Accountants run the gamut from professionals who prepare basic financial forms to those who do complex business forecasting. However, across all kinds of accountants, the gold standard in the field is the CPA.
Standing for Certified Public Accountant, a CPA designation demonstrates advanced education and expertise. Employers may seek out CPAs to help guide business decisions, and they are a requirement for companies that have to file certain federal paperwork.
You don't need to become a CPA to work as an accountant, but you may want to earn the credential if you'd like to:
- Expand your work opportunities -- The Bureau of Labor Statistics notes accounting job prospects in the coming years should be best for CPAs.
- Earn more money -- The American Institute of CPAs has found CPAs earn 10-15 percent more than uncertified accountants, while other studies have suggested that percentage may be even greater.
- File SEC paperwork -- Only CPAs can sign filings submitted by publicly traded companies to the federal Securities and Exchange Commission.
Before you can become a CPA, you have to pass the Uniform CPA Examination. Fortunately, we're here to help you understand how to prepare for and take this important test.
What is the CPA Exam?
The CPA is a state-issued credential, which means the requirements to become a Certified Public Accountant can vary depending on where you live. However, all states require applicants to pass the Uniform CPA Examination. In order to sit for this exam, you'll need at least the equivalent of a bachelor's degree.
The test itself is intended to measure four sets of skills, each section covered in more detail below:
- Remembering and understanding
Those who pass the test demonstrate that not only do they possess a certain level of accounting knowledge, but they also have the ability to apply that information to the complex tasks performed by CPAs.
How to Prepare for the CPA Exam
The American Institute of CPAs estimates people spend an average of 450 hours studying for the entire Uniform CPA Examination. However, some sections may require more preparation than others. According to the institute, average study times per section breaks down as follows:
- Auditing and Attestation - 100 hours
- Business Environment and Concepts - 80 hours
- Financial Accounting and Reporting - 160 hours
- Regulation - 110 hours
Some accounting degree programs are designed specifically for those planning to become CPAs. If you've enrolled in one of these, check first with your school to see what study resources it offers.
However, even if you are enrolled in a CPA-track accounting degree, it is wise to supplement with some independent study. Many companies offer CPA preparation courses, which can run into the thousands of the dollars. But there are free resources available as well. These include the following options:
- Uniform CPA Examination Blueprints -- Published by the AICPA, this guide is nearly 100 pages of detailed information covering exactly what will be asked on each section of the CPA exam. If you don't have money for an expensive course, you can prep for the test for free by going through the long list of representative tasks listed in the Blueprints and checking off each skill as you become proficient.
- AICPA Tutorial and Sample Tests -- The AICPA also provides a tutorial and several sample tests that can be used for practice. The tutorial is a guide to the format and navigation of the test itself and doesn't cover the exam content.
- CPA Review for Free -- Although you can buy a CPA preparation course from this website, it also offers several free resources to help people study for the exam. There are free multiple choice questions, articles and a forum for people to connect with others studying to become Certified Public Accountants.
CPA Exam Tips
Everyone learns differently, but here are three CPA tips that apply to all test-takers:
- Time your tests carefully -- You only have 18 months to pass all four sections of the exam, and you should plan on 8-12 weeks of study time for each test. According to AICPA, more than half of test-takers fail in any given test, so make sure you leave plenty of time to retake sections before the 18-month window closes.
- Schedule your study time -- It's easy to think that you'll start studying tomorrow, but it's even easier to procrastinate until next week. Before you know it, it'll be exam day. Avoid this common mistake by scheduling time on your calendar every day to review CPA material.
- Study sections individually -- There is some debate over which section of the CPA exam to take first. Some argue for completing your hardest exam first, while others say taking the section you're most likely to pass can boost your confidence and motivation. Still others swear by starting with the FAR section, since it usually requires the most study time. Regardless of which section you take first, it's best to study the sections individually rather than trying to prep for multiple sections at the same time. Otherwise, you may become overwhelmed or miss key elements of the test.
What to Expect on the CPA Exam
The examination is broken down into four sections. Each section represents a four hour test, and students can complete the tests in any order. While each state has its own timelines, the National Association of State Boards of Accountancy notes most jurisdictions allow applicants up to 18 months to complete all four sections.
The sections are as follows:
Section One: Auditing and Attestation (AUD)
For this part of the test, students must demonstrate they have an understanding of both audit and non-audit engagements. They must have knowledge of ethics, documentation requirements and quality control procedures. Overall, this section of the test is concerned primarily with remembering and understanding information and the application of that knowledge.
Test questions are divided into four content areas by the following percentages:
- Ethics, Professional Responsibilities and General Principles: 15 - 25 percent
- Assessing Risk and Developing a Planned Response: 20 - 30 percent
- Performing Further Procedures and Obtaining Evidence: 30 - 40 percent
- Forming Conclusions and Reporting: 15 - 25 percent
There are 72 multiple choice questions and eight task-based simulations. The sections are weighted equally for scoring purposes.
Section Two: Business Environment and Concepts (BEC)
This section of the Uniform CPA Examination looks at how well an applicant may be able to perform auditing, financial reporting, tax preparation and other duties typical of Certified Public Accountants. The bulk of this test is interested in evaluating application skills, but analysis as well as understanding and remembering concepts is also measured.
BEC questions are broken down into five content areas that are weighted as follows:
- Corporate Governance: 17 - 27 percent
- Economic Concepts and Analysis: 17 - 27 percent
- Financial Management: 11 - 21 percent
- Information Technology: 15 - 25 percent
- Operations Management: 15 - 25 percent
Students taking this test should expect 62 multiple choice questions, four task-based simulations and three written communication problems. The multiple choice section comprises half the final score, while the task-based simulations account for 35 percent and written communication is weighted at 15 percent.
Section Three: Financial Accounting and Reporting (FAR)
As its name suggests, this test looks at a person's ability to complete financial reporting for business, nonprofit and government entities. As part of the evaluation, applicants need to understand the standards and regulations of groups such as the U.S. Securities and Exchange Commission, Financial Accounting Standards Board and others. At least half the FAR test evaluates application skills. Another quarter of the questions pertain to analysis while the remainder test how well a person understands and remembers concepts.
The test questions are broken down into the following content areas and percentages:
- Standard-Setting and Financial Reporting: 25 - 35 percent
- Select Financial Statement Accounts: 30 - 40 percent
- Select Transactions: 20 - 30 percent
- State and Local Governments: 5 - 15 percent
The Financial Accounting and Reporting section includes 66 multiple choice questions and eight task-based simulations. Each segment of the test accounts for 50 percent of the final grade.
Section Four: Regulation (REG)
The final section of the exam covers regulations. Test-takers are asked to demonstrate knowledge of federal taxation, business law and the professional ethics required of those working in an accounting career. The test questions are split between understanding and remembering, application and analysis skills.
Within the Regulation section, five content areas are covered:
- Ethics, Professional Responsibilities and Federal Tax Procedures: 10 - 20 percent
- Business Law: 10 - 20 percent
- Federal Taxation of Property Transactions: 12 - 22 percent
- Federal Taxation of Individuals: 15 - 25 percent
- Federal Taxation of Entities: 28 - 38 percent
The exam contains 76 multiple choice questions and eight task-based simulations, with each section being weighted evenly for scoring.
Where and When to Take the CPA Exam
Before you can even take the Uniform CPA Examination, you need to receive a Notice to Schedule, also known as a NTS. Depending on your state, you get this either through the National Association of State Boards of Accountancy or directly from your jurisdiction's board. The NASBA notes it can take up to six weeks for applications for a NTS to be processed.
Once you have your NTS, you can schedule an appointment through Prometric, which administers the test. Testing is available during the first two months of each calendar quarter and closed during March, June, September and December.
You can test for as many sections as you'd like during each quarter's two-month testing window. However, if you fail a section test, you'll have to wait until the next quarter to retake it. Applicants can take tests in any order they'd like and don't have to pass one section before moving onto another.
Testing locations are available in major metro areas across 55 jurisdictions - including all 50 states, the District of Columbia, Guam, Puerto Rico, U.S. Virgin Islands and Northern Mariana Islands.
CPA exam fees are set by each jurisdiction and so vary by location. However, Gleim Exam Prep reports the following fees are typical:
- $150 application fee
- $193.45 exam fee (per section)
- $75 registration fee
Each testing appointment is 4.5 hours. That includes four hours for the test and 30 minutes for log-in, a survey and a break. The NASBA says Tuesdays, Wednesdays and Thursdays tend to be off-peak and quieter days for testing.
Getting Ready for Test Day
If possible, you should visit your testing center in advance so you're familiar with its location and parking availability. Prometric allows people to sign up for a 30 minute "test drive" of the CPA exam experience. For $30, you can schedule an appointment that walks you through the entire process of checking-in, testing at a computer and checking out. Although not required, some applicants find this walk-through experience helpful.
On your actual test day, plan to arrive at least 30 minutes before your appointment time to account for potential delays and to authenticate your identification.
Be sure to bring the following items with you:
- Notice to Schedule
- Two forms of photo identification (name must exactly match that listed on the NTS)
Leave behind food, drinks and weapons, as these are not allowed in the testing center. Personal items such as cell phones, outerwear, written notes or similar items must be stored outside the testing room.
Once you begin the test, you'll start on a series of introductory screens. You have five minutes to read the information on the screens and begin the examination. If you exceed the five minutes, the test will terminate and cannot be restarted.
What Happens After You Take the CPA Exam?
The Uniform CPA Examination is scored on a scale of 0-99, and you need a 75 to pass a section. The AICPA releases the scores using a release timeline that varies depending on the quarter and date of the test. Since new exam software was launched in April 2018, results for tests taken in the second, third and fourth quarters of 2018 will be held longer than those taken in the first quarter.
The scores are released by the AICPA to your state Board of Accountancy and will be made available to you either online or through another means, depending on your jurisdiction. When you have passed all four sections, test-takers in most states receive a congratulatory letter explaining the next steps needed to secure the CPA credential.
If you don't pass a section on the first try, know you're in good company. Many consider the Uniform CPA Exam to be among the most rigorous professional tests in the nation. Fortunately, you have 18 months from the passage of the first test to retake and pass the remaining sections.
Becoming a Certified Public Accountant is difficult, but those in the field say the designation makes for a rewarding accounting career. With proper preparation and a good dose of perseverance, you too can join the ranks of these highly regarded professionals.