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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.

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.

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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.

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 typeTimeTypes of questions
Auditing and Attestation 4 hrs72 MCQs and 8 task-based simulations
Business Environment and   Concepts 4 hrs62 MCQs, 4 task-based simulations and 3 written communications tasks
Financial Accounting and    Reporting 4 hrs66 MCQs and 8 task-based simulations
Regulation4 hrs76 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 typeApplicationRemembering and UnderstandingAnalysisEvaluation
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%—
Regulation35–45%25–35%25–35%—

Syllabus of Auditing and Attestation 

Auditing and Attestation ContentAllocation of marks (%)
Area IEthics, Professional Responsibilities, and General Principles15-25
Area IIAssessing Risk and Developing a Planned Response25-35
Area IIIPerforming Further Procedures and Obtaining Evidence30-40
Area IVForming Conclusions and Reporting10-20

Syllabus of Business Environment and Concepts 

Business Environment and Concepts ContentAllocation of marks (%)
Area IEnterprise Risk Management, Internal Controls, and Business Processes20-30
Area IIEconomics15-25
Area IIIFinancial Management10-20
Area IVInformation Technology15-25
Area VOperations Management15-25

Syllabus of Financial Accounting and Reporting 

Financial Accounting and  Reporting ContentAllocation of marks (%)
Area IConceptual Framework, Standard-Setting, and Financial Reporting25-35
Area IISelect Financial Statement Accounts30-40
Area IIISelect Transactions20-30
Area IVState and Local Governments5-15

Syllabus of Regulation

Regulation ContentAllocation (%)
Area IEthics, Professional Responsibilities, and Federal Tax Procedures10-20
Area IIBusiness Law10-20
Area IIIFederal Taxation of Property Transactions12-22
Area IVFederal Taxation of Individuals15-25
Area VFederal Taxation of Entities28-38

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 typeFees
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

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