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April 7, 1999

Wall Street Credentials

CPA
Certified Public Accountant

Overview -- One does not need to be a CPA to practice many of the skills in accounting, and many bookkeepers and other business managers handling funds are not CPAs. However, for many duties the CPA is a required professional designation and license.

There are a vast number of fields a CPA may enter, and one of the most common ways that an individual investor will come in contact with a CPA is when they meet with their tax preparer or financial planner. CPAs may gain additional skills and move on to work in investment analysis, but they rarely work as brokers in investment sales.

The CPA designation is often used as a "base" to which numerous other professional designations are added. Among the other designations that CPAs commonly strive for include CMA, CFM, and CFP.

Requirements -- The requirements to receive the CPA designation vary widely by state since it is the responsibility of the individual states to license CPAs. Most states require a bachelor's degree or its equivalent, but the degree does not have to be in accounting. Nevertheless, most states require a minimum amount of course work in accounting, normally about thirty semester hours.

The actual exam is called the Universal CPA Exam and is the same in all states. The national association that gives the exam is called the American Institute of Certified Public Accountants (AICPA). The rather intense exam is given twice a year, administered over a two-day period. There are four sections of the exam that cover the broad subjects of business law, auditing, taxes, and financial accounting. Some states allow applicants who have not passed all portions of the test to retake only the failed portions as long the scores are above a minimum level. Only a small percentage of the applicants pass all four sections on the first attempt, yet all four sections of the test must be passed before the license is given.

Many states also have an experience requirement that must be fulfilled before the actual license to practice accounting publicly will be issued. The accounting experience needed is normally between one and two years, but is drastically different from state to state.

For information concerning the requirements for the CPA designation in your state, check the following links:

http://www.aicpa.org
http://www.beckercpa.com/examinfo.htm

Time Needed To Fulfill Requirements -- A bachelor's degree in accounting takes roughly the same amount of time as any other undergraduate degree -- about four years of full-time study. A combined bachelor's/master's program generally takes between five and six years to complete.

Once a degree is attained, preparing for the actual CPA exam is no small task. Most candidates end up taking a review course that generally meets for several hours a week for about four months. For those who can take time away from work and are willing to go through accounting boot camp, some review programs even offer live-in "crash courses" that can be completed in a month.

Many CPA candidates end up taking the exam multiple times due to its difficulty.

Next -- Master of Business Administration (MBA)

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