CPA Requirements

What You Need to Know About Becoming A CPA

In the world of accounting, CPAs are the elite of the elite.

Kind of like the Spartans of finance.

They enjoy better job stability, more career opportunities, and as a result, they make more money than your average accountant ($40,000 more per year, to be exact).

And for good reason. Although rewarding, the process of becoming a CPA is tough. In fact, the average passing rate for the CPA exam is notoriously low, hovering at around 50%. On top of that, CPAs also have to follow strict policies regarding their workplace experience and education requirements.

This is because CPAs are charged with maintaining higher standards than other finance professionals. In the accounting world, they are the most trusted professionals by far.

In other words, they’re a pretty big deal and get a lot of bonuses and perks as a result.

But, what is a CPA exactly?

CPAs, otherwise known as Certified Public Accountants, are financial advisors who have passed the CPA exam and satisfied the workplace requirements necessary to qualify. Rather than being a job title, the CPA is a classification of accounting professionals that gives them more flexibility in their career path.

As a result, they’re qualified for a wide range of work including:

• Tax consultants
• Auditors
• Business advisors

As well as other high-level financial roles that aren’t available to your run of the mill accountant.

Think you have what it takes to become one of the CPA elite? Let’s take a look at what you need to know about CPA license requirements.

In this article, we’ll discuss:

CPA Education Requirements 

CPA requirements can be divided into 3 categories:

1. Education requirements: The amount and kind of formal education needed to become a CPA.
2. Exam requirements: The educational and workplace requirements needed to sit for the exam.
3. License requirements: The different kinds of certifications and work experience you need to qualify for your license.

The first thing you need to worry about when getting your CPA is the education requirements. While the education requirements will vary depending on what state you’re taking your exam in, there’s a rule that stays virtually the same regardless of what state you test in.

Known in the CPA community as the “150-hour rule”, this rule states that the minimum requirement to take the CPA exam is a bachelor’s degree with at least 150 hours  of coursework from an accredited institution. 

This is usually done by doing one of the following:

• Taking a 4-year bachelor’s degree as well as one year towards a master’s
• Taking a 4-year accelerated program towards a bachelor’s degree that gives you the required 150 hours
• Taking a 4-year bachelor’s degree as well as 30 hours of non-degree courses

From here, the exact education requirements will vary depending on state. Most states require a degree in accounting which will satisfy those education requirements, but some states allow you to become a CPA as long as you have a bachelor’s degree of any kind. 

However, this usually comes with the stipulation that you take a certain amount of accounting classes at different levels, as well as experience in the field, to make up for the lack of education. 

For example, you may end up having to take an addition 24 semester hours of specific accounting courses or providing proof of extensive work experience under a licensed CPA.

CPA Exam Requirements

Another part of the reason that the CPA process is so tough is because there are no standard set of CPA requirements to sit for the exam. Instead, like the education requirements, they vary by state.

This means that while you might qualify for the CPA exam in one state, you might not qualify for the exam in another. So, it’s important to know which state you plan on taking the exam in and preparing accordingly.

Luckily many states have overlapping requirements, the most common including:

• Being at least 18 years of age
• Having 150 semester hours of credit in Accounting or a related field such as business or finance
• Possessing a Social Security Number

However, after that there are several other variables to consider, such as how many hours exactly are needed in what courses, whether you have residency in that state, and whether or not you’re a U.S. citizen.

To make things easier for you, we put together a quick and easy breakdown of each state’s requirements to sit for the exam that you can find here.

It’s also important to keep in mind that while all states require at least 150 hours of coursework to become a licensed CPA, some let you take the exam on the condition that you have at least 120 hours of coursework. 

This doesn’t mean that you don’t need to meet the 150 hour requirement, however. It just means that you have to complete it at a later date before earning your CPA.

It’s still usually a good idea to check out each state’s website for their CPA exam requirements before applying for the exam though, since they change from time to time.

CPA License Requirements

The requirements to get your CPA license are going to depend on what state you apply to get your license in (are you seeing a pattern here?). 

BUT, there is one requirement that is the same in all states and that is the scores you need to get your license.

Passing the CPA exam

Now, the CPA exam is made up of four parts: 

• Auditing and Attestation (AUD)
• Business Environment and Concepts (BEC)
• Financial Accounting and Reporting (FAR)
• Regulation (REG)

And it’s notorious for how difficult it is. So passing it will be a large part of your process towards becoming a CPA.

Each part of the exam is about four hours long and made up of different types of questions, such as multiple choice questions, simulation, and written communication. You must pass all 4 parts within 18 months of each other or you’ll have to start over again entirely. 

It’s important to keep in mind that the exam is so difficult that the American Institute of Certified Public Accountants (AICPA) recommends that CPA hopefuls study between 300-400 hours for it. So, account for the time and effort that will need to be spent.

And in order to pass, you’ll need to score at least a grade of 75 on a scale between 0-99. Unlike the tests you may be used to in school, however, this grade doesn’t represent a percentage. Instead, it’s a weighted combination of scaled scores from each type of question in each part of the exam.

Then, the ethics exam

After passing the CPA exam, in most states, you’ll then have to take the American Institute of CPAs (AICPA) ethics exam. It consists of 40 multiple choice questions that are designed to prepare you for the real world ethical dilemmas you might encounter in your accounting career.

Luckily, this exam is pretty easy. It’s a take home test that comes with a text book and you can take it online or on paper and mail it in. Another nice bonus is it can be taken as many times as needed until you pass.

Now, your workplace experience

All states maintain that to get your CPA license, you must have relevant workplace experience. But just what does that mean?

Well, as with everything else regarding becoming a CPA, the exact requirements will depend on your state. In some states, your work experience requirement might be as low as only one year. In others, it may be as high as 3-5. However, the average requirement is two years. 

Usually, just working in an entry-level accounting position, such as bookkeeping, is enough to satisfy this requirement. However, some states may require you to work directly under a CPA for a minimum of one year. Other states will allow you to slide by even if you only have volunteer experience in accounting.

The important thing to remember is that the amount of time spent working and the field of work will change from state to state. To avoid any unwelcome surprises, stay on top of your state’s requirements.

Lastly, maintaining your license

Congratulations, you’ve finally received your license! But that doesn’t mean the process is over. Once you’ve become a CPA, you still need to maintain it.

Continuing Professional Education (CPE) is the act of continuing to participate in courses that satisfy your state’s State Board of Accountancy requirements. Each state has different requirements regarding the following specifics:

• Annual renewal date: The date by which you must apply to renew your license.
• CPE reporting period: The period of time in which you must complete your CPE requirements.
• The general number of hours required: Each state has their own number of CPE required.
• The specific courses required: Each state has their own specific requirements for courses that satisfy their CPE.
• The number of hours required for specific courses: Each state has their own specific requirements for the number of hours required for each course.
• The type of course required: Each state has different requirements for the type of CPE courses required.
• Your area of employment: Different areas of employment will have different course requirements and number of hours.

It’s important to stay on top of your state’s board requirements since they can vary wildly. While most states require 40 hours per year, some have different requirements. One state may require only 20 hours of CPE, with 8 of those hours being in Regulation, while another might demand 80 hours of CPE, with only 15% of it being published material.

In Conclusion… Key Notes

Not only is the process of becoming a CPA a hard one, it’s also an ongoing one. Getting your CPA qualifications might seem overwhelming, but the rewards are life-changing. Just remember to keep in mind:

• CPA requirements can be divided into three categories: education requirements, requirements to sit on the exam, and requirements to get your actual license.
• Every single aspect of becoming a CPA is contingent on the state you practice in, so make sure to stay on top of your state’s State Board of Accountancy requirements.
• Passing the CPA exam will be the hardest part of getting your CPA, hands down. Be prepared.
• Make sure you’re working on getting your workplace experience while you work on other parts of the CPA process. Otherwise, you’ll find yourself waiting a year or longer to qualify for your license.
• Once you get your license, the fun doesn’t stop there. Stay on top of your state’s CPE requirements or you could risk losing your license.

Now that you have everything you need to know about becoming a CPA… good luck!