The Meaning of the CPA Designation

The acronym CPA stands for Certified Public Accountant. A CPA is an experienced accountant who holds a degree in accounting, has completed an internship and as passed a series of special accounting tests to obtain CPA licensure within each state where they work.

CPA Education and Work Experience Requirements

In order to become a CPA one must first complete a certified accounting program offered from an accredited educational institution. Depending on each state’s individual requirements, they accountant may also need to complete an internship for up to two years under a licensed CPA.

Applying to Take the CPA Licensing Exam

Once an accountant has completed the education requirements and the internship they can apply to take a series of exams called the Uniform Certified Public Accountant Examination (Uniform CPA Exam) which have been created by the American Institute of Certified Public Accountants (AICPA). The CPA exam is administered at the state level by the National Association of State Boards of Accountancy (NASBA). Accountants apply directly to their state’s board of accounting which administers the exam and reviews all required documentation and proof of work experience/internship and educational attainment before sending a Notice to Schedule (NTS) to the examinee.

American Institute of Certified Public Accountants (AICPA)

The AICPA is a professional accounting organization that seeks to maintain the professional integrity of the accounting field by upholding rigorous standards for evaluating the knowledge of accountants and holding accountants to a professional code of ethics. CPA’s agree to a level of ethics beyond the basic requirements of the law. One of the key roles of the certified public accountant is to take on responsibility for acting in the best interests of the public. CPA’s are expected to act at all times with professional integrity, objectivity and to exercise due care in their work. They must also remain independent of any firms that they are involved with in order to maintain their objectivity.

2011 CPA Exam Competencies

The CPA exam will be updated January 1, 2011 so be sure to visit the AICPA website to review the changes if you plan to study for or take the CPA exam after this time. The exam consists of four sections and accountants can focus on studying for and taking one section of the CPA exam at a time. All sections must be passed, before the license is granted. The sections are Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR), Regulation (REG) and Business Environment and Concepts (BEC).

Auditing and Attestation (AUD) Section

The Auditing and Attestation section tests knowledge of professional standards including: U.S. audit standards, international audit standards, government and non-for-profit organizations and employee benefit plans. You must be familiar with attestation and assurance standards and requirements for accounting and review services as well.

Financial Accounting and Reporting (FAR)

The Financial Accounting and Reporting section of the exam tests examinees on the financial reporting framework used by business, government and non-profits. Standards in this section are created by the Financial Accounting Standards Board, the Governmental Accounting Standards Board, the International Accounting Standards Board and the U.S. Securities and Exchange Commission.

Regulation (REG)

The Regulation section of the exam tests examinees on ethics, legal responsibilities, professional responsibilities, law and federal tax regulations. The ethics portion of the exam accounts for approximately 12-16% of the questions.

Business Environment and Concepts (BEC)

The Business Environment and Concepts section of the exam tests examinees on their knowledge of broad issues in the business world. Potential CPA’s should be familiar with corporate governance, business economics, business strategy, financial risk management, strategic planning and operations management.

Continuing Education Requirements for CPA’s

Once an accountant has obtained their CPA license, the state may require an additional 150 hours of continuing education units (CEU’s) each year to stay current on the new accounting laws and changes within the profession in order to maintain the CPA license.

Ethics for Accountants

Certified Public Accountants (CPA’s) are held to a high standard and are expected to maintain a code of ethics. CPA’s are required to offer sound advice to the individuals and companies that they advise.

CPA Job Titles and Descriptions

Most people associate CPA’s with filing income taxes for individuals, small businesses or corporations, but there is much more to the job. CPA’s work in many different industries including public accounting, tax preparation services, tax auditing services, business, financial planning, consulting, government, law, and education fields. CPA’s can hold titles within several different levels of business such as Auditor, Internal Auditor, Chief Financial Officer (CFO), Chief Executive Officer (CEO), tax preparer, or they can work for themselves as independent certified public accountants.

Resources

American Institute of CPAs: Home (http://www.aicpa.org/Pages/Default.aspx)

American Institute of CPAs: 2011 CPA Exam http://www.aicpa.org/BecomeACPA/CPAExam/ExaminationContent/ContentAndSkills/DownloadableDocuments/CSOs-SSOs-Final-Release-Version-effective-01-01-2011.pdf

National Association of State Boards of Accountancy: FAQs (http://www.nasba.org/nasbaweb/NASBAWeb.nsf/wpef?openform)