The Certified Public Accountant (CPA) designation is a hallmark of professional excellence in the field of accounting. However, earning this prestigious certification requires meeting a series of requirements that vary by jurisdiction.
For aspiring CPAs, understanding these requirements is the first step toward achieving their goal.
This guide provides a detailed overview of the education, examination, experience, and licensure prerequisites for becoming a CPA, helping you navigate the process with clarity and confidence.
Overview of CPA Exam Requirements
Contents
The CPA exam is administered by the American Institute of Certified Public Accountants (AICPA) and facilitated by the National Association of State Boards of Accountancy (NASBA). Each U.S. state and jurisdiction sets its own requirements for CPA eligibility. These requirements generally fall into four categories:
- Educational Requirements
- Exam Eligibility
- Experience Requirements
- Ethics and Licensure Requirements
Educational Requirements
#1 Minimum Degree Requirement
To sit for the CPA exam, most jurisdictions require candidates to have a minimum of a bachelor’s degree from an accredited institution. The degree should include coursework in accounting, business, and related fields.
#2 Credit Hour Requirements
In addition to a bachelor’s degree, candidates typically need 150 semester hours of education. This is often referred to as the “150-hour rule,” which exceeds the standard 120 hours required for most undergraduate degrees. To meet this requirement, candidates can:
- Pursue a master’s degree in accounting or business.
- Take additional undergraduate or graduate courses.
- Complete CPA-specific programs offered by some institutions.
#3 Specific Coursework
Most states mandate specific accounting and business coursework to qualify for the exam. This usually includes:
- Financial accounting
- Auditing
- Taxation
- Managerial accounting
- Business law
It’s important to review your state’s requirements, as some jurisdictions have additional or unique prerequisites.
Exam Eligibility
Once educational requirements are met, candidates must apply to their state board of accountancy to determine exam eligibility. This process involves:
Submitting Transcripts: Official transcripts must be sent to the state board or NASBA to verify educational qualifications.
Application Fee: Most states require a non-refundable application fee, ranging from $50 to $200.
Notice to Schedule (NTS): After approval, candidates receive an NTS, which is required to schedule exam sections.
CPA Exam Structure
The CPA exam consists of four sections, each designed to test specific knowledge and skills:
Auditing and Attestation (AUD): Covers auditing procedures, ethics, and professional responsibilities.
Business Environment and Concepts (BEC): Focuses on corporate governance, economics, and financial management.
Financial Accounting and Reporting (FAR): Tests financial reporting frameworks used by various entities.
Regulation (REG): Includes federal taxation, business law, and ethics.
Each section is scored on a scale of 0 to 99, with a passing score of 75. Candidates must pass all four sections within an 18-month rolling window.
Experience Requirements
Most states require CPA candidates to gain practical experience under the supervision of a licensed CPA. These requirements vary but generally include:
Length of Experience: One to two years of full-time work in accounting or a related field.
Type of Work: Acceptable experience typically includes auditing, taxation, financial reporting, or consulting.
Verification: The supervising CPA must verify and attest to the candidate’s experience.
Some states allow experience in academia or government to count toward this requirement. Always consult your state board for specific guidelines.
Ethics and Licensure Requirements
#1 Ethics Exam
Many jurisdictions require candidates to pass an ethics exam, such as the AICPA’s Professional Ethics for CPAs exam. This open-book test ensures candidates understand the ethical standards expected of CPAs.
#2 CPA Licensure Application
After passing the CPA exam and meeting experience and ethics requirements, candidates must apply for licensure. This process involves:
- Submitting proof of education and experience.
- Paying a licensure fee, which varies by state.
- Committing to ongoing Continuing Professional Education (CPE).
#3 Continuing Professional Education (CPE)
CPAs must complete CPE courses to maintain their license. Most states require 40 hours of CPE annually, with specific courses in ethics or technical accounting topics.
CPA Exam Requirements for International Candidates
International candidates who wish to become U.S. CPAs must meet the same requirements as domestic candidates. Additional considerations include:
Educational Credential Evaluation: Transcripts from non-U.S. institutions must be evaluated by a recognized credentialing agency.
Residency Requirements: Some states may require candidates to reside in the U.S. or be employed by a U.S.-based firm.
Testing Centers: The CPA exam is offered in select international locations, reducing the need for travel to the U.S.
Frequently Asked Questions
Can I take the CPA exam without 150 credit hours?
In most states, you must have 150 credit hours to become licensed, but some allow you to sit for the exam with fewer hours as long as you complete the requirement later.
How long does it take to become a CPA?
The timeline varies but typically ranges from 1 to 3 years, depending on how quickly you complete the educational, exam, and experience requirements.
Do CPA exam requirements vary by state?
Yes, each state or jurisdiction sets its own requirements. It’s crucial to review your state board’s specific rules.
What happens if I don’t pass all CPA exam sections within 18 months?
If you fail to pass all sections within the 18-month rolling window, the earliest-passed section will expire, and you’ll need to retake it.
Bottom Line
Becoming a CPA requires dedication, planning, and a thorough understanding of the requirements. By meeting educational prerequisites, passing the CPA exam, gaining relevant experience, and fulfilling ethics and licensure obligations, you can achieve this esteemed designation. While the process may seem complex, breaking it into manageable steps ensures steady progress toward your goal.
Remember, the CPA journey is not just about passing an exam; it’s about preparing for a rewarding career that upholds the highest standards of professionalism and integrity in accounting.