So you passed all four parts of the CPA exam. Congratulations! But now I have an important question, “When’s the party?” You deserve one. It’s one of the most difficult professional exams in the world and you should be very, very proud.
After you’re done celebrating, it’s time to think about becoming a licensed CPA. So when you would usually be studying, or find yourself daydreaming about what Becker instructor Peter Olinto is up to, it might be a good time to understand what you need to do complete the licensure requirements.
Most States Have Experience Requirements
One of the first things you will want to do is find your State’s Board of Accountancy website and thoroughly understand the type and amount of experience required for licensure.
Most states require a CPA to work for one year under the direct supervision of a licensed CPA. This experience allows you to demonstrate your ability to use accounting data to serve the public competently. For example, CPA’s providing attest services would be expected to work on assignments providing attest services leading to attestation of clients’ financial reports. Such experience would typically lead to a form of CPA licensure that would allow you to sign attest reports for clients. Obtaining an attest license does not always require that a candidate work the entire year on attest engagements.
For example, the State of California expects candidates to spend no less than 500 hours—or about a quarter of the year—on attest engagements to obtain an attest license. At one time when states only issued one type of CPA, candidates focusing on providing tax services would work the majority of the year providing tax services, but then also needed to spend part of the year working on attest engagements in order to obtain CPA licensure.
Over the last few years, most states have evolved to also offer the opportunity for CPA candidates to obtain a non-attest license. Under these circumstances, candidates work using accounting data to, say, prepare a tax return or conduct financial analysis, but are not required to provide attest services to obtain their CPA.
The non-attest CPA can perform a wide range of accounting services, including participating in attest engagements; however, the CPA may not sign reports on attest engagements. Most states will accept experience gained through employment in public accounting, private industry, or government.
I gained my experience for an attest license in California working for the United States Government Accountability Office. It is important to understand what your employer’s (or potential employers) process is for providing and signing-off on your experience.
Additional College Education May Be Required
All states, obviously, require that candidates obtain minimum education prior to sitting for the exam. This typically involves obtaining a bachelor's degree carrying 120 semester units of education that contain no less than 24 semester units of accounting and 24 semester units in business subjects.
Some states require that a candidate complete an additional 30 semester units of education, for a total of 150 (the so-called 150-hour requirement) prior to sitting for the exam.
And while almost all the states require 150 units of education in order to obtain your license, there is a fair amount of variability amongst them as to the timing and type of education study. This is an area where I strongly suggest you reach out to a well-informed advisor to make sure you understand what your state requires.
All Roads Lead to Ethics
I once read a fortune that declared, “It is important to know there is a path at the end of the road.” I thought, oh are they talking about the CPA ethics exam?
In addition to your four CPA exam sections, most states will require you to take an ethics exam to obtain your license. Such exams typically touch on both the AICPA’s Code of Professional Conduct requirements as well as state-specific regulations.
The State of California, for example, requires candidates to complete an open book/self-administered exam containing 50 multiple-choice questions. Candidates must obtain 90 percent on this exam.
CPA licensure candidates from most states purchase a self-study book or online format from their respective State CPA Society. These self-study programs typically are broken into chapters or study modules that contain practice questions at the end of each chapter module.
The final exam is then submitted by the candidate to the State Society where it is graded. In California, ethics exam results are valid for no more than two years and candidates can take the exam before or after passing the CPA exam.
Most candidates take the ethics exam at the end of the process, but if you plan to take it before completing the CPA exam, and/or experience requirements, make sure you know how long the ethics exam results are valid and that you can complete the other requirements with in the period that your results are valid.
Forever 80
I am sometimes amazed when I hear stories of CPAs that went through the process outlined above, and then let their license be suspended because they do not keep up a continuing professional education (CPE) regiment.
Most states require a candidate to obtain no less than 80 hours of CPE over a rolling two-year period, beginning from the date that their license is issued. Most employers offer their employees either in-house or external CPE help. Becker Professional Education can help you maintain your license through our offering of online and live on-site offering of classes.
The Future
One time I had a young man entering college ask me what I thought the odds were that he would be able to become a CPA. I told him that I didn’t want to talk about odds but instead described the process so that he could decide if it was something he wanted to do.
After I went through the four E’s with him—Education, Exam, Experience, Ethics, and then more Education, he looked at me and said,” I don’t want to do that.”
I thought to myself: “Wow, I just created the next Justin Bieber; and, I need to work on my motivational speaking skills.” At the same time, I realized how hard CPAs work to obtain and keep the privilege to earn their living serving the public and providing their clients with vital and valuable services. I believe the investment is well worth it!
