This article is written by Vanya Verma from O.P. Jindal Global University. This article discusses the CPA exam in detail and how to prepare for it.
Table of Contents
Introduction
Certified Public Accountant (CPA) requires the highest level of skill in the subject of accounting. The American Institute of Certified Public Accountants (AICPA), the world’s biggest accounting group, administers the test. A CPA course is the finest option for anyone who is thinking about a career in accounting and wants to make a name for themselves. CPAs are regarded as the best accountants in the world, and they are employed in a wide range of businesses.
Who is a CPA
A CPA is an accounting professional who has completed the educational requirements, gained experience, and passed the CPA Exam to receive the CPA license.
What does a CPA do
A CPA is a professional designation, not a career path or job title, that can give accounting professionals more flexibility and mobility in their careers. CPAs are typically only licenced in one state, however, based on reciprocity laws they can obtain licences in other states.
CPAs are sought after across industries for their industry knowledge, reliability as well as credentials. The AICPA lists the following five common industries in which CPAs work:
- Business and industry;
- Public accounting;
- Non-profit;
- Education;
- Government.
This isn’t a complete list. Obtaining a CPA designation can open doors in almost every business.
Five popular areas of specialisation available to persons who achieve the CPA designation, according to the AICPA, are:
- Tax preparation and consulting;
- Financial planning;
- Auditing and review;
- Consulting services;
- Litigation consulting.
It takes time, effort, and planning to become a CPA. Even after getting your CPA designation, being a CPA necessitates a commitment to continued education. Depending on state board standards, it is often expected by a CPA to complete forty hours of continuing professional education each year.
Many in the finance and accounting sector consider the CPA licence to be one of the most prominent CPA/accounting credentials a professional can achieve due to the difficulty of passing the CPA Exam and the commitment to continuous education.
Steps needed to become a CPA
Depending on where you live, the path to become a Certified Public Accountant (CPA) differs. The 4 E’s can be followed at a basic level:
Education
To become a licenced CPA, all states require some level of accounting education. This usually entails 150 credit hours of college-level accounting coursework in most states. Some CPA accounting candidates fulfil this qualification as undergraduate students. While a master’s degree is not required to fulfil the educational requirement, some of the 150-hour programmes do lead to a graduate degree.
Experience
Candidates must meet certain experience criteria in some states, such as a year of work experience under the supervision of a certified CPA.
Exam
For some individuals, passing the CPA Exam is the most challenging criterion. It is a single level exam involving four subjects.
Ethics
Ethics exams or ethics courses may be required by some states to complete a CPA licence.
Eligibility for the CPA
- A candidate must have a bachelor’s degree or equivalent to enrol in the CPA certification programme.
- The candidate must finish 150 hours of CPA course semester to get the CPA licence.
- Many states demand that candidates have 1-2 years of experience working under the supervision of a CPA.
It must be noted that the CPA eligibility criteria for US citizens and candidates differ from those for the rest of the world. International candidates have a different consent agreement, international testing expense, and additional identification requirements than US candidates.
Eligibility criteria for Indians to sit for the CPA exam
Candidates must possess any of the following qualifications to sit for the Certified Public Accountant Examination.
- Member of the Institute of Chartered Accountants of India
- Member of the Institute of Cost and Works Accountants in India.
- Member of the Company Secretaries in India.
- Master of Commerce.
- MBAs
Several states in the United States recognise Indian CAs with a B.Com. The exact criterion, however, will differ from state to state.
The CPA exam
The exam is a four-part, 16-hour evaluation that assesses the abilities and knowledge required of a CPA. The computer-based test is administered at recognised test centres throughout the world and is the same for all candidates. The test is conducted in English. MCQs, simulations, and written ability are all included in the questions. On a scale of 0-99, passing marks are 75.
Subjects in the CPA exam
The CPA certification exam consists of questions from the following four subjects.
- Auditing and Attestation (AUD)
- Business Environment and Concepts (BEC)
- Financial Accounting and Reporting (FAR)
- Regulation (REG)
CPA exam pattern
CPA exams consist of the following four parts that take a total of 14 hours to be completed.
| CPA exam type | Time | Types of questions |
| Auditing and Attestation | 4 hrs | 72 MCQs and 8 task-based simulations |
| Business Environment and Concepts | 4 hrs | 62 MCQs, 4 task-based simulations and 3 written communications tasks |
| Financial Accounting and Reporting | 4 hrs | 66 MCQs and 8 task-based simulations |
| Regulation | 4 hrs | 76 MCQs and 8 task-based simulations |
The CPA exam is scored on an independent basis for each candidate. The candidate is graded using this scoring pattern based on their knowledge levels, talents, and analytical approach.
Skill levels to be assessed on each section of the CPA exam
| CPA exam type | Application | Remembering and Understanding | Analysis | Evaluation |
| Auditing and Attestation | 30–40% | 25–35% | 20–30% | 5–15% |
| Business Environment and Concepts | 50–60%* | 15–25% | 20–30% | — |
| Financial Accounting and Reporting | 50–60% | 10–20% | 25–35% | — |
| Regulation | 35–45% | 25–35% | 25–35% | — |
Syllabus of Auditing and Attestation
| Auditing and Attestation Content | Allocation of marks (%) | |
| Area I | Ethics, Professional Responsibilities, and General Principles | 15-25 |
| Area II | Assessing Risk and Developing a Planned Response | 25-35 |
| Area III | Performing Further Procedures and Obtaining Evidence | 30-40 |
| Area IV | Forming Conclusions and Reporting | 10-20 |
Syllabus of Business Environment and Concepts
| Business Environment and Concepts Content | Allocation of marks (%) | |
| Area I | Enterprise Risk Management, Internal Controls, and Business Processes | 20-30 |
| Area II | Economics | 15-25 |
| Area III | Financial Management | 10-20 |
| Area IV | Information Technology | 15-25 |
| Area V | Operations Management | 15-25 |
Syllabus of Financial Accounting and Reporting
| Financial Accounting and Reporting Content | Allocation of marks (%) | |
| Area I | Conceptual Framework, Standard-Setting, and Financial Reporting | 25-35 |
| Area II | Select Financial Statement Accounts | 30-40 |
| Area III | Select Transactions | 20-30 |
| Area IV | State and Local Governments | 5-15 |
Syllabus of Regulation
| Regulation Content | Allocation (%) | |
| Area I | Ethics, Professional Responsibilities, and Federal Tax Procedures | 10-20 |
| Area II | Business Law | 10-20 |
| Area III | Federal Taxation of Property Transactions | 12-22 |
| Area IV | Federal Taxation of Individuals | 15-25 |
| Area V | Federal Taxation of Entities | 28-38 |
Application and fees for the CPA Exam
The method of applying for the CPA exam differs from that of applying for a CPA licence. You can begin the application procedure for a CPA licence once you have passed the Uniform CPA exam with a minimum passing score of 75.
You must pay the CPA application and examination fees after you have reviewed the minimal eligibility criteria for the jurisdiction you desire to apply for. The application and other relevant documentation should be accompanied by the CPA application fees.
CPA fee structure for applicants not belonging to the US
| CPA exam type | Fees |
| Auditing and Attestation | $356.55 |
| Business Environment and Concepts (BEC) | $356.55 |
| Financial Accounting and Reporting (FAR) | $356.55 |
| Regulation (REG) | $356.55 |
How to prepare for CPA
Schedule your exam
- Decide when you’ll take the exam.
- Schedule your exam with Prometric using your NTS information.
- You can take the exam at any Prometric test centre that offers the exam.
- There is an extra charge for international locations.
Prepare for your exam
- To prepare for the exam, review the Exam Blueprints and make use of all accessible exam resources and study aids. For each exam section, you’ll find the following information in the Blueprints:
- Content is grouped by area, group, and topic, with a score weighting system in place.
- Task statements examples that depict what you might be required to complete during testing.
- Tasks are graded according to skill levels.
- Reference materials that support sample task statements.
- You must accomplish a certain number of different item types (multiple-choice questions, task-based simulations and written communication tasks).
- The weighting of each item type in the final score.
- Practice with the sample exams and access the lesson topics located by selecting the “Help” button in each sample test to learn about the exam’s format and operation.
- Review the test structure of each exam section.
- Use your NTS to get six months of free access to the Professional Literature package of the National Association of State Boards of Accountancy (NASBA).
Take the exam
- Within 18 months, pass all four portions of the exam (score a minimum of 75 on each section)
- In most situations, the 18-month complete “clock” starts when you pass the first Exam segment, but check with your specific Board of Accountancy for more information.
- You can take multiple exam sections per test window, but you cannot retake the same section in the same exam window.
- Pass the Ethics test (only if required by your Board of Accountancy)
Apply for your license
- In general, you’ll need 150 credit hours of education with an accounting concentration. This consists of 30 semester hours in accounting and 24 semester hours in business administration.
- A minimum of 15 semester hours in accounting must be taken at the graduate or upper-division level.
- A minimum of one year of experience (roughly 2,000 hours) is verified by a licensed CPA.
- The experience must be in the fields of accounting, attest, auditing, or tax.
- For licensure specific requirement information, visit the NASBA website or contact your Board of Accountancy.
Benefits of pursuing CPA as a career
The CPA exam is regarded as the pinnacle of accounting education, with limitless opportunities to demonstrate your abilities. According to the NASBA, there are five benefits after becoming a CPA, the benefits are as follows:
Reputation and esteem
You will join a selected group of accountants once you have finished the difficult road to pass the CPA Exam and meet all other prerequisites.
Advancement of your career
Certified Public Accountants have the opportunity to advance their careers both inside and outside of the CPA/accounting profession. Candidates who pass the CPA test have the option of working in investment banks, accounting and auditing firms, hedge funds, merger and acquisition firms, research firms, mutual funds, private equity firms, commercial banks, and other areas.
Career security
As CPAs continue to be in high demand, and as retiring CPAs exit the market, the number of employment openings for freshly licensed CPAs is increasing. The average CPA accounting pay may be higher than that of other accounting professionals in the field, depending on their individual skills.
Job satisfaction
You’re more likely to be qualified to conduct highly specialised duties that are more important or fascinating after receiving the CPA designation.
Money and Benefits
Being a CPA is more than simply a job, it’s a series of jobs and stepping stones that will lead to an incredible career. The latest stats on CPA earnings and employment are as follows:
- If you have a CPA licence, you will earn 10-15% extra.
- Accountants and auditors are expected to expand faster than the average for all jobs through 2024, according to the Department of Labor and Statistics.
CPA jobs and recruiters
A CPA’s job entails financial management, which involves assessing and analysing the client’s financial situation, reviewing financial documents, generating capital, tax, and audit reports, providing bookkeeping advice, and informing the client about changes in government regulations. The following are the key responsibilities of a CPA:
- Prepare and evaluate financial statements and records.
- Maintain records of all financial transactions, as well as assets, liabilities, and taxes.
- Prepare client financial reports.
- Ensure compliance with government regulations.
Individuals, corporations, industry, government, private, and non-profit organisations hire CPA licenced experts.
Conclusion
Considering the benefits and recognition that a CPA can get it’s indeed one of the most prominent fields one can think of depending upon the interest. Though it’s quite tough it’s worth it.
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References
- https://www.edupristine.com/blog/cpa-course-application-fees-benefits
- https://www.becker.com/cpa-review/requirements
- https://www.shiksha.com/cpa-certified-public-accountant-chp
- https://www.aicpa.org/becomeacpa/cpaexam/examoverview.html
- https://www.edupristine.com/blog/cpa-course-application-fees-benefits
- https://www.naukri.com/learning/articles/certified-public-accountant-cpa-exam-details-syllabus-and-eligibility/
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