How To Pass The CPA Exam

The IPassTheCPAExam.com Guide for International Candidates

Stephanie Ng

• Publisher: Wiley
• Year: 2013
• ISBN:
  9781118613252
• Edition: 1
• Topic: Aides à l'étude
• Subtopic: Guides d'étude CPA

A CPA exam guide written specifically for international students

The US CPA qualification exam is the most popular professional accounting qualification not just in the United States, but around the world as well. As international testing centers open across the globe, increasing numbers of non-American students are taking the exam, but lack a study resource written specifically for them. Author Stephanie Ng passed the exam in less than a year and operates a popular exam test-prep website at IPassTheCPAExam.com. In How to Pass the CPA Exam, Ng explains her techniques and study tactics specifically for students outside the United States.

• A comprehensive and practical study guide for CPA exam students outside the United States
• Written by the operator of a highly popular test-prep website for international students
• Includes practical and effective test-prep resources

Packed with smart advice presented from an international perspective, How to Pass the CPA Exam is a must for international students preparing for the test.

CHAPTER 1

Why CPA?

First of all, I applaud your decision to take on this difficult challenge—to study for and pass the Certified Public Accountant (CPA) exam.

Everyone has a reason to become a CPA. Some aspire to become a Big 4 partner, some strive to earn recognition from peers and colleagues, while others want to enhance their credentials, or simply get a secure job that is well paid with a decent work-life balance.

Whatever your reasons might be, I can assure you that passing the CPA exam is going to be one of the most celebrated moments in your life.

What Is CPA?

CPA stands for Certified Public Accountant in the United States. It is a designation granted to individuals who pass the Uniform CPA Examination and have met the educational and working experience requirements.

In most parts of the United States, only licensed U.S. CPAs can sign audit opinions on financial statements. This statutory right differentiates U.S. CPAs from Chartered Accountants and CPAs from other countries, as well as professional designations such as Chartered Financial Analyst (CFA), Certified Management Accountants (CMA), and Certified Internal Auditor (CIA).

Unlike some other professional accounting certifications such as Association of Chartered Certified Accountants (ACCA), CPA does not have a syllabus for which candidates can sign up, take the coursework, and expect to obtain the designation on completion of the coursework.

Instead, candidates must find a way to meet the educational requirements to become eligible for the exam. We cover the educational requirements extensively in Chapter 3, “How to Get Qualified.”

Five Reasons to Become a CPA

The U.S. CPA exam is considered to be one of the most challenging with a low passing rate, yet tens of thousands of candidates jump in and take the challenge every year. Why?

Increasing Demand

After the recent corporate scandals and failures, governments and the business communities have stepped in to scrutinize the corporation, pouring considerable resources to hire and train accounting professionals.

The Sarbanes-Oxley Act is believed to have increased the demand for accountants and CPAs by double-digit percentage points. The U.S. Bureau of Labor Statistics predicts that the number of jobs for accountants and auditors “is expected to grow by 22 percent between 2008 and 2018, which is much faster than the average for all occupations.”

The constant demand for CPAs makes this an ideal profession for those looking for a stable and rewarding job.

Hi Stephanie, I am a Psychology major who just graduated from college. Starting from junior year, I decided I want to become a CPA. I wanted to be able to provide my family with financial stability after seeing the stress my family went through when my mom passed away following my dad's unemployment during my sophomore year. I wasn't able to get into the accounting minor at my school but I took an equivalent amount of accounting classes and I enjoyed them. Indeed, the knowledge I gained is very practical and I found the learning process very rewarding.

Right now, I am finishing up my last few online classes and getting ready to take the CPA exam.

—Ying

Decreasing Supply

An intriguing national survey by the American Institute of Certified Public Accountants (AICPA) shows that 75 percent of its members are retiring in 10 years. The situation in major financial hubs is equally acute: More than 50 percent of the practitioners at the New York Society of CPA are more than 50 years old. Even in academia, the supply of accounting professors is getting tight: The average age of the accounting faculty is 55; the most common age is 63.

It takes 10 to 15 years to reach the senior positions in public, governmental, and corporate accounting, so this is the time to jump in and catch this golden opportunity.

The American Institute of Certified Public Accountants (AICPA)

The AICPA is the national professional organization for CPAs in the United States, and one of the oldest and largest accounting bodies in the world. The institute sets the U.S. auditing standards and ethical standards for the profession. It is also one of the major stakeholders in the design and administration of the Uniform CPA Examination.

The Value of Getting Recognized

Besides the demand-supply imbalance, becoming a CPA is a personal achievement. Your family, friends, and business partners will be proud of you with this globally recognized qualification.

Becoming a CPA is also a demonstrated commitment to the accounting industry. Accounting firms and companies recognize professionals who put in the investment of time, money, and effort to achieve this goal. You will get the reward when it comes to recruiting and promotion.

Hello Stephanie. Merry Christmas! Well, almost.:) I'm writing to you because I have decided that I want to embark on this long and grueling journey towards my CPA license. I live in California, and graduated two and a half years ago. I have been working in private accounting, but feel I need my CPA license to help me move up and make more money. I feel that obtaining my CPA license will help open new opportunities or make me qualified for better paying positions.

—Edgar De La Torre

At the same time, getting the CPA designation could be a matter of survival. I got many emails from readers asking for help to pass the CPA exam as soon as possible, because they had received an ultimatum from the management to get it done. Most of these readers are seasoned finance professionals with many years of practical experience; yet for one reason or another, they procrastinate until it becomes almost too late. Learn from my readers' experience and take the exam as soon as you can.

The Door to Career Change or More Interesting Career Paths

Accounting is much more than bookkeeping and auditing. There are many interesting niches once you reach a level of expertise. Forensic accounting is an exciting field. Finance and risk management careers within biotechnology and environmental engineering are options with great potential. As the economy recovers, your CPA designation will be a valuable asset when new opportunities emerge in promising industries.

If you are looking for career change, the CPA designation can help you get into accounting even though you have no prior experience.

Hi Stephanie, my name is Donna, and I am a mere eight weeks away from completing my Master's of Science Degree in Accounting. I actually never really thought I would be interested in accounting. I obtained my Bachelor's Degree in Elementary Education way back when and taught for a few years. My husband moved around for his job (with me in tow), and after our first move I never got back into teaching. I've been in administrative roles for the last fifteen years and ended up doing some financial work in city government. I decided to utilize the city's educational assistance program to pursue my Master's Degree and decided that accounting seemed interesting (go figure . . . I usually get blank stares or comments like “Wow . . . better you than me. . . . I could never be an accountant”).

While I'm not certain where my hat will hang after I get my degree, I do know that the sky is the limit if I am able to get my CPA license. I'll be 44 this November, so I am anxious to get on the career ladder. With that being the case, my goal is to have all four sections of the exam passed successfully by the end of 2013.

—Donna

The Route to Financial Freedom

The salary range of accountants depends on education, geography, and market condition among other factors. In general, however, CPAs can expect to earn up to 10 percent more than their peers without the professional designation. If you take into account the cumulative effect as well as the potential for CPAs to get more frequent promotions, the difference can be substantial over the lifetime of your career.

You may not become a millionaire strictly as a CPA, but you will likely pay off the mortgage, retire early, and enjoy life earlier with the help of this designation.

Five More Reasons to Become a CPA for International Candidates

As an international candidate, you may have an even greater desire to obtain the U.S. CPA designation.

It Could Be Easier Than the Local CPA Exam

It may be hard to believe, but in some parts of the world, the professional accounting examination is even tougher to pass.

In China, for example, the equivalent exam administered by the Chinese Institute of Certified Public Accountants (CICPA) has a passing rate of well below 20 percent. The exam comprises seven papers with exam topics constantly changing as the local accounting and auditing standards converge with the international standards. In comparison, the U.S. version is considerably more lenient with passing rates around 50 percent.

It is interesting to note that with the growing Chinese economy, the demand for accountants is higher than in the United States: There are currently 180,000 CICPA members but the institute aims to increase this number by almost 40 percent to 250,000 by 2015.

With this extreme demand-supply imbalance, it is logical for Chinese accountants to take the U.S. CPA exam for higher success rates and speedier processes, as long as their employers recognize non-Chinese qualifications. These U.S. CPA–qualified accountants in China are in high demand in international accounting firms and multinational corporations.

It Could Take Less Time to Become a CPA

The U.S. CPA exam consists of four sections totaling 14 hours, involving multiple-choice questions, task-based simulations, and written communications. Candidates can take the sections separately or in one go. They can also sit for the exam any time during the testing windows, which are offered in the first two months of each quarter.

In other parts of the world, the equivalent professional accounting exam often consists of several papers with long calculations and essays. Each paper is offered once or twice a year. Because of the different arrangements, a U.S. CPA candidate can technically complete the exam within a few months, while the non-U.S. counterparts have no choice but to tackle each paper one at a time.

If you want to become a CPA on a fast track, this is a great reason for you to get started.

It Allows More Flexibility

As you embark on the CPA journey, you will appreciate the flexibility offered by this exam when compared to its overseas counterparts.

First of all, the exam is 100 percent computerized, which enables low-cost delivery of the exam in a more customized and user-friendly format. By scheduling the exam on any Monday to Friday (even Saturday and Sunday for some sites) during the test win...