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CPA Certification Comprehensive Guide [2022 Updated] To become a professional accountant – auditor, one of the certifications you need is a CPA certificate. A CPA certificate is a measure to show an individual’s professional level and ability when they work in the field of taxation, auditing, etc. What is CPA? CPA is an acronym for […]

August 3, 2022

CPA Certification Comprehensive Guide [2022 Updated]

To become a professional accountant – auditor, one of the certifications you need is a CPA certificate. A CPA certificate is a measure to show an individual’s professional level and ability when they work in the field of taxation, auditing, etc.

What is CPA?

CPA is an acronym for the English phrase Certified Public Accountants, which can be understood as Licensed Certified Public Accountants. Holders of this certificate are recognized as professional accountants/auditors, able to freely practice their profession, enhance their own brand and prove their competence to society.

For those who work in accounting, auditing, and finance professions, the CPA certification is a fundamental certification. Many countries today have certificates equivalent to CPA, typically the CA (Charter Accountant) certificate.

When possessing this certificate, you can become a professional accountant, participate in bookkeeping jobs, as an individual in the business of accounting services; have the opportunity to become a Chief Accountant, or as an owner of an accounting service business.

Why Should You Take the CPA Certification?

What are the primary advantages of becoming a CPA? To become a Certified Public Accountant is the desire of many accountants. The following are the top five reasons why one should become a CPA:

Respect from Others

CPAs are often regarded as members of an exceptional group of professionals since they are held in high esteem not just by their colleagues but also by their clients and the general public. After years of academic and technical study, as well as passing the demanding CPA Exam, a Certified Public Accountant (CPA) must next undergo many years of intensive on-the-job training. This puts the CPA’s ethics and character to the test. These professionals proudly obtain the title of Certified Public Accountant by achieving a level of competence and proficiency that is above and above that of a “normal” accountant.

Career Development

Individuals who have passed the Certified Public Accountant (CPA) Examination and have obtained their CPA license are able to distinguish themselves from prospective employers, who are often impressed with accountants who have achieved this highly desired designation. Obtaining a CPA license not only identifies possible prospects for leadership and management roles but also displays a candidate’s dedication to the field of public accounting.

Those who want greater degrees of control and responsibility must also get a license to practice as a certified public accountant. It is fairly unusual for experienced accountants to decide to go back to school in order to get a Master’s Degree in Accounting. This allows them to begin the process of becoming a certified public accountant (CPA).

Career Security

CPAs are in more demand than they have ever been, and this trend does not seem likely to reverse itself in the near future. A decrease in the number of students enrolling in accounting programs during the dot-com boom of the 1990s, when many students instead decided to pursue careers in information technology and marketing, is one of the reasons why there is a greater need for certified public accountants now. 

In addition, the Sarbanes-Oxley Act was signed into law in 2002, and as a result, there is a greater need for trained CPAs to enforce better standards of public company accounting.

Job Satisfaction

CPAs are typically multi-talented professionals who perform a variety of highly specialized job functions, such as auditing, business, and management consulting, information technology (IT), international financial reporting, tax advisory services, etc. 

Other job functions that CPAs may perform include analyzing financial statements, advising clients on how to best manage their businesses, and providing information technology (IT) services. Individuals have the opportunity to make a difference in a variety of fields through the various routes they can take to become a certified public accountant (CPA), such as becoming a forensic CPA. 

This is contingent, of course, on the knowledge and experience they’ve acquired as well as the goals they hope to achieve through their work. Particularly for CPAs who are members of the Millennial generation, the accounting profession provides these people with distinctive benefits in terms of giving back to society, which is something they place a high value on.

In addition, the environment in which accounting is practiced is evolving as a result of the development of globalization. CPAs have greater opportunities to travel the globe and get expertise in international business, particularly those CPAs who are fluent in several languages and have a diverse cultural background.

Monetary Benefits 

Next to having a love for the work, many individuals place a high value on the possibility of earning a good wage and receiving other advantages from their chosen line of work. Those who are thinking about getting their CPA certification are fortunate in that there are a variety of employment options available to them, including positions in business, government, non-profit organizations, and public accounting.

Being a Certified Public Accountant (CPA) is not simply a job; rather, it is a succession of occupations and stepping stones that, when taken together, will lead to an incredible career. If the fact that having a CPA license may open up a wide variety of doors for you in terms of professional advancement isn’t enough to convince you, consider the following data about wages and employment rates for CPAs:

  • You’ll earn 10-15 percent extra if you have your CPA license.
  • Through the years 2024, the Department of Labor and Statistics anticipates that the number of jobs available for accountants and auditors will increase at a rate that is higher than the average for all professions.

CPA Exam Structure and Format

There are four different portions, or components, of the CPA test, and they are as follows:

  • Auditing & Attestation (AUD)
  • Financial Accounting & Reporting (FAR)
  • Regulation (REG)
  • Business Environment & Concepts (BEC)

In its most basic form, each section of the Uniform examination consists of a test that lasts for four hours and covers a distinct selection of subjects and ideas. Therefore, in order to become a CPA, you are required to get a score of at least 75 on each of the four portions of the exam that must be taken within a period of 18 months.

You are free to choose the sequence in which you tackle the various parts of the exam provided there is an available testing session. In addition to that, you are permitted to sit for an unlimited number of examinations within the confines of a single testing window. Having said that, I do not advise taking more than 2 at the same time frame. It is impossible to effectively plan for more than this at the same time since it is too tough. You don’t want to end your own life, do you? However, it is feasible to sign up for and take all four within the same time frame.

You are not permitted to take the same part more than once. If you do not pass one of the parts of the exam, you will not be able to repeat the test until the next available opportunity. The AICPA is the entity responsible for formulating and creating the exam; however, they are not responsible for the actual administration of the test. Instead, the test is administered by each individual state, applicants are given feedback on their performance, and those of us who are successful in the exam are awarded licenses.

Each exam section is organized into tests, which are groups of questions. Either task-based simulations or multiple-choice questions are included in these tests. Each exam also begins with a number of MCQ test and is followed by a number of Task-Based Simulation (TBS) tests.

Let’s take a look at the structure, content, and scoring of the Certified Public Accountant test.

Multiple-Choice Question 

When you answer a multiple-choice question, the level of difficulty increases or decreases depending on the response that you choose. For example, a multiple-choice question test of a medium difficulty level kicks off each exam session. If you perform well on this multiple choice test, you will be given an MCQ test that is of a higher difficulty level on your next try. If you perform well on this test, you will go on to the third test, which will have a collection of questions that are much more difficult. If, however, you fail any test, the reverse is true. This is how it appears:

Perhaps the thought that just crossed your mind was, “Oh, this is great. It’s possible that if I perform poorly on the first round of questions, the rest of the exam will be easier. Wrong. Because they carry more weight, you really prefer queries that are harder. 

In general, one properly answered challenging question will have a bigger impact on your final grade than numerous successfully answered simple questions. As a result, giving answers to questions that are difficult to answer is highly recommended for you to do.

There are pretest questions hidden within the operational questions that need to be answered. The AICPA is now analyzing these questions in order to decide whether or not they will be included in subsequent exams. They are similar to the questions that are on a conventional test, and the answers do not have any influence on how you ultimately score.

Task-Based Simulation 

Task-based simulations are problem sets that allow you to demonstrate your familiarity with the topic being tested by putting your knowledge to use and putting it to test. The most common kinds are matching and fill-in-the-blank, although each part of the examination has its own unique format. In each of the sections, there is also a research question that requires you to read a particular topic from a credible source and then cite a portion of the statute that discusses the problem at hand. The vast majority of candidates have the impression that they are more difficult than the MCQs.

You will have a total of four hours to finish each exam, despite the fact that they each include a different number of questions and situations. In the examinations that were given in the years before, each section was given a unique amount of time. The AICPA lowered the FAR in 2017 and prolonged the BEC, which resulted in a time constraint of 4 hours for each component.

Written Communication 

In addition, the Business Environment and Concepts (BEC) section of the CPA exam is the only one that includes a written communication component. Although there are candidates who find this component to be easy, there are others who find it to be somewhat difficult. It’s not hard at all. They want you to compose a customer letter or a memo using a word processor so that they can assess your technical writing and communication skills. During your CPA review course, you may have the opportunity to try and practice a few different examples of this.

The following is an outline of how each component of the CPA exam is arranged. The following is a rundown of the simulations as well as the multiple-choice questions that are associated with each part.

Section

Multiple-Choice Question

Task-Based Simulation

Written Communication

Auditing & Attestation (AUD)

72

8

0

Business Environment & Concepts (BEC)

62

4

3

Financial Accounting & Reporting (FAR)

66

8

0

Regulation (REG)

76

8

0

CPA Exam Scoring

The AICPA regularly revises the weight and grade assigned to the multiple-choice questions that appear on its examinations. There was a time not so long ago when the questions on the exam were worth more than 70 percent of the entire score on the test.

In recent years, they have been emphasizing the importance of task-based simulations while downplaying the value of multiple-choice questions (also known as MCQs). The multiple-choice questions and the simulations each carry the same amount of weight, with the exception of the BEC. As a consequence of this, the multiple-choice questions (MCQs) only count for half of your total points, while the simulations account for the other half.

The following is a breakdown of the weighting and grade for the CPA test.

Section

Multiple-Choice Question

Task-Based Simulation

Written Communication

Auditing & Attestation (AUD)

50%

50%

0

Business Environment & Concepts (BEC)

50%

35%

15%

Financial Accounting & Reporting (FAR)

50%

50%

0

Regulation (REG)

50%

50%

0

CPA Exam Content

The following list of general subjects is split down into each of the 4 CPA tested specimens:

Auditing (AUD)

AUD is responsible for all of the auditing and assurance work that is carried out in public accounting. Your knowledge of the audit process, reviews, compilations, and attest engagements will be evaluated to see how well you understand these topics. The following is a list of the different subjects that will be examined during the test.

Subsection

Percentage

Professional Responsibilities, Ethics, and General Principles

15–25%

Assessing Risk and Developing a Planned Response

20–30%

Performing Further Procedures and Obtaining Evidence

30–40%

Forming Conclusions and Reporting

15–25%

Business Environment and Concepts (BEC)

A BEC is a comprehensive investigation of the environment in which an organization operates. It encompasses a wide range of topics, including cost accounting, management, information technology, as well as both macroeconomics and microeconomics. The following is a list of the topics that will be covered in BEC, along with the percentage of the test that they will account for.

Subsection

Percentage

Corporate Governance

17–27%

Economic Concepts and Analysis

17–27%

Financial Management

11–21%

Information Technology

15–25%

Operations Management

15–25%

Financial Accounting and Reporting (FAR)

The FAR component of the exam covers the greatest content of all of the test sections. It covers all there is to know about accounting and financial reporting. The FASB framework, the creation of financial statements, the stipulations of US GAAP, and the regulations of IFRS are all included in this. The following is a rundown of the subjects that will be tested on the FAR, along with the percentage of the total score that each will account for.

Subsection

Percentage

Standard-Setting, Conceptual Framework, and Financial Reporting

25–35%

Financial Statement Accounts

30–40% 

Transactions

20–30%

Local and State Governments

5–15%

Regulation (REG)

The only exam that does not expressly contain questions about accounting principles is the REG. The most important aspects of this field are business ethics, legal issues, and taxation. The following is a list of the several issues that were discussed.

Subsection

Percentage

Professional Responsibilities, Ethics, and Federal Tax Procedures

10–20%

Business Law

10–20%

Property Transaction Federal Taxation

12–22%

Individual Federal Taxation

15–25%

Entity Federal Taxation

28–38%

What is the CPA’s Most Difficult Section?

According to the results of our latest analysis of the CPA industry, over half of those polled say that the most challenging aspect of the CPA Exam is the FAR part. Applicants for the CPA exam are expected to have a solid understanding of US GAAP, which covers topics such as standards for income statements, transactions, and events, governmental entities, as well as accounting for both nongovernmental and not-for-profit institutions. 

FAR makes this a requirement for CPA candidates. Candidates for the Chartered Professional Accountant (CPA) designation need to be able to show that they have the necessary abilities to apply the financial statement expertise expected of CPAs.

Having said that, this is a really open-ended question. The portion of the Certified Public Accountant exam that is seen to be the most challenging might vary from person to person, given that some subjects may be more challenging to comprehend than others.

Above is all the information related to the CPA certification we want to send to you. Hope this information is useful to those of you who are working in the field of accounting and auditing. Hope you reach the top of your career soon.