TL;DR - The CPA exam is hard, fewer individuals are joining the industry, and it's unlikely you even need a CPA - but you might really want one.
You may have heard this before: all CPAs are accountants, but not all accountants are CPAs.
Obtaining your CPA:
- Minimum level of education requirements (~150 hours)
- Countless hours of studying
- Pass 4 exams - Financial Accounting & Reporting (FAR), Auditing & Attestation (AUD), Regulation (REG), Business Environments & Concepts (BEC)
- Not done yet... Gain 1 year of work experience under an active CPA & pass your state ethics exam
Ok, now that you have your CPA, what can you use it for?
- Signing off on attestation reports (audits, reviews, compilations, and other compliance audits)
- Represent & sign certain financial matters for SEC/IRS
- ... have the letters behind your name, get promoted, get a raise?
A few data points:
- There is a 45-60% pass rate on the 4 exams.
- *The number of undergrad accounting degree completions peaked in 2011-2012 at 57,483, has been in a flat-to-decline every year since.
- *The number of new CPA candidates peaked in 2010 at 49,597 and has taken a similar path. 32,186 in 2021 - a significant downward trend since 2016.
Why doesn't the next generation want to study accounting?
I'm going to take a few stabs in the dark here.
- Insane hours in public accounting
- Lack of engagement in impactful work
- Not forward-thinking, lacking in technology
- The accounting profession's image - not super sexy (or is it?)
- Pay not commensurate with workload
- I'll let other CPAs chime in on other reasons...
My Journey & Opinion
I'm a CPA and proud of it. It was not easy, it consumed my life for the greater part of a year. During my tenure as a CPA working at a CPA firm, I worked on a significant number of financial audit reports alongside professionals both with and without their CPA license. From a work quality standpoint, there was no discernible difference between those that had passed the exams and those that didn't. The Partners of the firm(s) were signing the reports - it was their CPA license on the line for the finished work product.
The governing bodies over administering the exams as well as providing training materials for the exam boast prestige, career development, career security, job satisfaction, and money as benefits of earning your CPA license. It's difficult to gauge the impact of having the credential vs not having the credential, but I can tell you that I do not believe that my license has driven widespread respect and admiration for me because of it.
I never signed off on an audit report, never represented a client before the SEC, never signed a tax return, or did anything that a non-CPA couldn't. Do I regret spending the time to get the license? Not at all. Do I believe that it's necessary to build a successful career in the accounting and finance field? Not at all.
Fact of the matter is that 90% (wild guess) of credentialed CPAs will ever use their license to sign an audit report or represent a client in front of a regulatory body.
There is a degree of credibility that comes with having those three little letters, however, I'll be the first to admit that if there's an arena in the accounting world that I don't feel comfortable with, I'll be the first to tell you. It all boils down to - are you committed to the trade? Are you bettering yourself through personal and professional growth? Are you committed to providing clients with the best possible service that you can deliver? Do you own your mistakes and tackle issues head on? I'll hire the person that exhibits those traits 10/10 times, CPA license in hand or not.
So...is it worth it? Do I need a CPA?
With enough folks working to move our industry out of the stone-ages, I do believe that the credential is worth it. Don't do it for prestige, don't do it for job satisfaction, or money. Do it to better yourself and those around you.
So what does this mean when you're evaluating professional services for your business? Need a financial audit? You need a CPA firm. Need IRS/SEC representation? You need a CPA. Need accounting or finance support, you have a ton of options. When it comes to evaluating your options, there are many factors to consider. More on that soon.
CPA thoughts over, for now.
Just always remember to...
Go Full Send.™
*2021 Trends Report published by the AICPA