Step 1: Know Your Requirements

How do you become a CPA?

CPA licenses are issued by State Boards of Accountancy. Each state or jurisdiction makes its own rules, but their requirements are often similar. These three requirements are known as the three E’s.

Education

To sit for the CPA exam and become licensed, you will need at least a college degree. Back in the day, a bachelor’s degree used to be enough. And to test, sometimes it is. But, if you wish to become licensed, you’ll need 150 hours of education.

Examination

To sit for the CPA exam and become licensed, you will need at least a college degree. Back in the day, a bachelor’s degree used to be enough. And to test, sometimes it is. But, if you wish to become licensed, you’ll need 150 hours of education.

CPA licensing rules change from state to state, but no matter where you live, the CPA exam is the same.

The CPA exam totals four sections and 16 hours of testing:

  • Auditing and Attestation (AUD)
  • Business Environments and Concepts (BEC)
  • Financial Accounting and Reporting (FAR)
  • Regulation (REG)

These include a mix of multiple choice questions, task based simulations, and written responses. Each section is difficult, often requiring 90-120 hours of study time and the exam passing rate (the percentage that pass each exam) is just 50%.

Experience

You can take the CPA exam as soon as you meet your State Board of Accountancy's education requirement. But, this is not enough to put the letters "CPA" after your name. You need two years of work experience in public accounting as well.

Some states will accept government or industry experience, but they will usually require such experience to be for a longer period.

Ethics

Wait, there’s a fourth E?

The fourth 'E’ is Ethics. Not every state requires it, but most insist on an ethics exam before they issue a CPA license. This is nowhere near as intense as the CPA exam. The pass rate tends to exceed 90%.

Requirements by State

Since exam and licensure requirements vary by state, it’s best to determine your state requirements before signing up for the exam.

Do you know your state's requirements for testing? What is the best state for you?

Compare CPA Requirements By State

Step 2: Master the Exam Format & Scoring

The CPA Exam is a comprehensive litmus test comprised of four sections. Each section is taken as a separate four hour exam and covers a wide range of accounting topics.

Types of questions on the CPA exam:

  1. Multiple-Choice Questions
    MCQs make up the majority of the exam and are standard format, one question and four answer choices. Your task is to pick the best answer.
  2. Task-Based Simulations
    Think of these like mini-case studies. Some will require you to be able to search through databases of law, or work with spreadsheets and forms. TBS measure your application, analysis, and evaluation skills.
  3. Written Communication
    In BEC, you’ll be asked to write letters or memoranda on a variety of topics. The written communications are scored on the basis of three criteria.

Auditing & Attestation

The Auditing section of the CPA exam tests on the entire auditing process. This includes auditing procedures, auditing standards, and the AICPA Code of Professional Conduct. You’ll apply your knowledge of auditing and attestation over a variety of problems and complex tasks.

The AUD Exam Content:

  • Area 1 — Ethics, Professional Responsibilities and General Principles 15-25%
  • Area 2 — Assessing Risk and Developing a Planned Response 20-30%
  • Area 3 — Performing Further Procedures and Obtaining Evidence 30-40%
  • Area 4 — Forming Conclusions and Reporting 15-25%

Important AUD topics to know:

  • Nature and Scope of Engagements (audit and non-audit)
  • Ethics, Independence and Professional Conduct
  • Terms of Engagement
  • Engagement Documentation
  • Communication Requirements
  • Quality Control
  • Planning the Engagement
  • Understanding an Entity and Its Environment, Internal Controls Over Financial Reporting
  • Assessing Risk and Further Procedures

Auditing Exam Structure:

The AUD exam is comprised of 72 Multiple-choice questions and 8 Task-based simulations.

SectionItem TypeItem WeightingTestlet
Auditing & Attestation (AUD) 72 MCQs
8 TBSs
50%
50%
#1: 36 MCQs
#2: 36 MCQs
#3: 2 TBSs
#4: 3 TBSs
#5: 3 TBSs
Time to complete: 4 hours

AUD Sample Questions
The Auditing exam will test your mastery of the audit process. Practice over 200 Auditing questions now in our free test-bank.

Free AUD Questions

Business Environments & Concepts

The Business Environments & Concepts section of the CPA exam tests your understanding of business concepts and CPA duties within the business environment. You will put your knowledge of corporate governance, economic concepts, financial management, information systems, and communications to the test. The BEC exam is unique in that it contains a written communication in addition to MCQs and TBS.

The BEC Exam Content:

  • Area 1 — Corporate Governance 17-27%
  • Area 2 — Economic Concepts & Analysis 17-27%
  • Area 3 — Financial Management 11-21%
  • Area 4 — Information Technology 15-25%
  • Area 5 — Operations Management 15-25%

Important BEC topics to know:

  • Economic Concepts and Analysis
  • Market Influences on the Business Environment
  • Understanding Financial Risks and Methods for Mitigation
  • Calculating Metrics of Working Capital
  • Impact of Business Decisions on Working Capital
  • Application of Cost Accounting Concepts
  • Information Technology and IT Risks
  • Budgeting and Forecasting Techniques

Business Environments & Concepts Exam Structure:

The BEC exam is comprised of 62 multiple-choice question, 4 task-based simulations, and 3 written communications.

SectionItem TypeItem WeightingTestlet
Business Environment and Concepts (BEC) 62 MCQs
4 TBSs
3 Written communications
50%
35%
15%
#1: 31 MCQs
#2: 31 MCQs
#3: 2 TBSs
#4: 2 TBSs
#5: 3 Written communications
Time to complete: 4 hours

BEC Sample Questions
The BEC exam will test your mastery of the corporate accounting landscape. Practice over 200 BEC questions now in our free test-bank.

Free BEC Questions

Financial Accounting & Reporting

The Financial Accounting and Reporting section of the CPA exam tests on U.S. GAAP standards, financial statements, the recording of transaction types and events, accounting and reporting for government entities, non-governmental entities, and not-for-profit organizations. The amount of content covered by FAR is immense and it is often described as the hardest CPA exam section.

The FAR Exam Content:

  • Area 1 — Conceptual Framework, Standard-Setting and Financial Reporting 25-35%
  • Area 2 — Select Financial Statement Accounts 30-40%
  • Area 3 — Select Transactions 20-30%
  • Area 4 — State and Local Governments 5-15%

Important FAR topics to know:

  • Financial Accounting Standards Board (FASB) Accounting Standards Codification
  • FASB Concepts Statements
  • AICPA Accounting and Auditing Guides
  • International Financial Reporting Standards
  • Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards (GASB)
  • Select Financial Statement Accounts (inventory, trade receivables, revenue recognition, statement of cash flows, and more)

Financial Accounting & Reporting Exam Structure:
The FAR exam is comprised of 66 multiple-choice questions and 8 task-based simulations.

SectionItem TypeItem WeightingTestlet
Financial Accounting & Reporting (FAR) 66 MCQs
8 TBSs
50%
50%
#1: 33 MCQs
#2: 33 MCQs
#3: 2 TBSs
#4: 3 TBSs
#5: 3 TBSs
Time to complete: 4 hours

FAR Sample Questions
The FAR exam will test your mastery of the financial accounting process. Practice over 200 FAR questions now in our free test-bank.

Free FAR Questions

Regulation

The regulation section of the CPA exam will put your knowledge of federal taxation, business law, ethics, and professional/legal responsibilities to the test. You better know your difference between a W-2 and a W-4 for this one as the majority of Regulation is tax law.

The REG Exam Content:

  • Area 1 — Ethics, Professional Responsibilities and Federal Tax Procedures 10-20%
  • Area 2 — Business Law 10-20%
  • Area 3 — Federal Taxation of Property Transactions 12-22%
  • Area 4 — Federal Taxation of Individuals 15-25%
  • Area 5 — Federal Taxation of Entities 28-38%

Important REG topics to know:

  • Understand of the legal implications of business transactions as they relate to accounting, auditing, and financial reporting
  • The Uniform Commercial Code under the topics of contracts and debtor-credit relationships
  • Non tax-related business structure
  • Federal income tax and property transactions
  • Federal taxation of individuals
  • Federal taxation of S-corps, C-corps, sole proprietorships, partnerships, limited liability companies, not-for-profits, and more

Regulation Exam Structure:

The REG exam is comprised of 76 multiple-choice questions and 8 task-based simulations.

SectionItem TypeItem WeightingTestlet
Regulation (REG) 76 MCQs
8 TBSs
50%
50%
#1: 38 MCQs
#2: 38 MCQs
#3: 2 TBSs
#4: 3 TBSs
#5: 3 TBSs
Time to complete: 4 hours

REG Sample Questions
You don’t know tax. Or do you? Practice over 200 REG questions now in our free test-bank.

Free REG Questions

CPA Exam Format & Scoring

When you walk into Prometric for the first time, you may be a bit nervous. To help, here’s what you can expect as you sit down and begin.

The CPA exam is broken into multiple testlets. The total exam time is 4 hours with a standardized 15 minute break which can be taken after the first TBS testlet.

Scoring

What’s the passing score of the CPA Exam? 75. But, this isn’t as simple as 75%. Your score is calculated through a much more complicated process.

In AUD, BEC, and FAR, 50% of your score will come from multiple-choice questions and 50% from task-based simulations. For BEC, the score breakdown consists of 50% from multiple-choice questions. 35% from task-based simulations and 15% from written communications.

When it comes to MCQs, not every question is worth the same. Questions that are more difficult will be worth more and equate to a higher percentage of your overall score.

How the AICPA Determines Question Difficulty

If more difficult questions count for more of the score, how does the AICPA determine question difficulty? They use pre-tested questions.

One of the more curious things about the CPA exam is that not every question contributes to your grade. Most do, but there are also a small number of "pretested" questions.

These question are on the exam to collect data on how many people answer them correctly. This then gives the AICPA a real-world measure of that question’s difficulty. After a question has been pretested, it can go on future exams as a graded question and the AICPA will know what percentage it should be worth.

CPA Exam Testlets and Multi-Stage Testing

During the multiple-choice section, you will receive one testlet of medium difficulty questions. If you do well enough, your next testlet will include difficult questions.

Understanding how this multi-stage testing works can help you keep calm on exam day.

Just picture it: you're in the middle of this hugely important and notoriously difficult exam and for a while you're doing well. But, all of a sudden, all the questions become immensely more difficult.

If you don't understand multi-stage testing, this could easily cause panic. But, if this happens to you, fear not. The questions in the more difficult testlet are worth more towards your score. So, by advancing to the more difficult testlet, you may earn a higher score by doing well on less questions.

Multi-stage testing is not a factor in the task-based simulations. It is only used in the multiple choice section. While important to know, don’t waste too much time mastering how the exam is scored.

Step 3: Apply for the Exam

Ready to sit for the CPA Exam? The process is more than just paying a fee and scheduling a time. There are several steps to take. Since small mistakes, omissions, or delays at any of these steps can push back the entire process, it is best to be organized in advance.

  1. Order Your Transcripts Early
    Your State Board of Accountancy will require you to prove your education with academic transcripts and it is a good idea to get your transcripts well before you need them. When it's getting close to exam time, you're going to have a great deal on your mind as it is, so you will be grateful to have one less thing to organize. Exact rules for applying for transcripts vary from school to school, so contact your registrar’s office. You'll likely need to apply by mail—if you're lucky, your school may allow you to apply online.
  2. Submit CPA Exam Application with fees
    After you’ve submitted your transcripts and paid your application fee, you will receive an Authorization to Test. This document is issued by your State Board of Accountancy and is your permission slip to sit for the exam.
  3. Get Your Notice to Schedule from NASBA
    Your “Authorization to Test” allows a window of time to sit for your exams. The time period varies from state to state, but is most often 90 days. For this reason, when you submit your application to your State Board of Accountancy, you will only want to pay for the exams you can sit for during this time. If you are unable to sit for a paid-exam during this period, you will lose your testing fee.
  4. Book With Prometric When ready to schedule, visit the Prometric website and schedule your exam.
    1. Click “Schedule My Test” & choose your state
    2. Enter exam section ID and first four letters of your last name
    3. Choose your location/date/time.

    Beware, rescheduling fees become more expensive closer to your exam date.

CPA Exam Rescheduling Fees:

  • 30+ days: no fee
  • 5-30 days: $35.00
  • 1-5 days: full exam fee
  • >24 hours: rescheduling not allowed. You’ll have to re-apply.

What is the best order to take the CPA exam in?

There’s no perfect answer, but there are three main strategies:

  • Start with the most difficult
  • Start with the easiest
  • Start with the freshest

Start with the Most Difficult

If you are one that likes to get a challenge out of the way early, why not consider taking the most difficult section first? With the hardest out of the way, you can focus the remaining 18 months of preparation time on easier sections without worry of an exam expiring.

As it is, once you pass a part of the CPA exam, there is an 18 month window before that exam expires. With there being three parts left to take after your initial pass, you will have six months per section to study.

If there’s a section that worries you enough that you’d rather spend more than six months studying for it, why not start there? That way, when you pass, you will have built the confidence necessary to succeed.

While pass rates are similar amongst parts, FAR and AUD tend to cover the greatest amount of material. These could be a great starting place.

Start with the Easiest

On the other hand, the CPA exam is such a long process that good habits, momentum, and self-discipline are crucial if you plan to make it to the end.

So, instead of tackling the most difficult first, why not begin with the subject that comes easiest to you first? This will allow you to ease into the study process with a familiar topic, allowing you to build manageable study habits.

After you’ve studied and passed your first part, you will have plenty of positive momentum to continue forward.

But, is there an "easier" part? Many assume that BEC is the easiest, by far, due to it having a much higher pass rate. But, the fact of the matter is that BEC also has lower enrollment than any other sections. This is due to many candidates tackling it last. So, BEC is mostly taken by those who have already succeeded with the other three examinations.

Start with the Freshest

What’s most fresh in your mind? Have you recently graduated? Are there any specific accounting subjects that you did extremely well in and were those topics related to one of the four CPA sections (AUD, BEC, FAR, REG)?

If they were then why not go with the flow? That recent semester of study is 6 months of preparation that you can continue building on. It may be much better to tackle the subject now, before you start forgetting everything that you learned.

Step 4: Choose a Review Course

A good CPA review is like a good tool. It can make a tough job easier, but it isn’t going to do the work for you. It certainly doesn’t contain a magical path to a passing score. Yet, choosing a course with quality review questions, reliable guarantees, and that fits within your price range can absolutely make a difference.

Where do you begin and how do you choose the right CPA review for you?

Start by looking past gimmicks

If you’ve seen the recent announcements made by review providers over this past year, you’d think there was a technological revolution taking place in the CPA review industry.

All of a sudden, everybody and their cousin has a “SMART” course built upon “adaptive learning.” These courses include some strong promises like saving hundreds of hours of study time. Most of these options employ a variety of reporting to track your performance, but few are truly adaptive. The technology can certainly help, but it’s best not to purchase a review course based on a single feature. Be sure to look past the gimmicks when choosing your course.

Don’t rely on pass rates

“Better than 9/10 pass!” “2x National Pass Rate!”

You may be tempted to study with a course that has a high “pass rate.” But, remember, the AICPA does not release information regarding with whom a successful candidate studied with. Therefore, all review course pass rates are determined by internal surveys which can be incredibly biased. If a pass rate seems too good to be true, it more than likely is. Don’t forget that the overall exam pass rate is less than 50%.

Ask about support and guarantees

Some review providers include great guarantees to help you along your way to becoming a CPA. Where some limit your access to 18 months, others will give you access until you pass. Some courses will also include free online updates whereas others will charge for updated material. Be sure to ask about the guarantees included in your purchase and make sure there isn’t limiting fine print.

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