Certified Public Accountant (CPA) - Explained
What is a Certified Public Accountant?
Written by J. Mance Gordon
Updated at April 18th, 2024
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What is a Certified Public Accountant (CPA)?
A Certified Public Accountant (CPA) is a professional designation given by the American Institute of Certified Public Accountants referring. It is given to accountants who pass certifying exams and meet the applicable state requirements to become a licensed.
What is Required to be a Certified Public Accountant CPA?
State Boards of Accountancy determine the laws and rules for each state/jurisdiction. In each jurisdiction, 3 Es are needed for licensure:
- Education
- Exam or Uniform CPA Examination
- Experience
Requirements differ with the state, but generally:
- 150 semester hours of Academic Credit
- Number of accounting hours depends on state requirements (mostly 30 or more)
- Pass all parts of the CPA Exam
CPA Exam
- Computer-based format
- Consists of 4 sections
- Auditing and Attestation (AUD)
- Business Environment and Concepts (BEC)
- Financial Accounting and Reporting (FAR)
- Regulation (REG)
- Same test no matter where it is taken
- Passing score is 75 on a 0-99 scale
- Question types include multiple choice, simulation, and written communication
- Eligibility to sit for exam depends on state requirements
Accounting Experience
- A candidate is an applicant for a CPA license
- Many states require the candidate to have 1 2 years experience under a CPA
- Additional requirements vary by the candidates needs.
- Education e.g., Graduate degree vs. 150 hours of undergraduate Employer(s)
- Type of work e.g., Tax professional vs. Auditor
Licensure
- Licenses give the right to practice public accounting
- Some state requires an ethics exam
- Must comply with rules of professional conduct
- CPA Exam & Licensure Center
Continued Education
- Continuing Professional Education (CPE)
- 40 hours per year Types (e.g., computer-based vs. group learning) of CPE vary by area requiring an application of Ethics and compliance Subjects differ relying on the type of license and area of work
- Renewal of license every 1, 2 or 3 years
Certified Public Accountants mostly prepare income tax or auditing but can also practice forensic accounting, management accounting, and information technology. Auditors are required to follow a code of ethics. According to federal and state laws, accountants and auditors should be independent when performing their duties