Professional Accounting 101: How to Become a Certified Public Accountant (CPA)?
A certified public accountant (CPA) is a professional accountant that offers accounting and financial services for a fee. The primary duties of an accountant include preparing tax returns and financial statements. The accountant also performs audits and advises clients that include company executives and business owners on effective financial decisions.
Want to know how to become a professional CPA? Here you will learn about the degrees and experience required to meet the requirements of becoming a qualified accountant in the US.
Certified Public Accountant (CPA): An Overview
A CPA has a diverse role and duties relating to financial and accounting management. The main duties of the accounting professional include the following:
- Bookkeeping
- Financial reporting – Profit and loss statement, Cash flow statement, Balance sheet statement
- Tax returns
- Audits
- Financial consultancy
CPAs generally work full time and earn salaries that depend on their experience, education, and geographic location. Overtime and bonus also affect the average salary. According to Payscale, the average salary for CPAs is $70,896 in the US. Individuals with over two decades of accounting experience command a salary as high as $119,000 per year.
Steps to Become a CPA
You need to meet certain requirements to become a CPA.
Bachelor’s Degree
A CPA requires a minimum of a four-year bachelor’s degree. You need to complete at least 150 credit hours. It is not required that the professional majors in accounting and finance, though it will help in passing the CPA exam.
Individuals with a degree other than accounting must complete additional accounting related credits. The exact number of credits is determined by the accountancy body in the state.
A master’s degree in accounting and financial management will greatly improve the chances of passing the CPA certificate. Individuals with a master’s degree have a higher rate of passing in the first try, according to an article in CPA Journal. The first time exam seekers with a masters degree have a passing rate of 58.3 percent while individuals with a bachelor’s degree have a passing rate of 48.8 percent.
Apply with the State Accountancy Board
Individuals who want to take the CPA exam must apply with the accountancy board in the state. The fees for submitting an application ranges between $50 and $200. You should note that the application fee is non-refundable. So, you must make sure that you meet the CPA requirements before submitting an application.
Pass the CPA Exam
If your application is approved by the State Accountancy Board, you should submit the Notice of Schedule (NTS) for taking the four sections of the CPA exam. You are allowed 18 months from giving the test for the first section to complete the remaining sections.
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The four sections of the Uniform CPA exam consist of the following
- Auditing and attestation
- Financial accounting and reporting
- Regulation
- Business environment and concepts
The CPA exam is not easy; each section contains complex scenario-based questions. You must complete the test in four hours. It is important to study hard to pass the certification exam. You should only tackle the exam once you feel you are fully prepared. Each section of the CPA exam requires rigorous study. Candidates are recommended to study for just one section at a time.
A CPA exam consists of questions that are categorized into question blocks titled testlets. The question blocks consist of different types of questions including multiple choice questions (MCQs) and task-based simulations.
A weighted scoring system is used to mark the questions. This means that marks for the difficult sections are more. The questions will not only test your accountancy knowledge and skills but also communication skills as you have to write a letter to the client on a computer.
Get the Accountancy License
Candidates passing the CPA exam need to meet additional requirements to get the accountancy license. The process of getting the license is different in states. Most state accountancy bodies allow accountants to get the license after getting one to two years of experience. Some states also have specific requirements such as experience in auditing and financial reporting.
State accountancy bodies have also set an age limit for obtaining the license. Most require individuals to be at least 21 years of age to obtain the CPA license.
Renewal and Maintenance of License
A CPA license needs to be renewed after every one to two years. Accountants need to meet continuing education requirements to renew their license. Continuing education generally includes specific professional accounting and ethics topics.
Renewal of the CPA license is important to ensure that you are able to maintain your professional accountancy certification. You will lose your license as a professional CPA if you don’t renew the certification.
The requirement of continuing education ensures that you keep yourself updated with the changes in accounting rules and regulations. This will help you to better serve your clients by providing professional accounting services.
Conclusion
Businesses require specialized services of CPAs for accounting and financial consultancy. The demand of CPA professionals is rising with the increased need of financial accountability. Getting a professional accountancy license is important to succeed in the field.
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