I have decided to dedicate a long post to the details of the CPA exam. This seems to be a popular question and deserves a good answer. In general the questions I have received are from the United States, so I will address the requirements accordingly. Along with the CPA requirements I will discuss the salary information and several other related topics.
Becoming a CPA and sitting for the CPA exam are two separate things. Sitting for the CPA exam is one of the steps to becoming a CPA.
The exam itself consists of four parts: Financial Accounting & Reporting, Regulation (includes law and taxation), Auditing & Attestation, and Business Environment & Concepts. Auditing & Attestation and Financial Accounting & Reporting exams both consist of three multiple choice testlets, one simulation testlet, and seven task-based simulations. The Regulation exam is similar with just six task-based simulations instead of seven. The Business Environment & Concepts exam does not have a simulation but a written portion instead. The testing windows for each exam are the first two months of each quarter. The AICPA posts the general outline of each test online. Also, most study guide programs have the outline of what each exam consists of.
Education
Before you take the exam you must have met the education requirements. Most states require 150 hours of college/university level work. The normal path to the 150 hours is a master in accounting degree. Several universities offer this degree. There are also many online universities that will offer this degree.
The online education sector for accounting is growing rapidly. If you are already a professional and would like to get an accounting degree part time, this is a great option. Or if you do not live close to a university that offers an accounting degree, this is a good option. Learning online requires dedication and patience. The traditional classroom gives you the ability to see the teacher and other students face to face. This helps with accountability. If you have a strong determination to complete the degree, then you should definitely try the online path.
If you are already enrolled in a university and progressing toward an accounting degree you can stay and get the 150 hours without the master degree. This was the case for me because I took several other classes that were not relevant to graduation. When I was getting ready to graduate, I saw that I already had 140 hours. So I just stayed and took the additional accounting classes to round out my 150 hours and be eligible to sit for the exam.
Experience
Once you have your education requirements complete you must complete the experience requirement. This may or may not be necessary to sit for the exam. This will depend on the state you decide to get licensed with. Most states will only require the education requirements and age limit (18). Some states will require that you are a citizen of the USA. But if that is the case and you are not a citizen, just remember that you can sit for the exam in any state. Generally, you don’t even have to physically take the exam in that state to be licensed there either.
Some states require two years of experience and others only require one. This experience is easiest to gain if you are working directly for an already licensed CPA. If you are not, but believe you have relevant experience then you can submit a statement with the type of work you have been doing. Generally this will be accepted if it is mostly accounting related work. Things like account reconciliations, journal entries, cost analysis, metrics reporting, investments, and so forth are usual jobs for accountants that will classify as relevant experience.
Salary
As accountants we love money and love to compare. So here are the general salary ranges as I have seen them. First of all this will depend on if you are looking at salaries for small vs. large company or salaries from accounting firm vs. industry firm. Industry firms can be any company that has accountants (which is almost any company). Small industry firms will start you out generally at the same salary as any other functional area. This is in the range of $25,000 to $40,000 per year. The average is probably closer to $38,000. This is similar to small CPA firms. Large companies will generally start you out at $35,000 to $60,000 with the average being closer to $45,000. Again this is similar to large CPA firms. The big four CPA firms will start you out closer to the $60,000 mark.
These numbers are as I have seen them recently. Of course as with all other salary numbers, this will depend on supply and demand. If you believe you will be a great asset to a small firm and they really need your expertise, then you should push for the upper $50k range. I have mostly seen this work out well. IF you are not unreasonable about your salary negotiation then it is usually perceived well.
Interesting Jobs in Accounting: Forensic Accountants
Forensic accounting is a growing trend and I have posted about this subject already but I think it will only be fair to include the topic again here. For the geeky accountants in us this seems to be like a dream come true. Forensic accountants earn a higher salary but require much more experience. The cool thing is not the money, but the job itself. You may be able to testify in front of a court of law about your research.
Interesting Jobs in Accounting: FBI Special Agent
This is something that was brought to my attention recently. I wish I had known about it a while back because I probably would have chosen this path. The FBI accepts accountants to become special agents. This is probably due to the fact that accountants make great problem solvers. Also, they are familiar with financial information and understand fraud. This would be a really cool career for anyone who wants a non-traditional accounting job. If you are interested in the FBI but have already started on your path to becoming a CPA, don’t worry, all you need is the license and/or 3 years’ experience.
Step by Step Conclusion
If you are just starting out and would like a quick guide to getting started as an accountant, here is a quick overview on how to become an accountant:
- Education – go get a degree in accounting! It’s required and plus here you can find out if you really want to do this or not. Be sure to stay and get 150 hours or do a master in accounting degree. Don’t forget you can always stay home and get this degree online.
- Experience – land a job at one of the big four accounting firms or just go with a local company hiring accountants, either way, you need at least one year of experience.
- Exam – grab the best study guide you can find and head over to your local testing location and take the exam. This is probably the hardest step, but if you do this while you are in school it should be fresh on your mind and a bit easier.
- Salary – then watch the money rolls in. CPAs enjoy great salaries and great jobs. Reward yourself with salaries that range from $40k to $60k per year just starting out.