accountancy.
8 Steps to Becoming a CPA
The CPA ExaminationCPA ExaminationThe CPA Exam assesses accounting professionals not just on their financial knowledge, but also on their ability to review and seek out key abilities. is one of the most demanding exams designed to evaluate a professional’s competency to practice the accounting profession. As discussed above, AICPA conducts it in coordination with NASBA.
Considering the low CPA exam qualifying rate, we can easily say that only the most hard-working and focused individuals qualify for this exam. So, do you want to be one of the fortunate enough individuals to pass this 4-section rigorous exam? Let us guide you through the journey of becoming a CPA using our 8 step process.
1. Consider the pros and cons
Weighing the pros and cons of any decision plays a crucial role. Keeping in mind your circumstances while contemplating ensures that you don’t take up anything on instinct and regret it later. Some of them as follows:
|Expansion of your knowledge horizon||A time-consuming and taxing process|
|Job flexibility and stability||Long working hours as a CPA|
|International career opportunities||Expensive Exam|
|Higher pay||Low Passing Rates|
The points mentioned above will help you remain clear on your goals so that you stay focused. Remember that the arduous journey of becoming a CPA needs considerable patience, hard work, and consistency.
2. Ensure your eligibility
Every state board of accountancy has different eligibility requirements. As such, you’d often find aspirants looking for information on how to become a CPA as per their states such as Florida, California, Texas, or Colorado, etc. You will not be permitted to sit for the exam until you meet the jurisdiction requirements where you plan to register as a licensed CPA.
To check your eligibility, please click here (NASBA or AISCPA) and select your state or jurisdiction. They specify every detail related to educational qualifications, transcripts to be submitted, and residency requirements of your state board.
Please ensure you meet all the requirements before applying. If the state board finds you ineligible, it will reject your application.
Some requirements common to most state boards are as follow:
- Minimum 120 to 150 credit hours of education or a bachelor’s degree
- Education from an accredited and recognized institution
- Minimum 24 credit hours in accounting and business-related course
International candidates can check their eligibility through the NASBA’s Internal Evaluation Services. Make sure to opt for the jurisdiction which participates in international administration.
3. Submit your application and transcripts
After checking your eligibility with the relevant state board, you can start the process of CPA application. Please note that you can’t register for the CPA exam in more than one state at a time.
- Submit your application through the NASBA’s CPA Central portal along with the application fees (around $150).
- Select the state or jurisdiction in which you plan to practice as a CPA.
- Submit your academic transcript to your state board. Please include every university, college, private institute, and community college that you have ever attended.
If any of your education credit comes from an international university, ensure that the approved party validates the transcript.
4. Get the Authorization To Test (ATT) and the Notice To Schedule (NTS)
Once the board has approved your application, you get an ATT. The state board issues the ATT to NASBA and the eligible candidates. The ATT authorizes the candidates to appear for specified CPA exam sections. It is valid for 90 days.
- Decide on the CPA exam sections you are planning to take. It is advisable to take 1 or 2 sections at a time, giving each one of them its due importance.
- Please note to sign up only for the sections; you can pay within 90 days.
- Once you decide on the exam sections, log in to the NASBA site and pay the fee.
- The fee structure varies across the state boards. On average, it will cost you around $1100 (for all sections). For more details on the fee structure, visit the NASBA website. Select your jurisdiction to reach the state board website. Then, click on Exam Fees.
- On the receipt of the fees, NASBA issues a Notice To Schedule (NTS) that allows you to schedule the exam date within six months.
- It will take around 3-6 weeks after the payment to receive your NTS.
5. Pick your testing center and schedule the exam
NTS is the final approval you need to appear for the exam. Upon receipt of the NTS, you can schedule the time and place for taking the exam sections (authorized by the ATT) as per your preference and availability.
- For a list of test centres, visit the Prometric Testing Center website. Enter the jurisdiction, exam section ID, preferred testing center location, first four letters of your last name, etc., to schedule the exam.
- You can schedule and take the exam in your preferred state regardless of where you obtained your eligibility.
- Schedule the exam as soon as you receive the NTS or at least five days before the test date. You can also reschedule the exam, but you have to pay a rescheduling fee to Prometric.
- International candidates have to check availability before choosing the Prometric location outside of the U.S.
- You must carry the NTS with you to the test center on the examination day, or else you won’t be permitted to sit for the exam.
- NASBA has replaced the CPA Exam Testing Window model with the continuous testing model. Under this model, you can take the exams throughout the year, unlike the earlier testing window model, wherein you had to take the exam only during the designated period.
6. Prepare and appear for the exam
This step is the most crucial of the entire process. Keep in mind one of the Founding Fathers of the U.S., Benjamin Franklin’s famous saying, “By failing to prepare, you are preparing to fail.” Understand the exam structure and process thoroughly to use it to your advantage.
CPA Exam structure
The total exam time is sixteen hours (four hours for each section). The following are the four sections of the CPA exam:
- Auditing and Attestation (AUD)
- Business Environment and Concepts (BEC)
- Financial Accounting and Reporting (FAR)
- Regulation (REG)
For a comprehensive understanding of each section of the exam’s content, structure, and format, please refer to the AICPA’s CPA Exam Blueprints. The blueprints cover every detail from topics covered in each section, skill levels, types of questions, scoring weights to reference materials to be used.
AICPA offers the candidates sample papers for each exam section to understand more about the exam format. You can also take some review courses and use popular CPA preparation books.
To pass the CPA exam, you need at least 75 on a scale of 0 to 99. Please note that you must pass all your four CPA exam sections within 18 months. The 18-month period starts from your date of passing the first section exam. However, it might vary as per the jurisdiction.
How to approach the exam?
- Prepare a comprehensive study plan
- Use relevant and up-to-date study materials
- Research about the exam process, requirements, content, and grading process
- Be motivated and confident throughout the study process
- Finally, believe in yourself
7. Pass the Ethics exam
The last step is to pass the ethics exam. Please note that a few state boards do not require you to pass this exam. So, check with your State Board of Accountancy.
- After passing the four sections of your CPA exam, you have to take the ethics exam within two years of applying for your license.
- Some state boards accept the AICPA Professional Ethics self-study course and exam. However, many conduct their own ethics exam, and as such, you would need to find a course that would cover their requirements.
- To take the AICPA Ethics exam, sign-up for the course, and get an ethics textbook. Go through the same and attend the exam. It is pretty easy as compared to the main CPA exam.
- You would have to answer 40 multiple-choice questions.
- Please note that you only have three attempts to pass this exam. The minimum passing mark is 90.
8. Apply for the license
After you have cleared your Ethics exam, apply for your CPA license. Every state has different work experience requirements for granting the license, varying from 6 months to 2 years. The experience certificates have to be verified by a licensed CPA.
You can take the help of NASBA Experience Verification services to sign off your experience requirement. Most states require experience in public accounting for at least two years. Many states also accept experience from non-public accounting fields, although with a higher experience count.
However, some states follow a two-tier system under which they award the license in parts. While one can obtain the licence upon clearing the exam, practising rights will only be allowed after fulfilling the experience requirements.
You can finally call yourself a CPA once you receive your license. The answer to “How to Become a CPA” includes many layers and sub-layers. Three things that can help you ace this taxing exam are careful planning, hard work, and consistency.
Be clear about your State Board of Accountancy requirements, don’t feel overwhelmed, and keep your priorities clear. Moreover, getting a CPA license is not the end. You must maintain that license through Continuing Professional Education (CPE). The AICPA and NASBA will help you along the journey. The road to becoming a CPA might seem long, but it would be worth it!
This has been a guide to How to Become a CPA. Here we discuss what is CPA, the Prerequisites for a CPA License, the Exam Structure of the CPA Exam, and also How to apply for the license. You may learn more about our articles below on finance –