When you ask recent college graduates where they plan to spend their summer, answers typically range from Disneyland to backpacking in Europe to a visit to the beach (or the shore, depending on where you call home). They tend to be places which generate maximum enjoyment with minimum thinking required. Why, then, do accounting graduates often buck the trend and commit to intensive studying rather than warm sunshine? Why do they surrender the last summer they may have off before retirement in order to prepare for the CPA Exam? Odds are, they figured out that sitting directly after graduation gives them a better chance for success on the test. Reasons include:
- Academic Conditioning
- Time to Focus
- Knowledge Freshness
- Immediate Career Boost
- Long-term Investment
Let’s take a more detailed look at each of these in greater detail.
Academic Conditioning
The CPA Exam requires a significant commitment to achieve a successful outcome. You have to commit extended periods to studying in order to capture the full breadth and depth of the exam’s content. You have to work a variety of exercises and problems to be ready for the types of questions you will face. You have to prepare yourself for the experience of sitting for three or four hours on exam day. And, yes, you have to know when to put the books away and give your mind a break. Sound familiar? It’s a pretty apt description for your college career – extended studying, working a variety of problems, and preparing for lengthy exams, while taking opportunities to relax when your brain needs it! This is what we call academic conditioning.
When you graduate, you are still used to the rigors required by college, so transitioning directly into preparation for the CPA Exam isn’t that jarring. On the other hand, consider a runner who goes out to run a mile every day for four years. After that, the runner decides to take a break and doesn’t run again for a few months. When he/she tries to go back out and run that mile, can they? Probably, but it’s much more difficult than when he/she were running regularly and it will take time to get back to that same level of conditioning. You’ll find the same thing if you step away from the intense studying you are conditioned for at graduation and then attempt to return to that same level of rigorous review a few months later.
Time to Focus
Successful preparation for the CPA Exam hinges upon investing enough time to effectively review the content and practice the skills necessary to achieve a 75. You cannot cram the amount of material tested on each part of the exam. Let’s say you had to drive from New York, New York to Los Angeles, California. You’d have innumerable options as to the route you choose and you may drive a little faster or a little slower than your neighbor. Although those will impact how long the trip takes, you are still going to spend an awfully long time in the car if you want to get there. The CPA Exam is no different. If you want to reach your desired destination, you’re going to have to invest the time.
So, it comes down to how many hours you can realistically expect to spend in the car each day! For many, the summer between graduation means having few or no commitments, which would allow you to spend all day in the car. Once you start working full-time, you’ll be able to spend far less time driving, so it will take longer to get there. Add in commitments in your personal life, longer still. peaking from experience, once you have kids you’ll find the battery in your car simply stops working for months at a time. So, if you would like to minimize how many days you’ll be spending in your car to arrive at your destination of passing the exam, take advantage of the time you’ll have to focus on preparation directly after graduation.
Knowledge Freshness
Most of the knowledge you need to succeed on the CPA Exam is covered in college, but that doesn’t mean that’s it all equally fresh in your mind. Assuming you are completing a five-year program, much of that content will be may be a year or two old, and in some cases three or four years have passed since you took the course corresponding to a particular section of the exam. If you delay in sitting for the exam, that knowledge will only become more dated. This problem can be even more pronounced on exam areas with evolving content. With a regular diet of new releases impacting the Accounting Standards Codification, Internal Revenue Code, and generally accepted auditing standards, the longer you wait to take your exam, the more likely it becomes that even relatively fresh knowledge may become stale.
Some students have noted that even as you leave your time in college behind, you will gain the experience of learning at your new job. Life-long learning is absolutely critical in the accounting profession and you will have the opportunity to refresh your knowledge, in some areas. Typically, you will specialize once you enter the profession, whether that’s in a traditional service line such as audit or tax, or in a more specialized area such as forensics, mergers and acquisitions, or financial planning. As such, you will continue to hone skills and knowledge in areas most relevant to that role, but it is highly unlikely you will continue to develop all areas of knowledge required for the exam and covered in the course of your college curriculum.
Immediate Career Boost
Most jobs you seek out of college will place significant value on the completion of the CPA Exam. In many cases, they offer a financial incentive for passing the Exam. It’s worth noting that those incentives are typically reduced as time passes from your start date and may eventually expire altogether. So, postponing the exam can have an immediate impact on your pocketbook. There can be other negative effects the longer you postpone the exam on your career progression. In many firms, there are limitations to how far you can advance until you successfully pass the Exam. Many firms include completion of the Exam as a goal on your first year performance review. All of these show the benefit of earlier completion.
How nice would it be to walk in the door of your new career, immediately receive a sizable bonus for passing the exam, and start your first year having already checked off one of your performance objectives? It’s worth considering the intangible benefits as well. How will promptly passing the exam reflect on your character? Will it illustrate your aptitude for the accounting profession, perseverance in overcoming a challenge, and desire to advance in your career? Or will failing to pursue it call your skills into question, indicate unwillingness to take on challenging assignments, or a lack of career planning? Although I trust that the first list describes you, don’t let delaying the exam plant the seeds of doubt about the second list in the minds of your employers!
Long-Term Investment
Coming out of college, many students at best have a small nest egg to start their career and at worst are carrying a significant amount of student loans. The idea upon completion of four or five years of education only to spend more money, time and effort on an exam isn’t very palatable! It’s critical not to view the CPA Exam as an expense, but instead see it as an investment, and a lucrative one at that. Over the course of a career, having the CPA license behind your name is worth an additional $1 million to your career earnings.
I honestly don’t know any investments on the stock market that could guarantee that kind of return! That investment won’t just pay you back financially. You’ll find that wherever your career path may take you, your CPA will always set you apart from other applicants and will immediately establish your credibility as a candidate. This is true not just in the accounting world, but in the business world in general. The CPA will open doors that otherwise might be closed to you.
For more information on what you can earn as a CPA and the $1 million dollar advantage, check out our CPA resources.
