Hi, this is Stephanie from IPassTheCPAExam.com. In this video, I am going to go through the steps on to become a CPA in the United States.
You may be thinking: why do you and I want to become a CPA in the first place?
For accountants and finance professionals, getting the CPA qualification means more likely to be hired, get promoted and get into interesting specialties. CPAs on average earn 10-15% more than their peers, and you gain the respect from friends, family, clients and business partners. Very importantly, you won’t be asked to leave your firm 10 years down the road as the only senior finance person without a CPA title.
In theory, the rule to become a CPA is very simple. It’s known as the 3Es: Education, Examination and Experience. Depending on your background and commitment, you can complete the whole process within a few months, or you can take the time and get it done in several years.
In practice, it is more complicated because it is the state that grants the CPA license, and each of the 54 qualifying jurisdictions has slightly different rules. Having said that, the difference has created opportunities for those who wouldn’t have qualified in one state to sit for the exam in another state.
Thanks to the Uniform Accountancy Act, most states are now more or less following the same guidelines when it comes to the 3E requirements. Let’s go over them one by one.
Education. Most states require at least a bachelor degree and preferably a master’s degree, as well as 150 credit hours which is equivalent to 5 years in college. The state requirement varies, but there should a minimum number of required accounting and business courses in each state.
If you have a bachelor degree which typically translates to 120 credit hours, you can make it up to 150 credit hours by taking additional courses from accredited educational institutions online or on campus.
By the way, some states may have citizenship, residency and minimum age requirements. While this shouldn’t be an issue for most people, please double check the rules which are printed clearly in the application.
Unlike the prerequisites, the exam itself is the same throughout the US. In fact, it’s officially known as the Uniform CPA Examination.
The exam is now 100% computerized and consists of 4 parts covering financial accounting, audit, taxation and miscellaneous business topics. Each part is 3-4 hours long and the whole exam is 14 hours long.
The exam is designed to test the candidates’ breadth of knowledge instead of the depth of knowledge. In other words, the examiners want you have a basic to intermediate understanding of a wide variety of topics, instead of an advanced knowledge in a one or two areas.
In terms of the format, 50-60% of the questions are multiple choice, and 40-50% are what’s called the simulations. Simulation is a series of task-based questions that is designed to test the application of the accounting knowledge rather than the knowledge itself. In the Business section, there is no simulation but instead you will be asked to write 3 pieces of writing such as a memo or letter to client.
For experience, almost all states now require at least 1 year of relevant working experience. Some states specifically require public accounting, that is, auditing experience while others are fine with non-public accounting work such as financial accounting in a corporation or non-profit organization.
Please note that all states require the experience to be supervised and/or verified by an active CPA licensee. In other words, your boss should have a valid CPA license during the time you work under him or her. And we are talking about the US CPA license holders, although states may allow Canadian CAs or Australian CAs or CPAs.
For international candidates, please note that CAs from countries such as India and the Philippines as well as ACCA holders are unfortunately not allowed to verify your experience.
I would like to point out that candidates with non-US background can also apply for the CPA exam. The process is more complicated as it involves selecting a suitable state and getting your transcript translated or evaluated. Please also be aware that it may be a challenge to find someone with an active CPA license whom you can work under in your home country.
To learn more about the specifics on how to prepare, study and pass the CPA exam, and the remaining steps to get your CPA qualification, please check out my website at IPAssTheCPAexam.com. See you there and thanks for watching.