If you want to become a certified public accountant, you have to pass a number of requirements. But the CPA exam is probably the most challenging and intimidating of all. Do you know what you’re getting into?
1. Who is Eligible?
In order to sit for the CPA exam, you must first pass a couple of basic eligibility requirements as they pertain to education and experience.
In the past, a four-year college degree was enough to qualify you to sit for the exam. But with advances in new regulations, compliance laws, and technology, the AICPA has adjusted its standards. In addition to getting the 120 semester hours included in a basic undergraduate program, you’ll also need 30 hours of a graduate-level program. Most CPA candidates meet these requirements in one of four ways:
• Bachelor’s degree in accounting + master’s degree in accounting
• Bachelor’s degree in another expertise + master’s degree in accounting or taxation
• Dual program that includes both a bachelor’s and master’s in accounting (five years)
• A bachelor’s degree in accounting + 30 semester hours of graduate-level instruction in accounting and taxation.
2. The CPA Exam is Hard
The CPA exam isn’t easy. The pass rate for the entire exam hovers around 50 percent – meaning roughly half of all candidates see their dream halted. This shouldn’t scare you – but it should wake you up to the fact that you need to take it seriously.
3. It’s Split Into Four Sections
The CPA exam is split up into four different parts. While some of the concepts build on one another, they each stand alone. The four sections are as follows:
• Financial Auditing and Reporting (FAR): Topics include Conceptual Framework, Standard-Setting & Financial Reporting, Select Financial Statement Accounts, Select Transactions, and State & Local Governments.
• Auditing and Attestation (AUD): Topics include Ethics, Professional Responsibilities & General Principles, Assessing Risk and Developing a Planned Response, Performing Further Procedures & Obtaining Evidence, Forming Conclusions & Reporting.
• Regulation (REG): Ethics, Professional Responsibilities & Federal Tax Procedures, Business Law, Federal Taxation of Property Transactions, Federal Taxation of Individuals, and Federal Taxation of Entities.
• Business Environment and Concepts (BEC): Corporate Governance, Economic Concepts & Analysis, Financial Management, Information Technology, and Operations Management.
Each of the four sections includes a variety of question formats – including multiple choice – and has a time limit of four hours.
4. This Section is the Hardest (By FAR)
While the entire exam is challenging, not all sections are considered equal (in terms of difficulty level). The BEC and REG sections both enjoy pass rates above 50 percent. And while the AUD test has become more difficult over the years, it tends to hover around the 50 percent mark. It’s the FAR exam that gets most people.
The FAR exam, which goes in depth on auditing and reporting, often has an average pass rate that’s below 50 percent. (In one recent year, the pass rate was barely above 40 percent.) We don’t say this to scare you, but rather to encourage you to be intentional with your planning and studying.
5. The Clock is Ticking
You have 18 months to complete the CPA exam (once you pass the first section). This might sound like a ton of time, but it goes much faster than you think. Evenly split, this gives you six months to prepare for and pass each section. (However, you theoretically have as long as you need to pass the first exam, since the clock doesn’t start until you complete it.)
6. Never Do This With an Answer
When taking the CPA exam, you should never leave a multiple choice answer blank. Wrong answers are never counted against you, which means you can’t hurt yourself by making an incorrect selection. When in doubt, try to eliminate one or two of the possible answers. If you can narrow your choices down to two possible selections, you’ve given yourself a 50 percent chance of answering the question correctly.
7. It’s All About Discipline
You could argue that the CPA exam is not a test of intelligence, but rather a gauge of discipline. There is plenty of information out there to help you pass the exam. It’s all about developing a schedule, committing to the process, and being willing to sacrifice in other areas of your life. If you do each of these things, you’ll find success.
Pass the Exam, Propel Your Career
Passing the CPA exam isn’t the be-all and end-all of your career. It is, however, a powerful launching point that has the potential to propel your career and take you to new heights. If you have aspirations of becoming a CPA in the near future, it all starts here. Getting past the exam is the first step. Armed with this knowledge and confidence, you can set your brand new career into motion. It won’t be easy, but it will be rewarding.