| BECOMING A CPA – DEFINITIONS AND GENERAL LICENSING REQUIREMENTS What is a CPA? BECOMING A CPA – EDUCATIONAL REQUIREMENTS What are the education requirements to sit for the CPA Exam? BECOMING A CPA – EXPERIENCE REQUIREMENTS How much work experience is needed to become a CPA?
How do I apply to take the CPA exam?
What type of questions are asked on the CPA exam? In general, a certified public accountant (or CPA) is a person who has received state certification designating technical accounting and tax competency. In California, a CPA is an accountant who has been certified by the State Board of Accountancy and has a permit to practice public accountancy. According to the California Business and Professions Code, a person cannot engage in the practice of public accountancy unless that person is a CPA. Specifically, only CPAs can perform the following services: 1. Professional services that involve or require an audit, examination, verification, investigation, certification, presentation, or review of financial transactions and accounting records. 2. Prepare or certify a report on the audit or examination of books, records, balance sheets, or any other type of report that will be used for the purpose of obtaining credit, for filing with a court of law or with any governmental agency, or for any other purpose. 3. Render professional services to clients relating to accounting procedure and to the recording, presentation, or certification of financial information or data. See http://www.dca.ca.gov/cba/forms/applbook.pdf for more information about the rules and regulations governing CPAs in California. HOW DOES A PERSON BECOME A LICENSED CPA IN CALIFORNIA?To be licensed as a CPA in California, a person must meet four basic requirements: 1. Education requirement. The CPA candidate must meet certain education requirements in order to qualify to take the CPA exam. These requirements can be confusing and are explained below. 2. Examination requirement. The CPA candidate must pass the CPA exam. The composition of the CPA exam is described below. 3. Ethics requirement. The CPA candidate must pass an examination on Professional Ethics. This exam is typically taken after the candidate has passed all four parts of the CPA exam. See http://www.dca.ca.gov/cba/ethics.htm for more information on this requirement. 4. Experience requirement. The CPA candidate must have work experience in the following areas: See http://www.dca.ca.gov/cba/forms/applbook.pdf for more information on this requirement. WHAT ARE THE EDUCATION REQUIREMENTS TO SIT FOR THE CPA EXAM? In order to take the CPA exam, you must first meet certain education requirements. The minimum education requirements are as follows: 1. Bachelors Degree requirement. CPA candidates must have a bachelor’s degree from a “recognized” school. 2. Accounting units requirement. CPA candidates must have taken at least 36 quarter units (or 24 semester units) on accounting subjects (e.g., financial accounting, auditing and assurance, forensic accounting, international accounting, managerial accounting, financial statement analysis, and taxation). 2. Business units requirement. CPA candidates must have taken at least 36 quarter units (or 24 semester units) on business subjects (e.g., business law, computer science, finance, information systems, management, marketing, mathematics, and statistics). If the CPA candidate has taken more than 36 accounting units, the excess accounting units count toward fulfilling the business units requirement. CPA candidates who meet these minimum education requirements can sit for the exam; However, CPA candidates who desire to work in a state other than California will probably need to meet an additional 225-unit requirement before they are licensed as a CPA. This requirement is discussed below. Although CPA candidates take the same uniform CPA exam in all 50 states, many states and U.S. jurisdictions require CPA candidates to have at least 225 quarter units (or 150 semester units) to be licensed as a CPA. This additional requirement is called the “150-hour rule”. California does not follow this requirement. However, other states may not allow newly-licensed California CPAs to practice public accountancy in their states without meeting this additional requirement. California’s solution to this issue was to create two separate pathways toward becoming a CPA in California: • Pathway 1 Licensure Requirements. Under pathway 1, CPA candidates will be qualified to engage in public accounting in California and other states or U.S. jurisdictions that do not follow the 150 hours rule. To take the CPA exam under pathway 1, the CPA candidate must meet the minimum educational requirements prior to taking the exam. • Pathway 2 Licensure Requirements. Under pathway 2, CPA candidates will be qualified to engage in public accounting in most states and jurisdictions, including California. To take the CPA exam under pathway 1, the CPA candidate must meet the minimum educational requirements. Because the lack of reciprocity associated with Pathway 1 restricts a CPA candidate’s future career opportunities, we recommend that SCU students who wish to take the CPA exam meet the 225 quarter-unit requirement before applying for licensure. CAN A CPA CANDIDATE MEET THE 225-QUARTER UNIT REQUIREMENT OF PATHWAY 2 AFTER PASSING THE EXAM?Yes. The 225-quarter unit requirement can be met after taking the CPA exam. However, your licensure is delayed until you meet this requirement. If a CPA who is currently licensed under Pathway 1 later desires to attain Pathway 2 status, the CPA must retake the CPA exam if he or she wants the benefits associated with Pathway 2 licensure. ARE THE ADDITIONAL UNITS REQUIRED UNDER PATHWAY 2 RESTRICTED TO CERTAIN SUBJECTS OR DEGREE PROGRAMS? No. CPA candidates that follow pathway 2 can meet the 225-quarter unit requirement by taking any course at a degree-granting college or university that is recognized by a U.S. regional institutional accrediting agency or a national accrediting agency. These additional units can be taken from either undergraduate or graduate programs. Courses taken from community colleges, extension, and correspondence programs may also apply. Before taking courses from non-traditional colleges or universities, however, we recommend that you check to see whether these institutions are accredited. Here is a link to the State Board of Accountancy’s website that discusses this issue: http://www.dca.ca.gov/cba/forms/applbook.pdf. Though CPA candidates may meet the 225-quarter requirement by taking any type of qualifying course, we highly recommend that students use this opportunity to seek out courses that will enhance their career and personal goals. The rationale for the 225-quarter unit requirement is that CPA candidates must have not only the accounting and business-related education the public expects, but also the broader, general education that has become a prerequisite for a CPA in today's highly technical, complex business environment. Our research on college recruiting finds that students who have double-majors or minors or develop specialties in certain subjects are highly desired by employers. Employers also desire students who improve their written communication skills by taking certain liberal arts courses. WHICH STATES HAVE ENACTED THE 225-QUARTER UNIT REQUIREMENT? For the most up-to-date licensing requirements on all of the 54 state or other U.S. jurisdictions, we recommend that you check the board of accountancy's website of the state in which you intend to practice, The National State Boards of Accountancy (NASBA) serves as a forum for the 54 U.S. boards of accountancy. Their website provides links to each of the 54 states and other U.S. jurisdictions. Here is a link to the NASBA website that links to these jurisdictions: http://www.nasba.org/nasbaweb.nsf/exam NASBA's National Qualification Appraisal Service (NQAS) determines if a state or other U.S. jurisdiction’s CPA licensure rules require 225-quarter units. Here is a link to the NASBA’s website that compares the licensure requirements for each of the 54 states and other U.S. jurisdictions: http://www.nasba.org/nasbaweb.nsf/exam. Maybe. CPA candidates must have their foreign transcripts evaluated by a foreign credentials evaluation service that is approved by the California State Board of Accountancy. The transcript evaluation must show a course-by-course breakdown. See http://www.dca.ca.gov/cba/forms/applbook.pdf for more information on determining which courses taken at a foreign institution qualify toward meeting CPA licensure requirements. HOW MUCH WORK EXPERIENCE IS NEEDED TO BECOME A CPA? CPA candidates applying for licensure must provide the Board with satisfactory evidence of having satisfied the general experience requirement. • Pathway 1 applicants have a 24-month experience requirement In order to satisfy the attest experience requirement for licensure, the applicant must show to the satisfaction of the Board that the applicant has completed a minimum of 500 hours of attest experience in the following areas: (1) experience in planning an audit; (2) experience in performing a variety of audit procedures; (3) experience in preparing working papers associated with an audit; (4) experience in preparing written explanations and comments on the audit; and (5) experience in preparing and reporting on financial statements. See http://www.dca.ca.gov/cba/forms/applbook.pdf for more information on this requirement. DOES THE REQUIRED WORK EXPERIENCE NEEDED TO BECOME A CPA NEED TO BE PERFORMED AT A CPA FIRM? No. Instead, the general rule requires that the work experience is to be obtained and performed, as provided in the California Accountancy Act, under the supervision of an individual with a valid active license to practice public accountancy. • Public Accounting Experience. General accounting experience obtained through employment in public accounting will be considered to have met the general experience requirement only if it is performed under the supervision of an individual holding a valid active license or comparable authority to practice public accountancy in any state or country. • Nonpublic Accounting Experience. General accounting experience obtained through employment in nonpublic accounting will be considered to have met the general accounting experience requirement only if it is performed under the supervision of an individual holding a valid license by a state to practice public accountancy. General accounting experience obtained outside the United States and its territories will be considered qualifying only if it is performed under the supervision of an individual holding a valid active license in the United States. See http://www.dca.ca.gov/cba/forms/applbook.pdf for more information on this issue. HOW DO I APPLY TO TAKE THE CPA EXAM? Once you have fulfilled the educational requirements fill out an on-line application https://www.cba.ca.gov/cbt_public and create a client account. Request that your transcripts be mailed to your state board. For California, your transcripts must be mailed directly to: California Board of Accountancy Examination Unit 2000 Evergreen Street, Suite 250 Sacramento, CA 95815-3832 The California Board of Accountancy (Board), within the Department of Consumer Affairs, is responsible for examining and licensing Certified Public Accountants (CPA) and for enforcing the state laws regulating the practice of public accountancy. The application process is described here: http://www.dca.ca.gov/cba/exam2.htm#prometric Once your transcripts have been reviewed by the State Board of Accountancy and you have received authorization to test, you must remit the required testing fees to NASBA and schedule your exam at a Prometric testing site. Prometric is an testing service that has locations throughout the United States. Prometric will administer the CPA Exam only at authorized CPA Exam testing centers in the United States, Guam, Puerto Rico, the Virgin Islands, and the District of Columbia. California candidates are allowed to take the CPA Exam in any of the 54 jurisdictions offering the exam, on a space available basis. The test centers are normally open six days a week. The exam may be scheduled using the Prometric website: http://securereg3.prometric.com/. To schedule an exam, you must use an exam ID number that you received from the State Board of Accountancy after it certified that you are eligible to take the exam. The CPA exam consists of four separate sections. Each section may be scheduled and taken independently of any other sections, and in any order. The CPA exam can only be taken during the first two months of each quarter of a calendar year: • Quarter 1: January and February (March is closed for testing) During the first two months of any quarter, the CPA candidate can take each section of the exam; however, any or all of the four sections of the exam may be scheduled and taken individually, and in any order. For example, you can take one section of the CPA exam in early January, another section in late January, a third section in early February, and the fourth section in late February. Or, if you wish, you can schedule to take one section in January, the second section in April, etc. If you fail to pass a section, you may retake it (for a fee) during one of the following quarters. Candidates will not be allowed to retake a failed section within the same quarter. WHAT ARE THE FOUR SECTIONS OF THE CPA EXAM? The CPA Exam has four sections. The sections are as follows: • Auditing & Attestation. This section covers knowledge of auditing procedures, generally accepted auditing standards and other standards related to attest engagements, and the skills needed to apply that knowledge in those engagements. • Financial Accounting & Reporting. This section covers knowledge of generally accepted accounting principles for business enterprises, not-for-profit organizations, and governmental entities, and the skills needed to apply that knowledge. • Regulation. This section covers knowledge of federal taxation, ethics, professional and legal responsibilities, and business law, and the skills needed to apply that knowledge. • Business Environment & Concepts. This section covers knowledge of general business environment and business concepts that candidates need to know in order to understand the underlying business reasons for and accounting implications of business transactions, and the skills needed to apply that knowledge. See the AICPA website, http://www.cpa-exam.org/cpa/computer_faqs_2.html, for more information. HOW MUCH TIME WILL I HAVE TO COMPLETE EACH EXAMINATION SECTION? The CPA Examination lasts a total of 14 hours. Each section of the exam lasts a different amount of time: Auditing & Attestation (4.5 hours); Financial Accounting & Reporting (4 hours); Regulation (3 hours); Business Environment & Concepts (2.5 hours). DO I NEED TO TAKE ALL FOUR SECTIONS AT THE SAME TIME? No. In California, eligible candidates can take any or all sections of the exam during any testing window. However, you will not be allowed to take the same section more than once during any testing window. WHAT IS A PASSING GRADE FOR THE CPA EXAM? To pass a section, you must receive a grade of 75% or better. Each section is graded individually, so it is possible to pass some sections and fail other sections of the exam within the same calendar quarter. The CPA Exam is graded by the AICPA. Within 90 days after the exam, grade reports are sent to the Board. Grades will then be mailed to candidates. Additionally, candidates will have access to their grade history via their online personal Client Account CPA candidates who pass one or more sections of the exam can retain credit for each section(s) passed for a period of 18 months from the date earned. If the candidate fails to pass the remaining sections within that 18-month period, then the previously passed section(s) is forfeited and he must retake the previously passed sections. WHAT TYPE OF QUESTIONS ARE ASKED ON THE CPA EXAM? The CPA exam includes multiple-choice questions and case studies called simulations. The relative weighting of the multiple-choice questions and simulations are as follows: • Multiple-choice portion: 70% The multiple-choice portion of the exam appears as sequential testlets. Testlets are groups of questions that are constructed to appear together. Each exam section includes approximately three multiple-choice testlets. Each testlet will contain 24 to 30 items (questions). Each exam section, except Business Environment and Concepts, also includes two simulations. Each simulation is also considered a testlet. Simulations are condensed case studies that will test candidates’ accounting knowledge and skills using real life work-related situations. Each simulation is approximately 30-50 minutes in length and will complement the multiple-choice portion of the examination. All simulations are intended to assess knowledge and skills that are appropriate to expect of an entry-level accountant. Each case study simulation also includes a writing skills exercise. In this portion of the exam, candidates must read a situation description and then write an appropriate document (“constructed response”) relating to the situation. The instructions will state what form the document should take (such as a memo or letter) and its focus. The candidate’s response should provide the correct information in writing that is clear, complete, and professional. Only those writing samples that are generally responsive to the topic will be graded. If the candidate’s response is off-topic, or offers advice that is clearly illegal, the candidate will not receive any credit for the response. The AICPA website includes some terrific information on the content of each exam. See http://www.cpa-exam.org/cpa/computer_faqs_2.html for more information. According to the official CPA exam website, CPA candidates are assumed to possess basic computer skills including the use of a mouse and keyboard. In addition they are expected to know how to use common spreadsheet and word processing functions, including writing formulae for spreadsheets. (Note, however, that the word processor and spreadsheet applications in the examination are NOT identical to Microsoft Word or Excel features). Candidates must also have the ability to use a four-function calculator or a spreadsheet to perform standard financial calculations. In addition, candidates will be asked to use authoritative literature, to answer auditing, accounting and taxation questions, to support judgments, and to create formal audit communications. WHAT RESOURCES ARE AVAILABLE FOR CPA CANDIDATES DURING THE TEST-TAKING SESSION? Resources available depend on the simulation that the candidate receives. Those common to all simulations include a four-function pop-up calculator, a blank spreadsheet with some elementary functionality, and authoritative literature appropriate to the section of the test. While completing the case study simulations, candidates will use financial accounting, auditing, or taxation databases. The financial accounting database will include certain portions of the FASB’s Original Pronouncements and Current Text. The auditing database will include certain portions of the AICPA’s Professional Standards. The taxation database will include certain portions of the federal tax code. The databases include all the excerpts that are necessary for completion of the case study simulations. ARE PRACTICE EXAMS AND TUTORIALS AVAILABLE? We strongly recommend all SCU students who are interested in taking the CPA exam to review the exam tutorial and sample tests at http://www.cpa-exam.org. The tutorial explains the design and operation of the computer-based test, and reviews the types of questions and responses used in the exam. This website is absolutely essential. HOW SHOULD I STUDY FOR THE CPA EXAM? We recommend that students prepare for the CPA exam by taking a CPA review course. These courses vary in nature: some are self-study courses in which the CPA candidate studies at her own pace. Other courses are more formal, involving daily or weekly meetings, either on-line or at fixed locations. It is also useful to review the CPA exam website at http://www.cpa-exam.org. This site includes free practice exams and tutorials. This information is critical; you should look through this information at an early stage in your study process. It is important that you review the CPA exam website and take a review course because the CPA exam includes material that is not covered in the accounting courses at SCU. The accounting courses at SCU train you think critically and to approach accounting problems in a sophisticated and structured manner. The SCU courses are not specifically designed to help you pass the CPA exam. The purpose of a review course is to prepare you to pass an exam. That’s all! |
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