Certified Public Accountant (CPA)

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Certified Public Accountant (CPA)

A Certified Public Accountant (CPA) is a licensed accounting professional who has met rigorous education, examination, and experience requirements. The credential authorizes holders to provide a range of services—most notably auditing and attestation—that non‑CPA accountants cannot perform.

What a CPA Does

  • Prepare, compile, review, and audit financial statements.
  • Prepare and file tax returns and advise on tax strategies.
  • Provide financial advisory services, including financial reporting, compliance, and planning.
  • Specialize in areas such as auditing, forensic accounting, managerial accounting, tax planning, bookkeeping, and accounting-related IT.
  • Sign off on audited financial statements for public companies and perform statutory attest services.

Education, Experience, and Licensing Requirements

  • Typically requires a bachelor’s degree (commonly in accounting, finance, or business) and completion of 150 semester hours of education.
  • Candidates generally must gain specified professional experience (often at least two years in public accounting, depending on the state).
  • Pass the Uniform CPA Exam and satisfy any additional state Board of Accountancy requirements.
  • Maintain the license by completing continuing professional education (CPE) and adhering to professional ethical standards.

The CPA Exam (Structure and Key Rules)

  • Total testing time is 16 hours, divided into four sections (four hours each).
  • The exam framework described here groups three core sections with one discipline section chosen by the candidate:
  • Core sections: Financial Accounting and Reporting (FAR); Auditing and Attestation (AUD); Taxation and Regulation (REG).
  • Discipline options (choose one): Business Analysis and Reporting (BAR); Information Systems and Controls (ISC); Tax Compliance and Planning (TCP).
  • Passing score: 75 (on a 0–99 scale) per section.
  • Candidates must pass all four sections within an 18‑month rolling window.
  • Pass rates vary by section; historically some sections have lower pass rates than others.

Career Paths and Advancement

  • Work settings: public accounting firms, corporate/private companies, government agencies, nonprofits, and consulting firms.
  • Common roles: staff accountant, auditor, tax specialist, controller, and CFO.
  • Specializations can open opportunities in forensic accounting, internal audit, IT controls, and financial analysis.
  • While a CPA license is not always required for private-company accounting roles, it is essential for public accounting and can accelerate career advancement.

Ethical Standards and Regulation

  • CPAs must adhere to a professional code of ethics and standards of conduct (e.g., the Code of Professional Conduct promulgated by the profession’s standard-setting bodies).
  • Independence and objectivity are required when performing audits and attest services.
  • High-profile scandals (for example, Enron and the collapse of Arthur Andersen) highlighted ethical failures and led to stricter regulatory controls, including the Sarbanes‑Oxley Act, which strengthened auditing and independence requirements.

Historical Context

  • The profession organized in the late 19th century to establish standards and ethics for public accounting.
  • CPAs have played a central role in financial reporting and regulation as securities markets and corporate disclosure standards evolved.
  • Over time, standard-setting responsibilities shifted (for example, the creation of the Financial Accounting Standards Board for GAAP), and regulation tightened after major corporate scandals.

CPA vs. MBA

  • CPA: a professional license focused on accounting expertise, technical skills, and regulatory compliance—highly relevant for accounting careers and public practice.
  • MBA: an academic management degree emphasizing broader business, leadership, and strategy skills—useful for starting or running a business and for general management roles.
  • The two are complementary; many professionals pursue both to combine deep technical and broader managerial capabilities.

Is Becoming a CPA Worth It?

  • The CPA requires significant time and effort to achieve, but it typically enhances credibility, opens career opportunities, and often leads to higher compensation. On average, CPAs tend to earn more and advance more quickly than non‑CPA accountants.

Bottom Line

The CPA credential signifies a high level of accounting competence, ethical responsibility, and regulatory authority—especially in auditing and attest services. Meeting the education, experience, and exam requirements is demanding, but the designation offers professional recognition, broader career options, and potential financial rewards.