How to Ace the CPA Exam
Shake Off the Fear with Solid CPA Exam Preparation
The hard work of college is behind you, but for those who plan to take the CPA exam, the studying isn’t over yet. Though the CPA exam has a tough passing rate and thus makes many aspiring CPAs quite nervous, the key to success lies in creating a great study plan and sticking to it. This guide looks at what everyone needs to know about the CPA exam, the variety of study options available, what to expect on exam day and even the variety of careers a financial expert can enjoy once the CPA is over.
Understanding the CPA Exam
Not sure what to expect from the CPA exam? This quick overview is a good place to begin.
What is the purpose of the CPA exam?
In order to become a Certified Public Accountant (CPA), a person must pass the Uniform CPA Examination. A passing score ensures the test taker has a wide swath of financial and accounting knowledge.
Who is eligible to take the CPA exam?
Each of the 55 jurisdictions has its own requirements concerning education, experience, residency and ethics. However, almost all require a bachelor’s degree, some work experience and a certain number of accounting courses completed. To learn more about what each state or jurisdiction requires, visit the State Boards of Accountancy.
Do I have to take the CPA exam to become an accountant?
Without a CPA designation, a person cannot call themselves a CPA. In some states, a person without a CPA cannot be called an accountant. They can, however, work in a limited capacity in the finance and accounting field while under the supervision of a CPA.
When is the CPA administered?
Students have four testing periods each year during which they can take the exam. These are January 1–March 10, April 1–June 10, July 1–September 10, and October 1–December 10.
Where can I take the CPA exam?
Test takers can choose any jurisdiction in which to take their exam; however, they should remember that each jurisdiction has its own rules, and what one allows may not transfer easily to another jurisdiction. Therefore, it’s best to take the test in the jurisdiction where the aspiring CPA plans to actually work.
How is the CPA exam taken?
The test is taken on a computer. Test takers must sit at the computer for the entirety of the examination unless they get permission to leave the work station. The testing center provides two noteboards and a fine point marker, to make notes.
How often can I take the CPA exam?
If a test taker fails any of the four sections of the exam, that section can be taken again during the next testing window. Reexamination fees will apply.
Acronyms and Definitions
Those preparing to take the CPA exam will encounter a wide variety of acronyms and terms that might be confusing. Here’s a quick rundown.
- AICPA: American Institute of Certified Public Accountants—this organization creates the key aspects of the CPA exam.
- Jurisdictions: The jurisdictions are divided up by state; the 55 jurisdictions represent the 50 states as well as territories, including Guam, Puerto Rico, the Virgin Islands, the District of Columbia and the Northern Mariana Islands.
- NASBA: National Association of State Boards of Accountancy—this organization represents the Boards of Accountancy in the 55 jurisdictions across the United States.
- NTS: Notice to Schedule
- Prometric: A company that runs computer-based test centers around the world. It administers the CPA exams.
- Testing Sections:
- AUD: Auditing and Attestation
- REG: Regulation
- BEC: Business Environment and Concepts
- FAR: Financial Accounting and Reporting
Earning a credential like the CPA license will be really valuable to your career as well as your job options in the future.
Test Composition & Timing
Now let’s take a look at what the CPA exam actually entails. Through a variety of sections pertaining to financial accounting, regulation, and auditing, test takers will prove their extensive knowledge of financial and accounting concepts and practices. The exam takes a total of 16 hours, with four hours devoted to each section. Let’s take a closer look.
Multiple-Choice Question Testlets.
Each of the four tests is divided up into five testlets, or short segments that feature a particular type of question. There are two multiple choice testlets in each section of the examination, splitting up the total multiple-choice questions evenly between the two.
Task-Based Simulation Testlets.
These testlets focus on tasks that an accountant might need to complete in the course of their day-to-day work, based on condensed case studies of real-life situations. Each test has three of these testlets, with the exception of the Business Environment and Concepts test, which includes only two.
Written Communication Testlets.
Test takers will read a summary of a particular situation and then respond appropriately in the format required, such as a memo or letter. There is one testlet for written communication, which is presented as part of the Business Environment and Concepts test.
The following are the test sections found in the CPA exam.
|SECTION||MULTIPLE CHOICE QUESTIONS||TASK-BASED SIMULATIONS||WRITTEN COMMUNICATION||BRIEF OVERVIEW AND EXAMPLES|
|Auditing & Attestation (AUD)||72||8||0||Tests knowledge of assessing risk, developing a process plan, forming conclusions, reporting, auditing engagement, accounting review services, ethics, personal responsibilities and general principles.|
|Financial Accounting & Reporting (FAR)||66||8||0||Exam focuses on financial statement accounts, standard-setting, conceptual framework, financial reporting, select transactions (such as leases and error corrections), and state and local government concepts.|
|Regulation (REG)||76||8||0||Includes questions on ethics, professional responsibilities, federal taxation and business law.|
|Business Environment & Concepts (BEC)||62||4||3||Questions include those on corporate governance, economic concepts and analysis, information technology, operations management and financial management.|
Scoring the CPA Exam
Understanding how the CPA exam is scored can help test takers know what to expect when that important final score report comes back. Here are the basics.
How does CPA scoring work?
On the AUD, FAR and REG tests, the multiple-choice questions and the task-based simulations each account for 50 percent of the weight of the score. But for the BEC test, things are a little different: The weights for this test are 50 percent for multiple choice, 35 percent for task-based simulation and 15 percent for the written response section.
What is a passing score for the CPA exam?
Test takers can earn a score of 0 to 99 in each section. A passing score is a 75 or higher.
What is included in the CPA score report?
In most jurisdictions, a report is only generated for a failing grade. Known as a Candidate Performance Report, this overview compares scores to those who just passed with a 75–80 score. This allows test takers to pinpoint the problem areas and better prepare for the retake.
When are scores released?
Scores are typically released twice during each testing window. The first round of scores is released halfway through the testing window, while the second round is released during the first week of the next testing window. This means most test takers will get their scores within three weeks or so after the test is done.
How will I receive my score?
Scores are sent to the Board of Accountancy in each jurisdiction, which then notifies the test takers of their scores. It can take several days beyond the published score release date for the Board of Accountancy to release the scores to the test takers in their jurisdiction.
What’s the test retake policy?
Test takers can take the test again if they failed it, but they can’t do it within the same testing window. For example, if someone took the REG test and got a failing score during the first window, they must wait until the second window to take it again. All exams must be completed with passing scores within an 18-month period, or all tests must be taken again.
Can I appeal my CPA exam score?
That depends upon the jurisdiction. For those that do allow appeals, test takers will be able to review their incorrect responses under very controlled conditions. There is no appeal for the written portion of the exam.
Don’t be intimidated about the low pass rates. Many people fail a section of the exam and eventually go on to pass all four sections.Lou Haverty
Registration & Fees for the CPA Exam
The process of registration for the CPA exam will vary from one state to another; therefore, this section isn’t comprehensive, but rather provides a good overview of what test takers might expect. For in-depth information about what a particular state requires, see the Board of Accountancy for that state.
Registering for the CPA Exam
How to register.
The registration begins with an application. Depending upon the jurisdiction, this will be completed through the CPA Examination Online Application System or directly through the Board of Accountancy of that jurisdiction. Upon approval of the application, test takers will receive a Notice to Schedule (NTS). At this point, go to Prometric to schedule an exam.
Documents needed for registration.
Most applications will require proof of completion of a certain amount of education, usually a bachelor’s degree, as well as two forms of ID and other requirements as determined by the jurisdiction. Make sure the name used on the application matches exactly the name on the two forms of ID. At least some portion of the fee—if not all of it—will be required at this point.
When to register.
Upon receiving the NTS, individuals usually have six months in which to schedule their tests—but again, check with the jurisdiction, as some have a window for scheduling that is as short as 90 days. Be sure to only apply for and schedule the exam when the likelihood of passing is high, such as right after completing a prep course, as the fees for retaking the CPA exams can really add up!
Paying for the CPA Exam
The cost of the CPA exam depends upon the jurisdiction. However, in most cases test takers will pay between $100 and $200 to take each of the four exams, putting their out-of-pocket expense at between $400 and $800. Retakes require an additional fee on top of the initial cost; since many individuals must take at least one portion of the CPA exam more than once, expect to pay $1,000 and up to complete all four exam sections.
Preparing for the CPA Exam: Tips & Practice Exams
Understanding how the CPA exam is presented and scored is the first step toward preparing for this very important exam. Some test takers find the CPA exam quite difficult; the good news is that there are plenty of ways to prepare and study for the exam. Here’s what aspiring test takers need to know.
Top Tips for Test Prep:
- Figure out how you learn. “The first thing you need to do is make an honest assessment of your learning style,” recommends Lou Haverty, creator of Financial Analyst Insider. “Do you do best when you’re in a more structured classroom style environment or are you disciplined enough to create your own self-study structure and stick to it?”
- Use flashcards. You can’t sit at a desk and study all the time. So when you’re on the go, flashcards allow an opportunity to flip through the variety of important points, definitions and more that you will need to ace the exam. Either buy a set of flashcards specifically for this purpose or create your own based on the points you are having difficulty remembering.
- Choose an order for practice tests. “You’re better off starting with the easiest exam section first,” Haverty says. “Positive reinforcement and confidence from passing easier sections first are really critical to keep you motivated to get through the exam. Most people consider the BEC section easiest, but you may also want to select a different section if your most recent classes or even your work experience might make the material fresher in your mind.”
- Constantly review. The CPA exam is filled with an overwhelming amount of information. Therefore, going through each segment of each testlet and studying it, then ignoring it for a few weeks while you move onto other points is a recipe for disaster. Instead, set aside time every evening for a review that includes all the segments you’ve studied so far.
- You can’t overdo it on the test questions. “Make sure you use a practice test question bank as much as possible,” Haverty recommends. “The only way to really retain the material is to practice as many questions as possible and use the diagnostics to hone in on your weakest areas.”
- A study schedule will help. “It’s really important to give yourself a set schedule and stick to it. You should create blocks of time during the week and on the weekend dedicated to studying,” Haverty advises. “You also need to maintain some balance to keep yourself sane, so make sure you regularly exercise and you keep a social life, even if you have to scale it back a little bit.”
- Have a testing strategy. Remember that once the first test is taken, there is only an 18-month window in which to take and pass the others, or the clock resets and all the tests must be taken again. That’s why it’s important to keep in mind work obligations, vacation plans, and anything else that might hinder the ability to finish the test set within 18 months.
- Keep tax season in mind. “For students just getting out of school that are going into public accounting, you might consider waiting until after your first tax season before you start studying for the exam,” Haverty says. “Tax season frequently requires late nights and trying to keep a study schedule for the CPA exam might greatly diminish your ability to retain the new information and completely overwhelm you.”
CPA Practice Exams & Study Guides
There are numerous practice exams and study guides available for help with CPA exam preparation. Some are entirely free (especially practice tests), while others require fees to unlock all the features and details. Test takers are strongly encouraged to partake of study guides, especially practice tests, as they can provide clues to the material on the real test when the big day comes.
A more structured program with live or recorded lectures will be more expensive than a more self-study based program that is focused on textbooks and utilizes a practice question bank.
Here are some great places to find these practice exams:
- AICPA: These are official practice tests that provide a very accurate representation of what will be encountered during the real thing. These tests are free and a must for anyone taking the CPA exam.
- Becker Professional Education: The choice of many employers who provide their employees with CPA review perks, this exam review has live, self-study, online and university cohort programs.
- Roger CPA Review: Though this one can be rather pricey, the excellent reviews make it clear that many test takers found it worth the money.
- Wiley CPAexcel: One of the most affordable options, this program contains over 12,000 multiple choice questions and more than 600 simulations.
- Yaeger CPA Review: This unique program allows for integration of the AICPA blueprints and one-on-one instructor help and coaching.
Test Day Prep: What to Bring with You
Show up on test day with a minimum of two forms of current identification, with at least one having a current photo. The names on the identification must match exactly the name on the registration for the exam.
Test takers are allowed to have a pair of soft foam earplugs with them in the testing area. They will also have a key to their locker. Any personal items, including small items in pockets, cell phones, purses, coats, etc. will be left in that locker until the testing is done. Since the lockers are small, try to bring as little as possible into the building.
CPA Salaries and Career Outlook
Though it is possible to work in finance and accounting without the CPA designation, having that designation is a big deal—especially since without it, an aspiring accountant can only go so far up the ladder in any organization. Besides that, many clients rely on the integrity and trustworthiness imparted by the CPA designation and won’t trust someone to even file a simple tax form without it.
Employment options, salary and broader work responsibilities are open to CPAs. Here’s a map that details employment, annual median salary, highest 10 percent earned annually, and other job growth statistics for accountants and auditors, based on the state.
5 Other Job Opportunities for CPAs
What if someone passes the CPA exam but decides they aren’t interested in working as an accountant or an auditor? There are several other careers that are excellent options for those who passed the CPA exam. Here are just a few of those options.
One of the common themes I’ve noticed is that people that tend to do well in this business have a strong accounting background. So if I see someone that has a CPA on their resume, I see that as a huge positive in the commercial banking business.
Financial analysts look at a variety of financial instruments, such as stocks and bonds, assess their performance and advise their clients on how to proceed in the financial market with a variety of those instruments. Much of their work involves studying the market, their client’s financial information, current trends and the strength of management teams.
Underwriters work for insurance companies, where they help the company assess the risks associated with covering particular clients. Ultimately, the underwriter determines whether to provide insurance to someone, and under what terms the insurance will be offered.
Loan officers typically work in banks, credit unions, mortgage companies and the like, where they evaluate and process loan requests for people and businesses. They might handle a loan from origination through approval, making sure all bases are covered along the way.
Personal Financial Advisor
These advisors work closely with clients to review their financial situation and provide advice on investments, loans, insurance, retirement, taxes, estate planning and much more. They might help clients form a savings plan for special life events, keep track of their finances to help ensure the best investments and even work to invest funds on their behalf.
These financial experts often work in one particular industry, where they can drill down on the financial implications for businesses within that industry. They provide an estimate on the time, materials and labor required for a particular company to develop a project or service. This estimation makes it clear what the bottom financial line will be for the company and provides an opportunity to find ways to cut costs.
Other good options for CPAs include working in private industry and within government (many different government agencies as well as some you might not expect, like the FBI). In my current role, I work directly with a variety of treasurers and CFOs of small companies and almost all of them have a CPA license.Lou Haverty
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