What are the Requirements to Become a CPA?

Dear Accounting Professor:

What does one have to do to become a CPA?

Student

Dear Student:

In the United States, a Certified Public Accountant (CPA) is someone who meets the education requirements (a bachelor's degree with at least 150 semester credits of college/university level coursework in specific areas of business including accounting) and passed a set of four exams covering a broad range of topics. Under the current model, these four exams cover regulatory matters (including income taxation), auditing, business environment, and financial accounting. (Please note that this exam model is expected to change in 2024.) The oversight of the CPA exams is done by the American Institute of CPAs (see https://us.aicpa.org/becomeacpa.html).

After the education requirements are satisfied, a prospective CPA candidate is granted permission to sit for the CPA exams. That permission comes from the state accountancy board that a candidate is seeking certification and licensing from or that state accountancy board's designated representative. More information about these requirements and this process is available at https://nasba.org/exams/cpaexam/.

After one has passed all of the CPA exams in an eighteen month time frame, that person may receive the CPA credential if they are seeking licensing in a "two tier" state (Oklahoma and Illinois are examples of this). CPA holders in the two tier states receive their licenses to practice public accounting after they have met the experience requirements as prescribed by those states. For those seeking licensing in a "one tier" state (New York and New Jersey are examples of this), the candidate does not receive the CPA credential and the associated license to practice until all requirements have been met and verified by the state accountancy board.

Because of some states following a two tier licensing model, it is possible for someone to encounter a CPA holder who does not have a license to practice public accounting. Anyone can verify someone's CPA license status by checking with the license granting state's accountancy board. As an alternative even though it is not as current as a state's accountancy board's own information, one can confirm certain details about most U.S. CPA license holders via https://cpaverify.org/.

The experience requirement for a newly licensed CPA holder is typically two years full-time experience that is accounting related and supervised by a licensed CPA. More information about this can be seen at https://us.aicpa.org/becomeacpa/licensure. Please note that each state determines the experience and education requirements for one to obtain CPA licensing. With this in mind, some states may require specific types of accounting experience (such as California) and others may have very specific educational requirements (Texas and Oklahoma jump to mind as potential examples). Also, some states may only require verification of experience by an actively licensed CPA (Virginia is an example).

I estimate that about half of the people who work in the accounting profession are CPA holders. I base this off the information available at https://nasba.org/licensure/howmanycpas/ and the U.S. Bureau of Labor Statistics' Occupational Outlook Handbook (see https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm).

One constraint that CPA holders often encounter is their CPA licenses are only valid in the state that issues it unless another state has agreed to recognize that license from outside of their states. As a point of clarification, a CPA who works in another state (other than the one that licensed that CPA) is supposed to have a license to practice accounting from the state that they are working in. Because of this, I recommend CPA candidates consider carefully where they intend to work and pursue licensing in that state instead of some other state. (Some states also have a residency requirement, which means that one has to move to that state to acquire a license to practice from it.)

Why should one pursue a CPA certificate and license? Employers want it. Robert Half International reported that it is the #1 most desired accounting credential in candidates and employees by employers (see https://www.roberthalf.com/blog/salaries-and-skills/finance-and-accounting-certifications-employers-want-to-see). Obtaining a CPA certificate and license significantly enhances your career opportunities within the accounting and finance fields.