Certified public accountant
Most businesses need 2 things – a good lawyer, and an excellent CPA (Certified Public Accountant). As of August 2021, there are 669,130 actively licensed CPAs in the U.S., which represents about 15% of all accounting and finance professionals.
Credibility plays a key role in business. That is why accounting professionals who earn CPA certification gain a critical advantage, leading to better access to high-profile positions and increased earnings. As with any career, location has a massive impact on salary; but as a national average, accountants earn about $52,823 per year, while CPAs earn almost $20,000 more, at $70,942.
“Typically, when you go into a public accounting firm, it is assumed that you will become a CPA because you need that certification for advancing in some form or fashion. There are other certification options, but the most recognized is CPA, so as a public accountant, you know that this is a path that you need to take.”
What is a CPA?
A CPA is a top-tier accountant who holds special certification through the American Institute of Certified Public Accountants (AICPA). CPA certification is the highest professional designation in finance and accounting. It allows accountants to perform several key functions that non-certified accountants, tax preparers, and bookkeepers cannot.
Certify that financial statements are accurate and complete (‘assurance’)
Write audited financial statements
Represents clients in court on tax matters
Perform mandatory audits for publicly traded companies
File reports with the Securities and Exchange Commission (SEC)
Most large accounting firms offer a salary bonus to accountants who earn CPA certification. “Once you pass the CPA, you get a bonus, and that bonus often decreases the longer it takes you to pass that exam”, says Steven L. Harris, CPA, CGMA, and a managing partner at Rubin Brown. “They want to create an incentive for you to get the exam out the way as soon as possible. In many cases, the size and stature of a firm is judged by the number of CPAs on staff. That is a major reason why firms want to have more CPAs in the organization.”
What is public accounting?
Public accounting involves the review of financial documents for accuracy and completeness before disclosure to the public. By contrast, private accounting focuses on internal documentation, budget planning, and fiscal performance evaluation.
The key requirements for becoming a CPA are listed below. Some states also stipulate an ethics examination (check details with your state licensing board).
- Bachelor’s degree (usually in accounting, finance, or business administration)
- 30 additional credit hours in accounting or a related discipline
- A minimum score of 75 on each section of the Uniform CPA Examination
- 1-2 years of professional accounting experience
How hard is it to become a CPA?
Becoming a CPA is challenging – only about 20% of test takers pass all sections of the CPA licensing exam on their first try, and the total pass rate hovers at around 50%. However, the added professional opportunities and potential income available to CPAs make this certification an excellent career move.
How long does it take to become a CPA?
About 6-7 years: 5 years of college to earn the necessary 150 credits and 18 months or less to complete all 4 sections of the CPA exam.
What are the Big 4?
The ‘Big 4’ is a nickname used to refer to the 4 largest accounting firms in the U.S. These are Ernst & Young, Deloitte, KPMG International Limited, and PricewaterhouseCoopers. The majority of companies in the S&P 500 are audited by one of these 4 firms.
Future Outlook Projections are taken from the Projections Management Partnership (PMP). The PMP is funded by the Department and Labor, Employment and Training Administration, with direct support from the Bureau of Labor Statistics. The PMP provides data-driven projections of future workforce needs.
Accountants and Auditors total employment
Annual openings include jobs available due to both an increase in demand, and regular employee turnover (retirees, career switchers, etc.).
The estimated increase in jobs (2018-2028) is the increase in total jobs expected and does not consider employee turnover.
To provide context to estimated job growth, we employ a “fire and ice” system, which compares projected career growth to the national average of 5.2%, as follows:
|<-10% = 3 ices|
|Btwn -5 to -9.9% = 2 ices|
|Between -5% to-.1% = 1 ice|
|between 0- 5.5% = neutral|
|Between 5.5%-10% = 1 fire|
|Between 10-20% = 2 fire|
At the state level, we simply sort the states from fastest growing to slowest within the particular career, or 1st to 50th.
Last five years employment and salary
|Average Wage||Total employment|
7 steps to becoming a CPA
The steps below outline the general path to become a CPA, but before you take any steps, check the specific requirements set out by the board of accountancy in your state or jurisdiction to ensure you know all the crucial details before you begin.
Step 1 – Earn a bachelor’s degree
A bachelor’s in accounting is likely to best prepare you for the CPA exam, but is not mandatory in all states as long as you take a sufficient number of accounting classes. Many states also accept degrees in finance or business administration, as long as you earn at least 30 accounting credits, 24 business administration credits, and at least 15 credits in upper-division or graduate classes.
Step 2 – Earn 30 additional credit hours
You will need to earn 30 additional credits beyond a standard bachelor’s degree to qualify for the CPA exam. These can be in an accounting-adjacent discipline, which can be an opportunity for aspiring CPAs to grain experience in other business disciplines.
Some states allow you to sit for the CPA exam with 120 credits, but require that you complete the additional 30 before applying for licensure. These are referred to as 2-tier states.
There are several ways to earn these additional 30 credits:
- by taking an extra year of classes at the bachelor’s level
- as part of a master’s in accounting
- by way of a special program, including accelerated bachelor’s-to-master’s; dual-degree or combined-degree; or 4+1 or 5-year accounting programs
Step 3 – Get a master’s in accounting (optional)
One way to earn your additional 30 credits is as part of a master’s in accounting, either in a traditional format, or as part of one of the alternatives listed above (accelerated, dual-degree, or combined-degree). Additionally, many programs embed CPA exam prep into the curriculum, meaning you can prepare for the exam while also earning an additional advanced credential.
Other options include a master’s in finance or MBA. “I had already been made partner when I went back to school to earn my executive MBA,” says Harris. “I was one of the youngest leaders in the firm at the time, and I wanted to be a great business-minded person instead of just being technically sound. I wanted leadership and strategy skills – to not just serve clients well by wowing them with my technical expertise – but to also serve my organization well. That’s why the MBA was the right choice for me.”
Step 4 – Pass the CPA examination
The CPA exam is divided into 4 sections which are separate exams in themselves:
- Auditing and Attestation (AUD)
- Business Environment and Concepts (BEC)
- Financial Accounting and Reporting (FAR)
- Regulation (REG)
You must pass each with a score of at least 75 out of 99. The cost per section is around $200. To choose which of the 4 exams you want to take first, log on the National Association of State Boards of Accountancy (NASBA) website and follow the steps.
You have 6 months to take the first exam from the moment you meet all the requirements and get your Notification to Schedule (NTS), and 18 months total to pass all 4 sections.
Step 5 – Pass the AICPA ethics exam (most states)
The American Institute of Certified Public Accountants (AICPA) administers an ethics exam that is a requirement in most states. It usually needs to be taken within 1-2 years of passing the CPA exam and is multiple-choice, open-book, and taken online.
» Read: How accountants combat fraud
Step 6 – Get some professional accounting experience
All states require some (usually 1-2 years) professional public accounting experience before you can get your CPA license. If the experience is gained in a non-public sector, the requirement tends to be longer, sometimes up to 4 years.
The details vary significantly by state – for example, whether or not it has to be full-time work or weather teaching experience counts. It may be possible to gain professional experience abroad, as long as it is verified, and in most cases, supervised, by an accountant with an active U.S. CPA license.
Step 7 – Get your CPA license
Your state board of accountancy issues CPA licenses. As states have particular requirements, make sure you know the specifics that apply to you before you start the journey to becoming a CPA.
Most states require CPA license renewal every 1-3 years, requiring fee payment and a certain number of continuing professional education (CPE) hours to ensure CPAs remain up-to-date on all new accounting and tax laws and other changes to regulations.
Types of CPA jobs
The type of work CPAs do depends largely on the environment within which they are employed. Their essential role is to help businesses and other organizations manage their money while complying with government regulations, but the details vary significantly by sector.
- In corporations, CPAs are crucial to corporate leadership for assistance with financial regulations, particularly in the context of complex multi-state and international business transactions. They also prepare annual reports for shareholders.
- In the small businesses sector, CPAs can perform bookkeeping, but also help entrepreneurs choose the best legal structure for their business, tax plan, create a budget, and set pricing. CPAs also help small businesses with the transition to becoming a corporation.
- The NGO sector has a completely unique set of accounting rules, and CPAs can help NGOs ensure they are complying with these as well as providing assurance and auditing services.
Accounting is the language of business, and CPAs are among its most fluent speakers. CPAs are a key player in organizational strategy and in holding industry accountable and ensuring compliance with financial rules and regulations, but truly exceling in the field also requires that CPAs cultivate non-technical skills.
“Accounting is far from just number crunching and spreadsheets,” says Harris. “So much of what we do is dealing with different people, personalities, and perspectives. This is especially true in public accounting, where I would say it’s a 60/40 split between technical knowledge and people skills. You may be the most technical person in the world, but if you can’t translate your knowledge so that a person that’s not as technical understands, you just can’t be as effective.”
“Accounting is far from just number crunching and spreadsheets. So much of what we do is dealing with different people, personalities, and perspectives.”
The stringent certification criteria, including extensive educational and ethical requirements, make CPAs some of the most trusted accounting professionals in the field. Ready to start your journey towards becoming a CPA? Explore our college rankings to find the undergraduate or graduate program that fits your needs.
Interview with a CPA
The AAA gathers under one roof an extensive community of accountants from all walks of life, including the academic field.
NSA is a society with a core mission of helping tax and accounting professionals further their knowledge.
AICPA is the official body that represents CPAs, developing and grading the CPA certification examination at state and national level.
The AAFA connects accounting organizations, firms, and professionals throughout the United States.
This organization represents accounting professionals in more than 130 countries around the world, acting as a global common ground for networking and best practices in the accounting industry.
NASBA acts like a forum for the 55 State Boards of Accountancy in the US, which administer the Uniform CPA Examination. In partnership with AICPA, NASBA facilitates CPA examination for professionals oversees.
FASB is an independent organization that sets the standards for public and private organizations following Generally Accepted Accounting Principles (GAAP) in the field of financial accounting.