The Uniform Certified Public Accountant (CPA) examination provides the minimum endorsement of the knowledge and comprehension that candidates developed in their program. Additionally, the examination opens up opportunities for further career and educational advancement. Many factors determine candidates’ successful bid for the uniform CPA examination, including academic deficiency and educational quality. Educational quality is defined by the institution’s accounting program size, accreditation in accounting, and faculty salaries. The Boards of Accountancy in any of the 55 US jurisdictions are required to pass the examination to qualify for licensure. Candidates who perform exemplary in the uniform CPA examination are awarded the Elijah Watt Sells Award, which is among the most prestigious professional awards in the US. This paper reviews the educational and experience requirements to sit for the uniform CPA examination and assesses the licensure and continuing professional educational requirements. Moreover, the paper reviews the examination’s purpose, structure, and format, and the organizations responsible for delivering the examination. The assessment will help students prepare for the examination and contribute to their success.
Uniform CPA Examination Requirements
Educational Requirements
All uniform CPA applicants must have a good moral character and reputation, which means that no formal complaints of convictions should have been made against them. Moreover, the Iowa Professional Licensing Bureau requires that all first applicants must have earned a graduate degree with a concentration in accounting or a graduate degree in business from an accredited program. Internship courses or life experience are not recognized. The third degree and accounting concentration requirement is earning a baccalaureate degree in business or accounting from an accredited program. In addition to the baccalaureate degree, an applicant must have completed at least 24 semester hours with more than one course in auditing, management accounting, taxation, and financial accounting. Alternatively, applicants must have earned a baccalaureate degree or higher and completed 24 semester hours in accounting courses or in business-related courses. Proof of completing all educational requirements should be submitted in the form of official transcripts issued by the institution’s registrar (“Accountants,” n.d.). For all four requirements, courses in internship and life experiences are unacceptable.
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For applicants that completed their educational requirements in international institutions, the National Association of State Boards of Accountancy (NASBA) International Evaluation Service should evaluate their credentials. Alternatively, the Foreign Academic Credentials Service could evaluate the applicants’ credentials (“Accountants,” n.d.). These applicants must submit a translated copy of their international transcripts. The credential analysis must provide an equivalency summary, the country’s name, degree awarded, and the awarding entity (“Accountants,” n.d.). Moreover, the analysis must include the number of credits earned.
Experience Requirements
The Iowa Professional Licensing Bureau requires verification of experience before candidates take the examination by filling a CPA verification of experience form. Candidates should include their employment period, the name and address of the employer, and a complete work description. The Board defines experience as availing any kind of service or advice about accounting use, management, compilation, finances, and tax or consulting skills. Candidates can gain experience in academia, public practice, or employment in the government or industry. For candidates to have one-year experience, they must have been employed full-time or part-time for a period exceeding one year and no more than three years. During this period, the candidate must have accrued more than 2,000 hours of services that use accounting competencies. Employment experience is not limited to one employment situation and includes internships. Teaching experience in academia includes employment in a higher education institution with more than 24 semester hours taught in accounting courses. An active licensee with direct supervisory control over the candidate verifies their experience. In the absence of a supervisor, a CPA licensee can verify a candidate’s experience (“Accountants,” n.d.). Original signatures are required for verification.
Licensure and Continuing Professional Education Requirements
For Iowa, applicants seeking CPA licensure must have at least 150 credit hours. The state has no age, citizenship, or residency requirement. Applicants must have a social security number, accounting experience, and undertake and pass an ethics exam. Licensure is granted to a person with a high moral standing and who meets all education, experience, and examination requirements. Applicants who have been convicted of any offense or crime leaving their morality as questionable may be denied licensure. Additionally, all applicants seeking an initial issuance of a certificate must have more than one year’s experience (“Accountants,” n.d.). Licenses are issued and renewed after every three years.
All licensed public accountants seeking license renewal must have completed all additional educational requirements required by the Board. The applicant must also have completed all examination requirements. The examinations are conducted at least biannually. Receiving a license requires applicants to successfully pass all the examined subjects. When an applicant fails the examination once, he or she is allowed to retake the examination at the next scheduled time (“Accountants,” n.d.). If the applicant fails the exam again, the applicant can retake the examination at the Board’s discretion.
Licensed public accountants are required to ensure continuing professional education, which maintains, improves, and expands their skills and knowledge present at initial licensure. During the period preceding the renewal of a license or certificate, the applicant must have completed 120 hours of qualifying continuing professional education. Programs that promote professional competence in accounting must address processes, methods, or principles of accounting. The programs can also be directly related to the CPA’s or LPA’s employment and exceed their current knowledge. Programs that offer continuous professional education in non-technical professional skills include communication, practice development, interpersonal management, client and public relations, leadership and personal development, motivational and behavioral, and speed reading and memory building. Courses that teach technical professional skills include human resource management, accounting and auditing, taxation, business law, asset management, professional ethics, and attestation standards and procedures, among others (“Accountants,” n.d.). All costs associated with the continuing professional educational requirements are the responsibility of the license holder.
Purpose, Structure, and Format of the Uniform CPA Examination
The uniform CPA examination fulfills one of the three E’s (education, examination, experience) mandatory for CPA licensure. Only the examination requirement is uniform across all 50 states. Therefore, the examination ensures uniformity of standards in the accounting field. Additionally, the examination assures regulatory agencies that applicants who succeed in the exam have attained the necessary technical knowledge and skills. The examination also protects the public interest by ensuring that only competent individuals are admitted into the profession.
Structure and Format
The CPA examination is made up of four sections, including auditing and attestation (AUD), business environment and concepts (BEC), financial accounting and reporting (FAR), and regulation (REG) sections. One section is allocated a maximum of four and a half hours. Out of the total hours, the first five minutes are dedicated to welcoming applicants and entering the launch code. The next five minutes allow the applicant to read through confidentiality or section information. A fifteen-minute break is allowed after the third testlet, while the last five minutes are dedicated to answering a survey (“CPA exam,” n.d.). The break is optional and will be offered after every exam section. Applicants who accept the break pause the exam timer for the allotted fifteen minutes.
Each of the four examination sections is tests specific content. For example, the AUD section tests on ethics, professional responsibilities, and general practice, among others. The BEC section tests for corporate governance, economic concepts and analysis, financial management, information technology, and operations management. The third section, FAR, tests on the conceptual framework, standard-setting, select transactions, and state and local governments. Lastly, the REG section tests on knowledge areas, such as ethics, professional responsibilities, and federal taxation. Applicants must attain or exceed the 75% pass mark for each of the four sections within the one-and-a-half-year testing window. Each section is scored on a scale ranging from 0 to 99. The total score in each section is a weighted combination of scaled scores from each testlet type. Scaled scores on the MCQ and TBS section considers the difficulty of the question and whether it was answered correctly (“CPA exam,” n.d.). However, the passing criteria change occasionally.
All four exam sections are further divided into five smaller sections referred to as testlets. The testlets are made up of multiple-choice questions (MCQs), task-based simulations (TBSs), and written communication tasks. MCQs are present in the first two testlets of each exam section. TBSs include condensed case studies that use real-life, work-related situations to test accounting knowledge and skill. The TBSs assess entry-level accountant knowledge and skills. The AUD, FAR, and REG sections have three TBS testlets and at least one research-oriented question, while the BEC section has two TBS testlets. The BEC section is the only section that includes written communication tasks (“CPA exam,” n.d.). Applicants are required to read the provided scenarios and respond in a written document.
Organizations Involved in Delivering the Examination
Delivery of the uniform CPA examination is dependent on close collaboration among several organizations, including the AICPA, the Boards of Accountancy in all 55 jurisdictions, NASBA, and Prometric. The AICPA develops content and scores the examination. This organization is monitored by the Board of Examiners (BOE) in performing its functions in the context of the CPA exam. The Boards of Accountancy set the requirements for CPA licensure in their jurisdiction. NASBA is responsible for collecting all the necessary data regarding eligible candidates, distributing advisor scores, and keeping a central database of the collected information. The organization also manages a test center in Guam. Lastly, Prometric enables technology-based testing by availing the required software and testing system. Prometric also provides data communication, registration, and scheduling. Moreover, the organization avails test centers where candidates are authorized to sit the exam (“CPA exam,” n.d.). The close collaboration among these organizations ensures the maintenance of the highest standards of quality throughout the examination process.
Changing the CPA Examination Topics for the Digital Age
The advancement in technology, process automation, and data analytics has led to a shift in the accounting competencies required for newly licensed CPAs. Consequently, the AICPA has embarked on a focused practice analysis that aims to discern what contents need to be tested on the CPA exam or eliminated. Previously, examination teams performed the practice analysis after every seven years. However, rapid and extensive changes have caused a demand in the acceleration of this time frame. A practice analysis performed in 2016 led to the increased prominence of critical thinking, analysis, and problem-solving skills. Additionally, the 2017 changes led to a reduction in the number of MCQs and an increase in TBSs. The total examination hours were also increased to 16 from the original 14 (Tysiac, 2019). These changes resulted from the swift pace of transformation in the business environment.
The changing business environment has led to some topics becoming relevant or obsolete in the current setting due to technological disruptions. Some of the topics that might be removed from the examination include International Financial Reporting Standards (IFRS), estates and trust, and derivative financial instruments. Therefore, examination teams should consider topics that they should remove from the CPA exam blueprint. Employers also want new skills to be taught to enhance efficiency in their organizations, such as using new software in the field. Due to the demand for conformity of accounting practices to evolving technology, the focus is shifting towards implementing regular updates on the exam to avoid rigorous research performed over several years (Tysiac, 2019). Licensing agencies are also considering changing the model for initial CPA licensure to respond to relevant skills and technological advancements that impact the business environment.
Role of Accounting Programs
Accounting programs should embrace the best practices to help their students pass the CPA examination. These practices are especially necessary due to the incongruence between the number of enrollments and that of the candidate sitting and passing the exam. Additionally, there are demographic challenges in the accounting field, whereby a substantial number of active CPAs are nearing their retirement age. Research determined that the most influential factors in CPA examination success rates are the ability to recruit and retain exemplary students, availability of employment opportunities with firms that pay for a review class, presence of student advisory teams on state requirements, structuring the accounting program to facilitate the attainment of required credits, and developing confidence from older students who pass the exam (Gaynor, 2017). Based on these recommendations, more schools should introduce CPA review classes, create on-campus study rooms, and designate faculty members to champion for the examination (Gaynor, 2017). Implementing these changes will result in a higher number of CPAs able to sustain the demand in the growing business environment.
Current Progress Towards Meeting Uniform CPA Examination Requirements
So far, I am in the process of acquiring a graduate degree in business from an accredited program, as per the Iowa Board of Accountancy requirements. Moreover, I have completed 24 semester hours in upper-level accounting courses and an additional 20 semester hours in upper-level business courses. I have also taken a CPA review course and earned the associated credits. By working full-time during semester breaks and part-time when in session, I have acquired 1200 hours of practical accounting experience and developed competencies in compiling and reviewing financial statements, comprehending accounting information systems, taxation, and cost analysis, among others.
National and State Accounting Associations
A recent survey performed by AICPA indicated that more than 75% of AICPA members are due to retire in the next 12 years (Ugrin & Honn, 2018). The challenging demographics indicate the importance of student membership in national and state accounting associations. Joining such associations will allow these students to develop a network of peers and reap the rewards. When the retirement of the masses occurs, members will enhance their bench strength (Ugrin & Honn, 2018). For students planning to seek job opportunities in accounting firms, they can meet periodically and access successful national and international alliance of firms. Therefore, student memberships in state and national accounting associations promote career development and provide a good foundation for graduates seeking employment.
Another factor to consider is that state and national accounting associations are made up of people who share similar values and traditions. Frequent interactions with association members help students develop important soft skills, such as communication, negotiation, problem-solving, and teamwork, which enables accountants to work with others, a crucial part of their job description. Accounting associations are also a good place to look for mentors who would instill leadership skills in the students, encourage them to get involved in the profession, and provide the highest quality of service. Instilling the leadership skills places students in a better position to occupy leadership positions in the future (Amato, 2013). Therefore, students who join accounting associations also position the profession for future growth.
Additionally, accounting associations help students develop an understanding of how the accounting field works. These associations make it easier for students to join by providing special student rates. An example is the AICPA, which offers affiliate student membership. Student members gain cheap access to numerous resources about the accounting industry. These students also receive discounts for conferences, which ensures that they become informed of the trends in the industry. Student members also have access to numerous opportunities to apply for scholarships reserved for members. Another accounting association that offers student membership is the Professional Accounting Society of America (PASA). Student members get services such as resume help, access to online articles, professional networking, discounts on various products and services, and training opportunities (Markova et al., 2013). Accounting students should make a point of joining accounting associations to reap the benefits associated with student memberships.
Internships with Public Accounting Firms
Many public accounting firms have chapters in accounting colleges and universities, which students can take advantage of to seek internship opportunities within these firms. Another avenue for seeking internships with such firms is through their off-campus clubs. Usually, such firms make internships only available to the current chapter or club members. Students can also forge connections with faculty members, who have an in-depth knowledge of some of the public accounting firms. Faculty members can notify students of any interested firms offering internship opportunities (Vien, 2018). Career fairs are also a good place for students to introduce themselves to potential employers. Utilizing these avenues gives students an upper hand in seeking internships.
Staying Current in Accounting Knowledge
Accounting practices, rules, laws, and tools frequently change, which requires accountants to keep up-to-date on accounting knowledge, hence stay current. After degree completion, one of the most suitable strategies for keeping updated on accounting knowledge is pursuing continuous professional education courses. Various professional associations, such as the AICPA, offer free CPE credits for online study. Such providers also offer free introductory courses and self-study programs that graduates can leverage. Graduates can also read frequently read industry publications and news sources, which provide them with relevant and useful information. There are also numerous web-based opportunities for graduates to stay current with new technological developments. For example, they can subscribe to Tax News headlines, Internal Revenue Service (IRS) quick alerts and newswires, and Tax Talk Today Series. They can also attend low-cost webinars offered by state associations to investigate and prepare for oncoming changes in the industry. Graduates can also take advantage of free trials for accounting software offered by companies that sell these programs (Mastracchio, 2017). Since graduates might not have extensive financial means to pursue a continuous professional education, they can take advantage of free programs and seminars provided by state and national associations and private entities.
Current Trends in Accounting Careers
Present technological advancements are shaping accounting careers and the industry. Currently, we are experiencing the fourth industrial revolution, which is characterized by the development of the internet of things (IoT), the internet of systems, and cyber-physical systems. These developments have resulted in a network of interconnected smart machines that can create, analyze, and share information. Smart technology will be embedded in people, assets, and companies. The subsequent development of cognitive technologies, analytics, robotics, artificial intelligence, and quantum computing will occur. These technologies will change how data and information is utilized, thus increasing companies’ efficiency. For example, financial reports which were readable only by humans will also be machine-readable. Many of the current accounting practices, such as invoice management and expense management, are performed by machines (Kruskopf et al., 2019). Bookkeepers and auditors will remain relevant in the field.
Conclusion
For students to take the uniform CPA examination, they must have achieved all the necessary requirements, including educational and experience requirements. Furthermore, licensure applicants must also meet licensure and continuing professional educational requirements. Having an understanding of the uniform CPA examination’s purpose, structure, and format place students in a better position to take the exam and succeed. After graduation, aspiring CPAs should strive to stay current in accounting knowledge by taking advantage of free services and materials, such as continuous professional education courses. They should also keep up with technological advancements, which are shaping accounting careers, and should be embraced as a means of creating new careers and job efficiency.
References
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