Certified Public Accountant: What Is A CPA?

You must show that you understand the rights, duties, and liabilities of debtors, creditors, and guarantors, as well as the audit and appeals process employed by the Internal Revenue Service (IRS). The American Institute of Certified Public Accountants (AICPA) develops and scores the test, grading each part on a scale of zero to 99. If that’s the case, you’re ready to take the Uniform CPA Examination. Once you click “continue,” you will be brought to a third-party website. Please be aware, the privacy policy may differ on the third-party website.

1. All CPAs must have a bachelor’s degree and 150 semester (225 quarter) hours.
2. I also really enjoy the client education aspect of my work when I can help client accounting team members learn additional skills or be a resource to answer questions and resolve problems.
3. There isn’t one single answer to how to become a CPA as all states have slightly different requirements.
4. Whatever those goals-saving for a new home, opening a new office, or planning a multi-billion dollar merger-CPAs can help.
5. The accounting industry thrived in the late 1990s due to the expansion of large accounting firms into various forms of consulting.
6. Many states reinstated exam credits lost from 2020 to 2023 due to the COVID-19 pandemic.

All Integrity Network members are paid members of the Red Ventures Education Integrity Network. The accounting industry thrived in the late 1990s due to the expansion of large accounting firms into various forms of consulting. The Enron scandal in 2001 resulted in major changes in the accounting industry, not least the collapse of Arthur Andersen, one of the nation’s top accounting firms. Federal and state laws require CPAs to maintain independence when performing audits and reviews.

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Find the SNHU online CPA graduate certificate that can best help you meet your goals. If you’re interested in a master’s in accounting, find out if they’re worth it.

How To Become A CPA: A Step-By-Step Guide

Minority students make up close to 19 percent of new accounting graduates. For more information, visit the Minority Initiatives section of this Web site. As the accounting field continues to change, career opportunities are on the rise. According to BLS, roles typically held by CPAs are expected to grow over the coming years. By passing the CPA exam, you can demonstrate to potential employers and clients that you have the expertise and skills needed to have a profound impact on their financial health.

After earning your bachelor’s degree, you can meet the 150-hour requirement by pursuing a master’s in accounting or a master’s in taxation. The most popular CPA career paths include working for public accounting firms, offering accounting services as self-employed professionals, and working on behalf of government and nonprofit agencies. They are chief financial officers for Fortune 500 automate 1099 form companies and advisors to small neighborhood businesses. They are well-respected strategic business advisors and decision-makers. They act as consultants on many issues, including taxes and accounting.

History of the CPA Designation

One important quality in being a successful CPA is genuinely caring about your clients and their businesses. I love working with not-for-profit clients for that very reason — I feel like I’m really contributing to their mission by helping them have good financial information on which to make smart business decisions. A CPA is a very valuable credential, and I wanted to position myself well in the marketplace for various jobs.

Besides tax advising and preparation, CPAs might specialize in auditing, bookkeeping, consulting, management or financial advising and planning, to name just a few. You might even work with a CPA to determine the best strategy for managing your income and withdrawals from individual retirement accounts (IRAs) and 401(k)s in retirement. Earning a bachelor’s degree from an accredited educational institution is the first step to becoming a CPA, and many CPAs start with a bachelor’s degree in accounting. Earning an accounting degree can help prepare you for the CPA exam, but majoring in accounting or a related discipline is not necessarily required. While many CPAs offer tax preparation services, they can also work in government agencies, nonprofit organizations, and self-employment.

While entry-level accounting positions may be a bit repetitive or boring, having a CPA license means you’re more qualified to perform more specialized tasks that suit your interests or that you find more meaningful. For example, if you enjoy working more directly with clients, you may find being able to assist them directly with financial planning or defend them against the IRS to be more fulfilling. Similarly, if you enjoy strategy and planning, having a CPA license shows you have more in-depth knowledge of financial analysis. Gaining relevant work experience helps prepare you for an accounting career by teaching you about accounting practices and developing the skills needed to become a successful CPA. Specific work experience requirements vary by state, but you should plan to have at least one or two years of relevant experience to become a CPA. Some states may require work experience to occur under the supervision of an active CPA.

Career Guidance

CPAs prepare reports that accurately reflect the business dealings of the companies and individuals that hire them. Many prepare tax returns for individuals or businesses and advise them on ways to minimize taxes. Internationally, accounting professionals with similar education and credentials are called CAs, or charted accountants. “Due to the testing and ethics requirements, the CPA certification represents a high level of accounting expertise and ethics,” said Stephens. “It shows employers and clients a dedication to the accounting profession and to the people the profession serves.”

The CPA designation became more important after trade name vs business name the Sarbanes-Oxley (SOX) Act of 2002, which was passed partly in response to corporate financial scandals like the Enron affair. Arthur Andersen company executives and CPAs were charged with illegal and unethical accounting practices. Other countries have equivalent certifications, notably the chartered accountant (CA) designation created in Scotland and now used in many countries. Our partners cannot pay us to guarantee favorable reviews of their products or services. We believe everyone should be able to make financial decisions with confidence. In fact, the average passing rate in 2021 was, according to AICPA, just under 50 percent for all four sections of the exam.

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The 2023 average CPA salary was $96,7523, though the average range is between $60,874 to $150,6124. Accountants without a CPA license tend to earn less with an average range between $47,138 and $82,167. CPA licenses are issued on a state level by each state’s board of accountancy, and each of the 55 jurisdictions within the U.S. sets its own specific licensing criteria. If you’re not sure where to start with your accounting degree search, see our ranking of the best online accounting degrees. Other common CPA requirements include an ethics exam and proof of state residency or U.S. citizenship.

If you are interested in starting or running a business, the MBA program will help you prepare. The AICPA established accounting standards until 1973 when the Financial Accounting Standards Board (FASB) was launched to set standards for private companies. The pass rates are low, with three out of the six possible sections having pass rates below 50%. Each section consists of a different number of multiple-choice questions and task-based simulations. For example, AUD consists of 78 multiple-choice questions and seven task-based simulations.

I would encourage students starting out in accounting to spend some time investigating their career options and talk to other people in the industry to get a sense of the best career fit for them. There are a lot of really interesting jobs and possibilities out there. As a CPA, it’s very rewarding to be able to make a direct and positive impact on a business client, especially with a not-for-profit that makes a real difference in our community. I also really enjoy the client education aspect of my work when I can help client accounting team members learn additional skills or be a resource to answer questions and resolve problems. In 2021, I decided to take the next step in my accounting career journey, and I am now a self-employed accounting consultant and business advisor.

For the AUD, FAR, and REG sections, multiple-choice questions count for 50% of the total score and tasked-based simulations count for the other 50%. The Core exam sections combined comprise 200 multiple-choice questions and 22 task-based simulations. The Discipline exam sections range from 50 to 82 multiple-choice questions and have six to seven task-based simulations. Before you apply, you need to make sure you meet the state requirements to sit for the exam. If you do, you’ll need to submit the proper documents, pay the fee, and apply through the state where you plan to be licensed. Once your application is accepted, you can schedule to sit for your first section.