By definition, licensed accountants act in the public interest. Because these professionals are entrusted with great responsibility, the accounting industry has created a professional standard to ensure that only qualified individuals receive licensure. The four variables that qualify a licensed public accountant are commonly known as the Four E’s: education, experience, examination and ethics.
Each of these four standards is non-negotiable for licensure. The Uniform Certified Public Accountant (CPA) examination is a required element and a key step in an aspiring CPA’s journey to professional practice.
Because these requirements are absolute musts, CPA credentials distinguish these professionals from those who simply hold degrees or job titles that reference the accounting industry. Many tasks CPAs perform, like compliance with federally mandated audit regulations, can only be legally managed by a CPA.
The senior governing body for the CPA exam is the Board of Examiners (BOE) committee of the American Institute of CPAs (AICPA). This committee sets policy for the exam, oversees scoring, monitors exam content for accuracy and relevance and collaborates with individual state boards of accountancy. Ultimately, this committee is the face of the CPA exam and answers to the public. The BOE works in conjunction with the National Association of State Boards of Accountancy (NASBA) and Prometric, its chosen test developer and proctor, to consistently deliver the CPA examination across all U.S. jurisdictions.
It’s important to note that individual states do maintain some authority over the administration of the exam. After CPA credentials have been granted, however, the licenses’ professional mobility allows for practice anywhere in the U.S. states or territories.
WHO IS ELIGIBLE TO TAKE THE CPA EXAM?
Eligibility requirements for the CPA exam refer back to the first two E’s: education and experience. In order to sit for this exam, aspiring accountants must demonstrate significant postsecondary education.
For much of the profession’s history, a bachelor’s degree from an accredited institution was considered adequate preparation for the exam. In today’s accounting environment, however, the proliferation of new regulation and compliance laws have resulted in a body of knowledge that can’t be encapsulated in a 4-year degree program. Rapid advances in technology have also dramatically altered the skill sets in practice management, audit and compliance that CPAs are expected to have. In reaction to these changes, the AICPA has adjusted its educational mandate. In addition to the 120 semester hours typically delivered in a baccalaureate degree program, 30 hours of graduate-level instruction are also recommended. Nearly all U.S. states enforce this 150-hour requirement. A master’s degree satisfies these stipulations, but it is not strictly required.
Generally, CPAs meet educational eligibility via:
- A bachelor’s degree in accounting, plus a master’s degree in accounting
- A bachelor’s degree in another discipline, plus a master’s degree in accounting or taxation, or an MBA with a concentration in accounting
- A dual program that delivers both bachelor’s and master’s degrees in accounting in five years of study
- A bachelor’s degree in accounting, supplemented by 30 semester hours of graduate-level instruction in taxation and accounting
Individual states may differ in their requirements; for example, in some states a master’s degree in law, finance or accounting information systems satisfies eligibility requirements. Some states demand residency or proof of citizenship, while others do not. For specific details, check each state where you’re considering taking the exam.
HOW DO I REGISTER FOR THE CPA EXAM?
First, choose the jurisdiction where you plan to sit for the exam. For many professionals, this isn’t a difficult question; it’s based on residency and where you plan to practice. However, differing combinations of residency, citizenship and educational qualifications may make some states more appealing than others. Again, consider each state’s accountancy board rules as you consider where best to sit for the exam.
Prior to registration, ensure that all educational requirements have been met before you apply. Gather original transcripts of undergraduate and graduate school classes for evaluation. Some states offer pre-evaluation service prior to registration, and some require that transcripts accompany registration materials. The length of time it takes to process a registration varies; many jurisdictions recommend planning for one or two months’ wait.
By registering, you establish your intent to sit for part or all of the four-section CPA exam. Each of the four exam sections is administered separately within a specific time frame; you may register and pay for all four at once, or for individual sections. When your registration is accepted you will be issued a Notice to Schedule (NTS). This official document qualifies you to schedule testing with Prometric, the official proctoring service for the CPA.
When you receive your NTS, you may register online for a seat during the next available testing window. You may take any section of the CPA exam you wish; there is no requirement that you take each section in sequential order. It is generally recommended that you reserve your seat at least 45 days before your exam date, though you may reserve a spot up to five days before the test.
A Note about NTS Expiration
Registration merely states your intent to schedule exam sessions within a certain time period. Individual jurisdictions vary, but most often require that you schedule the exams you’ve paid for within 18 months. This time period refers to calendar months and does not take testing windows into account; plan carefully, or risk running out of time and forfeiting part or all of your registration fees.
In many cases, an aspiring CPA can prepare for and pass all four sections of the exam within 18 months. However, difficulties scheduling around testing windows or unexpected challenges in your personal or work life could interrupt your long-term examination timeline. Some CPAs are more comfortable approaching the exam in smaller chunks, rather than all four sections in one timespan. Carefully weigh the external variables in your life that could impact your plans; that way you can avoid repeating the registration and payment process if your NTS expires.
HOW MUCH DOES THE CPA EXAM COST?
NASBA has established a fee schedule for each exam section, but keep in mind that fees are managed by boards of accountancy in individual states and jurisdictions; check carefully for variations. Additional fees may be charged for transcript reviews or online license verification. Generally, future CPAs can expect to spend about $1,000 on all four sections of the exam.
WHEN DO I TAKE THE EXAM?
The logistics of test scheduling are somewhat complicated, so it pays to stay on top of the particulars. Prometric, the company that proctors the CPA exam, offers testing during designated windows of time eight months of the year (or twice per quarter in accountant-speak). Testing is unavailable in March, June, September and December. In any other calendar month, testing is offered five or six days per week, depending on the test site.
Within these windows, the rules specify the following:
- You may take one exam section at a time per test day.
- You may schedule test days for one, some or all sections of the exam during a single test window.
- You may schedule exam sections in any sequence.
- You may NOT take the same section of the exam more than once during a single test window.
The entire exam takes 14 hours. Depending on which section you choose, you will have three or four hours to complete the section test.
WHERE CAN I TAKE THE TEST?
Prometric testing centers are located in each of the 50 states, as well as Puerto Rico, Guam and the U.S. Virgin Islands. Accountants who take the CPA in Guam should expect to pay an additional fee.
CPA EXAM SCORE AND RELEASE
Each of the four exam sections are graded separately; scoring rubrics are based on individual section formatting and are explained in detail below. Each test is scored from 1 to 100, and the minimum passing score is 75. Individual section scores are not averaged; the minimum score of 75 must be earned on each section to achieve licensure.
CPA exam score release timetables are updated biannually to reflect changing test dates. Turn around time varies, but on average release dates occur between 10 days and two week from the final date of testing for the window. We have included the official Q3/Q4 score release timelines below:
|IF YOU TAKE YOUR TEST ON OR BEFORE:||AND THE AICPA RECEIVES YOUR EXAMINATION DATA FILES FROM PROMETRIC BY 11:59 PM (EST) ON:||YOUR SCORE WILL BE RELEASED BY
THE TARGET RELEASE DATE:
|July 20||July 20||August 4|
|August 14||August 14||August 25|
|August 31||September 1||September 10|
|August 31||After September 1||September 18|
|IF YOU TAKE YOUR TEST ON OR BEFORE:||AND THE AICPA RECEIVES YOUR EXAMINATION DATA FILES FROM
PROMETRIC BY 11:59 PM (EST) ON:
|YOUR SCORE WILL BE RELEASED BY THE TARGET RELEASE DATE:|
|October 20||October 20||November 4|
|November 14||November 14||November 24|
|November 30||December 1||December 9|
|November 30||After December 1||December 17|
For detailed information, refer to the AICPA’s FAQ regarding the CPA exam release timeline.
AM I REQUIRED TO BE A U.S. RESIDENT TO SIT FOR THE CPA EXAM?
No. The accounting profession is becoming increasingly global in nature, and the AICPA recognizes that accountants from outside the U.S. may find it professionally advantageous to hold licensure in the states. These individuals have two options: off-site locations for the CPA exam, or an alternative exam geared toward practicing accountants in foreign countries.
Non-U.S. accountants may sit for the entire exam in some overseas locations. NASBA has partnered with Prometric to establish testing sites in Japan, Brazil, Bahrain, Kuwait, Lebanon and the United Arab Emirates. Registration logistics are similar to those experienced by stateside CPAs: applicants must examine potential jurisdictions’ eligibility requirements and choose one. Even though the physical testing site is outside of the U.S., all applicants must identify a jurisdiction that will grant CPA credentials after the exam is successfully completed.
- Commonwealth of the Northern Mariana Islands
- New Jersey
- North Carolina
- Virgin Islands
NTS expiration rules do apply for international test-takers. Scores are released within the same testing time frame, as are stateside applicant scores.
Alternatively, accounting professionals who are employed in certain countries may opt for the International Qualification Examination (IQEX). This examination is a result of NASBA and AICPA partnerships arranged with professional accounting associations in a handful of countries. These mutual recognition agreements ensure that the members of these associations meet the same professional standards that the AICPA requires of its members. For these individuals, the briefer IQEX tests applicants on the Federal Regulations section of the CPA exam.
The following countries have mutual recognition agreements that allow accountants to sit for the IQEX:
- New Zealand
- Hong Kong
To apply for the IQEX, you should have the credentialing organization that professionally licensed you in your home country supply NASBA with a Letter of Good Standing. When NASBA receives this official document, your eligibility will be determined and an NTS released to you. The NTS for the IQEX will expire in six months’ time, so schedule accordingly.
Like the CPA exam, the IQEX is administered during Prometric’s standard testing windows. You may schedule a seat at any participating Prometric testing site in the U.S. or Canada. Currently, the fee for this exam is $835.
TEST BREAKDOWN: WHAT IS ON THE CPA EXAM?
The breadth of content on the CPA exam makes it necessary to break it up into manageable chunks. While specific test questions may change, the exam is always divided into the same four sections of accounting knowledge:
- Auditing and attestation
- Business environment and concepts
- Financial accounting and reporting
Depending on your interests, areas of expertise or career plans, you may find some sections more challenging than others. Regardless, you must score at least a 75 on each in order to receive licensure.
All exam sections are computerized, and are only delivered in English. In each section, test questions are presented in smaller chunks called testlets. A testlet is composed of either a set multiple-choice questions, task-based simulations or a mix of both. Some of the task-based simulations contain written communication tasks.
- A task-based simulation provides relevant information in a sample case study. Based on the information provided, applicants must demonstrate their accounting skills by completing tasks that are typical for entry-level CPAs. Examples might include working in spreadsheets, researching a database or creating or completing forms. When necessary, additional research materials are made available in the form of professional standards, tax code or FASB rulings. Scoring in these simulations is based on accuracy.
- Written communication tasks require the applicant to craft communications in the form of letters or memoranda, based on the data provided. Scoring written communications is based on the evaluation of whether you 1) properly organized and presented ideas, 2) clearly presented supporting evidence and 3) communicated well using business English.
- Multiple-choice questions are delivered in an adaptive model. The first multiple-choice testlet you receive will be designed for moderate difficulty. Your performance on that testlet informs the difficulty of the subsequent testlets you are given; for example, excellent work will result in more difficult testlets later in the test period.
The content of individual questions will necessarily vary, but the format of each section test and testlet does not change. Below, we’ve broken down each test section, the content it covers, the type of questions you are expected to answer and their weight against your final score.
Auditing and Attestation (AUD)
- Time: 4 hours
- Skills Tested:
- Planning the engagement
- Internal controls
- Obtain and document information
- Review engagement and evaluate information
- Prepare communications
- Format: Three multiple choice testlets (60%) and one simulation testlet with seven task-based simulations (40%)
Business Environment and Concepts (BEC)
- Time: 3 hours
- Skills Tested:
- Business structure
- Economic concepts
- Financial management
- Information technology
- Planning and measurement
- Format: Three multiple-choice testlets (85%) and one simulation testlet with three written communication tasks (15%)
Financial Accounting and Reporting (FAR
- Time: 4 hours
- Skills Tested:
- Concepts and standards for financial statements
- Typical items in financial statements
- Specific types of transactions and events
- Accounting and reporting for governmental entities
- Accounting and reporting for nongovernmental and not-for-profit organizations
- Format: Three multiple choice testlets (60%) and one simulation testlet with seven task-based simulations (40%)
- Time: 3 hours
- Skills Tested:
- Ethics and professional responsibility
- Business law
- Federal tax procedures and accounting issues
- Federal taxation of property transactions
- Federal taxation – individuals
- Federal taxation – entities
- Format: Three multiple choice testlets (60%) and one simulation testlet with six task-based simulations (40%)
On test day, allow for an extra 30 minutes to complete sign-in and the student survey. Note that whether or not you complete these activities in thirty minutes does not impact the time you have to complete the test. When you arrive at the testing center, you must present your NTS and two signed forms of identification, one of which must be a photo ID. Under no circumstances will you be allowed to sit for the exam without these items in your possession.
CPA EXAM PREP AND STUDY STRATEGIES
Seasoned CPAs are known to remind their younger peers that passing the CPA exam is a marathon, not a sprint. In even the best scenario it can take months to make your way through the process, and the majority of CPAs devote a year or more toward earning this credential. Factoring in the time to prepare, study for, register and pass four separate exams, it’s easy to see why the NTS shelf life is 18 months.
Whether you plan to attempt all four exam sections at once or not, careful planning is key. To succeed on this exam, you need to dedicate your time and money; therefore, creating a thoughtful timeline can help you minimize the hit to your social life and wallet.
While choosing a test date may be the first physical step you take, working backwards from that date allows for more effective planning. Before you choose a test date, determine how much time you’ll need for every step in the process. Remember, you must work within Prometric’s somewhat limited timeframes in your scheduling. Many people account for study time, but neglect to consider the administrative steps in the process.
- Research jurisdictions and carefully check the Candidate Bulletin for specifics.
- Verify that you meet all eligibility requirements.
- Order your school transcripts.
- If your jurisdiction offers a pre-test evaluation service, submit your transcripts for review; otherwise prepare them for submission when you apply. Check with your individual jurisdiction board of accountancy for specifics.
- Complete your application and pay fees
- Receive your NTS
- Select the section on which you’ll test and reserve a seat in an upcoming test window
- Under the Americans with Disabilities Act (ADA), special accommodations must be provided to CPA candidates with disabilities or health-related needs. You must request these accommodations at the time of registration. Complete the ADA Modification Form provided by NASBA and submit it to your individual boards of accountancy when you register.
It’s impossible to predict the exact amount of time aspiring CPAs need to adequately prepare for the exam. Every candidate’s preparation requirements will differ, depending on individual comfort levels with each section’s content. The AICPA does, however, make a blanket recommendation of 8 to 12 weeks of study for each test. More specifically, it suggests the following time allotments:
- Auditing and Attestation (AUD) – 100 hours
- Business Environment & Concepts (BEC) – 80 hours
- Financial Accounting & Reporting (FAR) – 160 hours
- Regulation (REG) – 110 hours
Because each test section requires different levels of preparation, you’ll need to customize your timeline for each exam. As you project your timeline, don’t forget to include vacations, work obligations or anticipated personal events that will take you away from your studies.
Sample Preparation Timeline
Using the BEC section as an example and following AICPA’s conservative estimates, we estimate a start-to-finish timeline similar to the one shown below. Please note that, of the four sections, the BEC requires the least amount of preparation time; a similar timeline for other sections should allow longer time periods dedicated to study.
The CPA exam evaluates an accountant’s understanding of the complex issues their clients face. A CPA must have a grasp of not only the issues at hand, but potential solutions and the right problem-solving tools. Success on the exam is not about memorization, but about deploying an applicable skill set for the situation; this is what demonstrates your ability to protect the public interest in your work. Therefore, your preparation should focus on ideas and appropriate skills, not simple regurgitation of facts.
Review materials can come in the form of traditional classes, online courses, reading, podcasts, audio books, DVDs or interactive experiences online. Candidates may elect self-paced study, attend traditional classroom lectures in a face-to-face environment or combine methods to fit their lifestyles. Many successful CPAs recommend studying in small impromptu chunks, such as during commutes or solo lunch hours; the more portable study solutions lend themselves well to this kind of preparation.
There is no shortage of CPA study material providers. The AICPA and NASBA both offer free resources, as do a wealth of online providers. Academic institutions that offer accounting degree programs commonly offer CPA review prep courses. There are also a number of commercial entities that specialize in test preparation, some of which target multiple industries and some that are devoted solely to accounting. Fortunately for future CPAs, there are as many study methods as there are learning styles.
How Do I Choose the Best Study Materials for Me?
Because the selection may be overwhelming, it may help to consider how you learn most effectively and then seek out the tools that are most likely to work.
- Visual learners may find that plentiful reading material is useful, as is the ability to highlight important text. Flashcards containing mnemonics or formulas could be especially helpful, as could interactive experiences or chalkboard demonstrations.
- Auditory learners might find that listening to podcasts or audiobooks that explain complex ideas is most helpful in retention. Viewing taped lectures may also be useful for auditory learners, especially if it’s possible to rewind and replay when necessary.
- Hands-on learners benefit most by performing activities that illustrate concepts, and might prefer traditional prep classes that include demonstrations.
TIPS AND TRICKS
There are as many tips for the CPA exam as there are types of study materials. Each exam participant learns differently, processes information differently and manages the testing environment differently. Keep your individual circumstances in mind as you review our general study tips below:
- Use the 18-month NTS expiration period as a guideline. While it’s not mandatory that any accountant completes the exam within 18 months, most do so successfully. Factoring in administrative steps and study time, develop a 12-month plan to completion and use the extra six months as a buffer for unexpected interruptions.
- While it should go without saying, we’ll say it anyway: you cannot successfully cram for the CPA. The complexity of the issues at stake require a deep understanding of multiple variables, and problem-solving skills are not something one can memorize. Neurologically, repeated exposure to this material over time embeds information far better than panicked last-minute cramming.
- Consider breaking up study materials into weekly chunks; tackle one chapter and one set of review questions per week, for example. Repeat the review questions until they are 100% correct.
- Complete all test review work one week prior to test day; schedule only practice tests in that last week leading up to the exam.
- Choose the section you believe will benefit you the most to take first. Theories abound on how to choose, but most CPAs either take the sections they’ll find easiest or hardest first. A section that is anticipated to be easy can provide familiarity with the test environment and establish confidence going forward. Alternatively, taking the most difficult test first removes the most intimidating section from the equation.
- If distractions in your life are proving too difficult to ignore, don’t be afraid to take drastic steps. It’s not unheard of for aspiring CPAs to cancel their cable subscriptions or take a pass on softball season.
- Schedule breaks. Consider taking one day off per week or limiting long study sessions to three hours. Besides avoiding burnout, your brain actually retains information better when it’s given time to rebound.
- Explore the free preview tests, tutorials and literature available online, and take advantage of these resources even if you’ve purchased other sources of information.
- Consider visiting the Prometric test site ahead of time if it will reduce anxiety.
If the test day is rapidly approaching and you don’t feel ready, reschedule. A potential fee will be less painful than flunking a section and having to schedule a retake. Refer to our list below if you are considering rescheduling your test.
- 30 days prior to test day: Reschedule without penalty
- Up to 5 days prior to test day: $35 fee to reschedule
- Between 5 days and 24 hours before test day: $60-$80 fee to reschedule
- Within 24 hours of test day: Cannot reschedule, cannot receive refund
AFTER THE TEST
Your scores will be sent to you after the test by either NASBA or your state board of accountancy, depending on the jurisdiction where you tested. Scores are always released in the same testing window in which they were generated, usually during the last two weeks. Depending on your test date, you will receive your score within a maximum of eight weeks.
When you receive your scores for each section test, you’ll also receive a Candidate Performance Report. In it, your performance is measured against other candidates’ who scored between 75 and 80; in other words, you’ll be able to see how you performed compared to candidates who just squeaked by. This is useful because it can help you identify your strengths and weaknesses. This information is sent only to you, and can serve as a useful tool as you prepare for your next round of testing.
In the event that you did not accomplish a passing score on a section, you must take it again. Before you decide that accounting might not be for you after all, keep in mind that CPA passing rates generally hover around the 50% mark ― this examination is not meant to be easy. Entire websites are dedicated to helping candidates redirect their studies so that they pass on the next go-around (or the one after that). Unfortunately, there is no way to avoid having to re-register and acquire a new NTS. If you failed by a narrow margin, it may be wisest to reschedule in the next testing window while the information is still relatively fresh. If you really bombed the exam, it may be better to re-establish your study timeline and select a test date further out in the year.
THE LAST E: ETHICS
After you have successfully passed all four sections of the Uniform CPA Exam, perhaps hold off on the celebratory champagne; you aren’t quite finished yet. You must meet the AICPA’s ethics requirement in order to apply for state licensure. This element of the Four E’s requires that you demonstrate your grasp of ethical behavior in the service of the public trust. Not only is ethical accounting practice considered the right thing to do from a moral standpoint; it is also legally regulated by numerous U.S. governing bodies and is absolutely mandatory in this profession.
In many jurisdictions, this requirement can be met by completing the AICPA’s professional ethics online course. You can take this course at any point as you complete the CPA section exams, but it is recommended you take it afterward. This course also serves to meet continuing education requirements for licensed CPAs; please note that you must score a 90% or above on this exam when using it to meet licensure requirements.
Some jurisdictions manage their own ethics courses and examinations; check with your jurisdiction’s board of accountancy for specific rules.