CPA Exam

A Certified Public Accountant (CPA) is a US state board-issued license to practice the accounting profession. You earn it after passing the CPA exam and fulfilling the necessary state-specific educational and experience requirements. With its pass rates hovering over 50% and its unique format, grading, and score release process, the CPA Exam is believed to be one of the most challenging professional exams.

All the 55-US jurisdictions (50 states along with the District of Columbia, Guam, the U.S. Virgin Islands, Puerto Rico, and the Commonwealth of Northern Mariana Islands) are authorized to grant this accounting license in their respective locations. 

CPA license is issued at the state level. Therefore, you must submit an official application for licensure to the concerned State Board of Accountancy. However, before applying for licensure, you must pass the Uniform CPA Exam and meet the state-specific requirements. 

Moreover, you must renew your CPA license every 1-3 years by fulfilling the state-specific Continuing Professional Education (CPE) requirements. 

Here are a few benefits of this prestigious CPA designation.

The basic CPA exam licensing requirements include the four E’s.

Please note that each of the 55 US jurisdictions has its education, experience, and ethics requirements to be met. In addition, the requirements may also vary on the grounds of age, citizenship, residency, social security, and participation in international programs.

There are three regulatory bodies involved in the CPA licensure process.

CPA Exam is an AICPA-administered computerized set of tests that assess a candidate's competency to practice as a newly licensed CPA. It includes four sections, each four hours long. You must pass all the sections within 18 months.

Irrespective of the jurisdiction, the exam is the same for all candidates. However, other licensing requirements may differ by jurisdiction. Please note that AICPA, NASBA, and Prometric work jointly for the administration of the exam. 

You must determine your eligibility before submitting the CPA exam application. Note that the exam eligibility requirements are state-specific. 

US candidates

Some basic educational requirements common to most state boards are as follows:

• Minimum 120 to 150 credit hours of education or a bachelor’s degree 
• Education from an accredited and recognized institution
• Minimum 24 credit hours in accounting and business-related subjects

International candidates

International applicants must meet the same eligibility requirements as that of their US counterparts.

With CPA equivalent certification from their country, international candidates can take the (International Qualification Examination) IQEX to practice in the United States. However, the licensing bodies of their countries must have a Mutual Recognition Agreement (MRA) with the NASBA.

You must submit the required application and examination fees (full or some part) while submitting the exam application. Check with your state board (BOA), and follow their rules.

US candidates

The fees vary as per the BOA. The following table presents the approximate fees to be paid by US candidates.

International candidates

Irrespective of the jurisdiction, International aspirants must pay an additional administration fee and the domestic testing fees for each exam section. Please note that the amount is non-refundable and is paid through NASBA. 

NASBA has introduced a new Continuous Testing model for testing. Under this model, you can schedule and take the exam throughout the year. Moreover, candidates failing an exam section can apply and retake it immediately after receiving the scores.

This model has replaced the earlier Testing Window model, which permitted candidates to test only during designated calendar quarters.

The CPA Exam is administered at authorized CPA Prometric centers in the 55 US jurisdictions and 17 designated international locations. Prometric is a company that offers exam registration, scheduling, and testing services for a number of professional exams.

#1 - Verifying eligibility

US candidates

To check your eligibility, do the following:

• Visit the NASBA or AISCPA website.
• Select your desired jurisdiction.

You will land on your state board webpage. It presents all information relating to education, necessary transcripts to be submitted, courses accepted, and residency requirements.

Kindly ensure you fulfill all the requirements before applying. If the state board finds you ineligible, it will reject your application and forfeit your application fee. 

International candidates

To check your eligibility, do the following:

• Visit the NASBA’s Internal Evaluation Services webpage.
• Select the jurisdiction that is participating in the international administration of the exam.

Also, to check your eligibility to take the IQEX, visit the NASBA website and check if the professional association you are a member of has MRA with the NASBA.

#2 - Submitting the CPA Exam application

You can apply to any jurisdiction as long as you fulfill its eligibility requirements. However, do not apply in more than one jurisdiction at a time. 

After checking your eligibility with the desired state board, you can submit your application through:

• NASBA’s CPA Central, if your jurisdiction is using NASBA’s CPA Examination Services, or,
• Specific state board website

Note that you must submit the application with the required fees and documents each time you sit for an exam section.

Once your application has been approved, the next step will depend on who accepts your application and the examination fees.

Application and examination fees are both accepted by the BOA

Your BOA will

• notify NASBA of the exam sections that you are permitted to take
• inform you when to expect your Notice to Schedule (NTS)

Application fees accepted by the BOA

Your BOA notifies the NASBA of the exam sections you are allowed to take. In turn, NASBA will contact you through an email intimating you to pay the examination fees. You must

• log in to the NASBA CPA Candidate Account website
• pay the required fees

On the receipt of the fees, NASBA issues an NTS within five days and informs you of the same. Remember to print or save a copy of the NTS from the website to present it at the testing center on exam day.

International candidates

International candidates must follow the aforesaid CPA application process and receive their NTS.  However, to take the exam at an international location, they must pay an additional fee before scheduling the exam with Prometric. After receiving NTS, they must

• log in to their NASBA CPA Candidate account
• select the sections to be taken at an international location
• pay up the additional international administration fees

#3 - Scheduling the exam

After completing the application process, you can schedule to take the exam. With the continuous testing model, you can schedule your CPA exam at the authorized Prometric centers any time of the year. However, remember to schedule the exam before the expiry of the NTS (six months).

Scheduling process

You can either visit the Prometric website or call the Candidate Service Center to schedule an exam section appointment. However, before starting the scheduling process, you must

• plan the dates for taking each exam section
• decide on the preferred time and location for taking the exam
• schedule the dates at least five days (45 days preferable) in advance of the desired exam date

Rescheduling/cancellation

You can also reschedule or cancel the exam through the Prometric website or Candidate Services Call Centre. However, you must pay a rescheduling fee to Prometric. The amount depends on when you inform Prometric of the cancellation or change.

If you reschedule more than 30 days before the exam day, you will not have to pay any rescheduling fees. Moreover, no cancellation or rescheduling is permitted within 24 hours of the scheduled exam time. Finally, bear in mind that rescheduling does not change the NTS expiration date. 

Retaking the exam 

You cannot reschedule or receive a refund of the fees paid if you fail to

• attend the scheduled exam
• arrive with the right NTS or personal ID
• cancel the scheduled appointment
• schedule an appointment before the NTS expires

However, you can reapply within 5-7 days with the necessary application and examination fees to the BOA or NASBA. In the event of failing a section, you can reapply after 24 hours of receiving the scores.

Once you have successfully scheduled your exam, you must prepare to take the exam. The best scenario is to prepare first and then schedule and take your exam. This reduces last-minute stress.

AICPA and NASBA offer various exam resources and sample tests to prepare for the exam. In addition, use NASBA’s Candidate Bulletin to understand the exam process thoroughly.

Furthermore, for a detailed understanding of the content, format, structure, and scoring of the exam, you can refer to AICPA’s Exam Blueprints. Also, practice AICPA’s sample tests and tutorials to get familiar with the format and software of the exam.

Moreover, remember to use your NTS to gain free access to NASBA’s Professional Literature package. Besides, you can also take the help of popular CPA exam review courses.

Taking the exam

Before the exam day, take some time off to visit your Prometric center. Prometric offers a Test Drive program. It permits you to take a 30-minute trial run of the test center experience prior to the actual exam.

Also, don’t forget to carry your NTS and personal identification (ID) documents with you to the center on exam day. Or else you won’t be allowed to sit for the exam. 

Format

The exam has four exam sections to be taken separately. Each of the four CPA exam sections is divided into five small blocks or testlets. They include two types of CPA exam questions, namely, multiple-choice questions (MCQ) and task-based simulation (TBS).

Only the BEC section contains an additional element of written communication tasks (WCT). All question types have pretest and operational questions. The following table presents the number and type of questions in each exam section.

Question types

There are three types of questions in CPA:

• MCQ – They offer multiple answer options, and you have to select the correct one. They appear in the first two testlets of all the sections.
• TBS - They are real-life case studies that assess your ability to apply the concepts learned. They appear in the last three (two in BEC) testlets of all the sections.
• WCT - They are written tasks that require you to draft a short passage, letter, or memo on a given workplace scenario.

All questions (MCQ, TBS, and WCT) are either pretest or operational.

• Operational questions - They contribute to your final score.
• Pretest questions - They are not scored and are tested to see their viability in future exams.

Testing process

You have to take all five testlets consecutively. However, you get a 15-minute break after your third testlet.

MCQ testing process

The exam uses a multi-stage adaptive model for MCQs. It means that the test proceeds depending on your performance. Note that the MCQ testlets differ in difficulty.

The first MCQ testlet is of medium-level difficulty. If you display a strong performance in the first testlet, you get a difficult testlet next.  With a weak performance, you get a medium-level second testlet.

Please note that questions are scored based on their difficulty. Hence, a difficult question is worth more points than an easy one.

TBS & WCT testing process

The TBS and WCT testlets are common for all. You get the TBS testlets only after completing the MCQ testlets and the WCT testlet after completing the TBS testlets.

There are four sections in the CPA exam. They are as follows:

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

#1 - AUD Section

The AUD section in CPA exam evaluates your expertise as a newly licensed CPA to perform audit, attestation, or accounting and review engagements. 

It tests your understanding of the following concepts:

• Professional responsibilities (ethics, independence, and professional skepticism)
• Flow of transactions and data through a business process
• Operations of a business entity (information systems, risks, and internal controls)

Content allocation

Skill allocation

#2 - BEC Section

The BEC section in CPA tests your competency to perform the following services:

• Audit, attest, account, and review
• Financial reporting
• Tax Preparation

As mentioned above, BEC includes an additional segment WCTs along with MCQs and TBSs.

Content allocation

 Skill allocation

#3 - REG Section

The REG section in CPA tests your understanding of federal taxation, business Law ethics, and professional responsibilities related to tax practice. 

Content allocation

Skill allocation

#4 - FAR Section

The FAR section in CPA exam examines your competency in understanding and applying FAR frameworks used by business entities, state and local government entities, and not-for-profit entities. 

The FAR frameworks include the regulations and standards issued by the following entities:

• Financial Accounting Standards Board (FASB)
• US Securities and Exchange Commission (US SEC)
• Governmental Accounting Standards Board (GASB)
• AICPA

Content allocation

Skill allocation

Passing score

You must score 75 or more (not 75%) on a scale of 0-99 in each of the four exam sections to pass. Also, you must qualify for all the sections within the 18-month of passing the first exam section. However, this rule may vary by jurisdiction.

Scoring process

The CPA exam scores are scaled per AICPA's policy, considering each question's accuracy, level of difficulty, and statistical characteristics. Then, these scaled scores of MCQs, TBSs, and WCTs are combined with the policy weights to get the final score.

The following table presents the scoring weights assigned to each question type. 

Score release process

The CPA Exam score-releasing process consists of three steps:

1. As soon as you complete testing at the assigned Prometric test centers, Prometric sends the exam files to the AICPA for scoring within 24 hours. 
2. After scoring, AICPA sends advisory scores to NASBA. NASBA links the scores to your identity. 
3. NASBA transfers these scores to your state board for approval and release. 

Score release dates

The exam scores are released throughout the year. However, AICPA notifies the release dates twice a year. 

For exam sections to be taken during the first half of a year, score release dates are reported in December of the previous year. While for sections to be taken during the second half, score release dates are declared by June of the current year. 

Please note that the BEC section result can be delayed by a week beyond the target release date. This is due to the extra analysis required to evaluate WCTs. 

The CPA exam has an average pass rate of 50%. However, the pass rates vary from year to year. This does not mean that the exam was tough or easy in any particular year. It just reflects the performance of the candidates in a specific year in comparison to previous years. 

Moreover, AICPA publishes CPA exam pass rates for each section every quarter. Here is the currently released pass rate for Q1 2021.

Being one of the most challenging professional exams, you must brace yourself for some real hard work to pass it. The following tips on CPA exam prep will help you in the process.

After passing the exam, you can apply for a CPA license in any jurisdiction where you plan to practice as a CPA. Please note that the jurisdiction where you take the exam has no bearing on where you decide to practice. Your exam scores can be transferred to any jurisdiction for getting a license.

However, you must meet the additional requirements of the concerned jurisdiction. Like the education and work experience requirements for the exam, requirements for a license also vary from state to state.

Most states require 150 hours of education, with accounting being the main subject. Also, they need a minimum of 2000 hours of accounting experience, which a licensed CPA must verify. Check with your state board for specific details.

Ethics exam

Passing an ethics exam can be a prerequisite for a license in some jurisdictions. Hence, check whether or not your jurisdiction demands the same. 

Know that a majority of jurisdictions accept the AICPA's Professional Ethics exam and self-study. You must enroll in the course and score at least 90% on the exam to meet the ethics requirement. However, a few state boards may offer their own ethics exam or course. 

You are eligible to receive the Elijah Watt Sells Award for displaying outstanding performance in the exam.  To be eligible, you must pass all the exam sections on the first attempt and get a score of 95.50 or more in all four exam sections. 

For more than four decades, AICPA has been awarding hundreds of scholarships and fellowship awards to the nation’s top professionals. Some of the available AICPA scholarships are mentioned in the table below.

This article is a guide to CPA Exam. Here, we discuss CPA Exam Score release, exam structure, process, pass rates, score release dates to tips. You may also have a look at the below articles to compare CPA with other examinations -

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