TODAY WE'LL DISCUSS (CPA) CERTIFICATION,
Certified Public Accountant (CPA) is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA. Individuals who have passed the Exam but have not either accomplished the required on-the-job experience or have previously met it but in the meantime have lapsed their continuing professional education are, in many states, permitted the designation "CPA Inactive" or an equivalent phrase. In most U.S. states, only CPAs who are licensed are able to provide to the public attestation (including auditing) opinions on financial statements. The exceptions to this rule are Arizona, Kansas, North Carolina and Ohio where, although the "CPA" designation is restricted, the practice of auditing is not.
Many states have a lower tier of accountant qualification (below that of CPA), usually entitled "Public Accountant" (with designatory letters "PA"). However the majority of states have closed the designation "Public Accountant" to new entrants, with only about 10 states continuing to offer the designation. Many PAs belong to the National Society of (Public) Accountants.
Many states prohibit the use of the designations "Certified Public Accountant" or "Public Accountant" (or the abbreviations "CPA" or "PA") by a person who is not certified as a CPA or PA in that state. As a result, in many circumstances, an out-of-state CPA is restricted from using the CPA designation or designatory letters until a license or certificate from that state is obtained.
Texas additionally prohibits the use of the designations "accountant" and "auditor" by a person not certified as a Texas CPA, unless that person is a CPA in another state, a non-resident of Texas, and otherwise meets the requirements for practice in Texas by out-of-state CPA firms and practitioners
CPA exam
Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically the requirement is a U.S. bachelors degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional 1 year study. This requirement for 5 years study is known as the "150 hour rule" and has been adopted by the majority of state boards, although there are still some exceptions (e.g.California). This requirement mandating 150 hours of study has been adopted by 45 states.
The Colorado State Board of Accountancy allows Chartered Certified Accountants (ACCA), together with Chartered Accountants from eligible jurisdictions (Australia, South Africa, Canada, Ireland, India, New Zealand) automatic eligibility to sit for the Uniform CPA Exam as a Colorado candidate. As of December 9, 2009, ACCA members are not automatically eligible to sit for the Uniform CPA Exam.
Certain overseas qualified accountants seeking to become U.S. CPAs may be eligible to sit for the International Qualification Examination as an alternative to the Uniform CPA Exam.
The Uniform CPA exam tests general principles of state law such as the law of contracts and agency (questions not tailored to the variances of any particular state) and some federal law as well.[3]
State requirements for the CPA qualification can be summed up as the Three Es—Education, Examination and Experience. The Education requirement normally must be fulfilled as part of the eligibility criteria to sit for the Uniform CPA and the Examination component is the Uniform CPA itself. Some states have a two tier system whereby an individual would first become certified as a CPA—usually by passing the CPA exam. That individual would then later be eligible to be licensed once a certain amount of work experience is accomplished. Other states have a one tier system whereby an individual would be certified and licensed at the same time when both the CPA exam is passed and the work experience requirement has been met.
Two-tier states include Alabama, Florida, Illinois, Montana, and Nebraska. The trend is for two-tier states to gradually move towards a one-tier system. Since 2002, the State Boards of Washington and South Dakota have ceased issuing CPA "certificates" and instead issue CPA "licenses," and Illinois plans to follow suit in 2012.[4]
A number of states are two-tiered, but require work experience for the CPA certificate, such as Ohio.
AICPA membership
The CPA designation is granted by individual state boards, not the American Institute of Certified Public Accountants (AICPA). Membership in the AICPA is not obligatory for CPAs, although some CPAs do join. To become a full member of AICPA, the applicant must hold a valid CPA certificate or license from at least one of the fifty-five U.S. state/territory boards of accountancy; some additional requirements apply.
UPDATE on AICPA membership: AICPA members approved a proposed bylaw amendment to make eligible for voting membership individuals who previously held a CPA certificate/license or have met all the requirements for CPA certification in accordance with the Uniform Accountancy Act (UAA). The AICPA announced its plan to accept applications from individuals meeting these criteria, beginning no later than January 1, 2011. Individuals eligible to join as regular members are those who hold or previously held a CPA certificate/license/permit that was not revoked because of disciplinary action or those who meet the UAA requirements of 150 hours of college/graduate education passed the uniform CPA examination and have at least 1 year of experience. This opens up regular membership to individuals who chose not to apply for a license or permit because they are not employed in public practice (e.g. business, industry, education, and government).
Certified Public Accountant (CPA) is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA. Individuals who have passed the Exam but have not either accomplished the required on-the-job experience or have previously met it but in the meantime have lapsed their continuing professional education are, in many states, permitted the designation "CPA Inactive" or an equivalent phrase. In most U.S. states, only CPAs who are licensed are able to provide to the public attestation (including auditing) opinions on financial statements. The exceptions to this rule are Arizona, Kansas, North Carolina and Ohio where, although the "CPA" designation is restricted, the practice of auditing is not.
Many states have a lower tier of accountant qualification (below that of CPA), usually entitled "Public Accountant" (with designatory letters "PA"). However the majority of states have closed the designation "Public Accountant" to new entrants, with only about 10 states continuing to offer the designation. Many PAs belong to the National Society of (Public) Accountants.
Many states prohibit the use of the designations "Certified Public Accountant" or "Public Accountant" (or the abbreviations "CPA" or "PA") by a person who is not certified as a CPA or PA in that state. As a result, in many circumstances, an out-of-state CPA is restricted from using the CPA designation or designatory letters until a license or certificate from that state is obtained.
Texas additionally prohibits the use of the designations "accountant" and "auditor" by a person not certified as a Texas CPA, unless that person is a CPA in another state, a non-resident of Texas, and otherwise meets the requirements for practice in Texas by out-of-state CPA firms and practitioners
CPA exam
Main article: Uniform Certified Public Accountant Examination
In order to become a CPA in the United States, the candidate must sit for and pass the Uniform Certified Public Accountant Examination (Uniform CPA Exam), which is set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. The CPA was established in law on April 17, 1896.[2]Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically the requirement is a U.S. bachelors degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional 1 year study. This requirement for 5 years study is known as the "150 hour rule" and has been adopted by the majority of state boards, although there are still some exceptions (e.g.California). This requirement mandating 150 hours of study has been adopted by 45 states.
The Colorado State Board of Accountancy allows Chartered Certified Accountants (ACCA), together with Chartered Accountants from eligible jurisdictions (Australia, South Africa, Canada, Ireland, India, New Zealand) automatic eligibility to sit for the Uniform CPA Exam as a Colorado candidate. As of December 9, 2009, ACCA members are not automatically eligible to sit for the Uniform CPA Exam.
Certain overseas qualified accountants seeking to become U.S. CPAs may be eligible to sit for the International Qualification Examination as an alternative to the Uniform CPA Exam.
The Uniform CPA exam tests general principles of state law such as the law of contracts and agency (questions not tailored to the variances of any particular state) and some federal law as well.[3]
Other licensing and certification requirements
Although the CPA exam is uniform, licensing and certification requirements are imposed separately by each state's laws and therefore vary from state to state.State requirements for the CPA qualification can be summed up as the Three Es—Education, Examination and Experience. The Education requirement normally must be fulfilled as part of the eligibility criteria to sit for the Uniform CPA and the Examination component is the Uniform CPA itself. Some states have a two tier system whereby an individual would first become certified as a CPA—usually by passing the CPA exam. That individual would then later be eligible to be licensed once a certain amount of work experience is accomplished. Other states have a one tier system whereby an individual would be certified and licensed at the same time when both the CPA exam is passed and the work experience requirement has been met.
Two-tier states include Alabama, Florida, Illinois, Montana, and Nebraska. The trend is for two-tier states to gradually move towards a one-tier system. Since 2002, the State Boards of Washington and South Dakota have ceased issuing CPA "certificates" and instead issue CPA "licenses," and Illinois plans to follow suit in 2012.[4]
A number of states are two-tiered, but require work experience for the CPA certificate, such as Ohio.
Work experience requirement
The experience component varies from state to state:- The two-tier states generally do not require work experience for a CPA certificate (it is required for a license to practice).
- Some states, such as Colorado and Massachusetts, will waive the work experience requirement for those with a higher academic qualification compared to the state's requirement to appear for the Uniform CPA
- The majority of states still require work experience to be of a public accounting nature. However an increasing number of states, including Oregon, Virginia, Georgia and Kentucky will accept experience of a more general nature in the accounting area. This allows persons to obtain the CPA designation while working for a corporation's finance function.
- The majority of states require work experience to be verified by a licensed CPA. This can cause difficulties for applicants based outside the United States. However, some states such as Colorado and Oregon will accept work experience certified by a Chartered Accountant as well.
Ethics
Over 40 of the state boards now require applicants for CPA status to complete a special examination on ethics, which is effectively a Fourth E in terms of requirements to become a CPA. The majority of these will accept the AICPA self-study Professional Ethics for CPAs CPE course or another course in general professional ethics. Many states, however, require that the ethics course include a review of that state's specific rules for professional practice.Continuing Professional Education (CPE)
CPAs are required to take continuing education courses in order to renew their license. Requirements vary by state but the vast majority require 120 hours of CPE every 3 years with a minimum of 20 hours per calendar year. The requirement can be fulfilled through attending live seminars, webcast seminars, or through self-study (textbooks, videos, online courses, all of which require a test to receive credit). As part of the CPE requirement, most states require their CPAs to take an ethics course during every renewal period. Again, ethics requirements vary by state but the courses range from 2–8 hours.Inter-state practice
An accountant is required to meet the legal requirements of any state in which they want to practice. Also, the term "practice of public accounting" and similar terms are given definitions PA status under reciprocity to a CPA licensed in another state. CPAs from other states with less stringent educational requirements may not be able to benefit from these provisions. This does not affect those CPAs who do not plan to offer services directly to the public. Moreover, most states would grant the temporary practicing rights to a CPA of another state.AICPA membership
The CPA designation is granted by individual state boards, not the American Institute of Certified Public Accountants (AICPA). Membership in the AICPA is not obligatory for CPAs, although some CPAs do join. To become a full member of AICPA, the applicant must hold a valid CPA certificate or license from at least one of the fifty-five U.S. state/territory boards of accountancy; some additional requirements apply.
UPDATE on AICPA membership: AICPA members approved a proposed bylaw amendment to make eligible for voting membership individuals who previously held a CPA certificate/license or have met all the requirements for CPA certification in accordance with the Uniform Accountancy Act (UAA). The AICPA announced its plan to accept applications from individuals meeting these criteria, beginning no later than January 1, 2011. Individuals eligible to join as regular members are those who hold or previously held a CPA certificate/license/permit that was not revoked because of disciplinary action or those who meet the UAA requirements of 150 hours of college/graduate education passed the uniform CPA examination and have at least 1 year of experience. This opens up regular membership to individuals who chose not to apply for a license or permit because they are not employed in public practice (e.g. business, industry, education, and government).
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