CPA Certification Requirements and Why it’s Important
Why would you spend time and money to earn a CPA (Certified Public Accountant) license? After all, you can work as an accountant without needing to be a CPA.
Qualified CPAs have more expertise, experience, responsibility, earning potential and career advancement possibilities than non-CPA accountants. CPAs are trusted, strategic financial advisors who influence important fiscal decisions, made by their employers, through analyzing, interpreting and reporting financial data. Employers also perceive CPAs as having higher ethical standards than non-CPA accountants.
CPAs usually follow career tracks in public accounting (i.e., an accounting firm), non-profit, education, corporate or government accounting, and earn about 33% more than non-CPA accountants. Many can be working in senior roles within five years of receiving their license. The US Bureau of Labor predicts 135,000 new job openings annually for accountants and auditors over the next decade.
CPA accreditation is issued by a state’s Board of Accountancy to qualified individuals who have met the licensing requirements. Licensing and exam requirements vary by state. To start the process of becoming a CPA, you must hold a Bachelor’s degree in accounting or business administration with an accounting focus. Next, you need 120-150 approved credit hours of accounting continuing education coursework¬. Then, you have to pass a rigorous16-hour CPA Exam. The combined cost of the coursework, exam study review courses and the exam itself ranges from $3000 to $5000.
Once you pass the exam, you’re issued a CPA certificate. To gain a full CPA license, you’re required to complete 40 additional hours of continuing education annually and one to two years of related work experience. You must finish all requirements and apply for the CPA license within two to three years of taking the exam. Some states also require that you take an ethics exam.
If you receive a CPA certificate, but not the full license, you can still work as an accountant but have limited responsibilities, i.e., you can’t sign audit reports, use the term CPA on reports or hold senior roles. Licensed CPAs conduct and sign audit reports, prepare audited financial statements and hold executive positions, such as Chief Financial Officer (CFO) or controller. Some companies, such as a public accounting firm, will only hire CPA-qualified accountants.