Roger Philipp, CPA, is a Deloitte alum and the founder, CEO, and instructor for Roger CPA Review, a CPA Exam prep course. Roger CPA Review supports re: The Auditors as our first sponsor. I asked him to tell us, in a time of uncertainty, why passing the CPA exam (or whatever certification exam is applicable in your country) is still a great investment.
(I’ll give you one good reason: No one can ever take that accomplishment away from you.)
To begin, we’ll just break down the question itself: Why bother becoming a CPA? The very nature of that question implies that the act of becoming a CPA is a “bother,” or an irritating chore. Why do we see it that way? Common obstacles to getting a CPA license include the difficulty and cost of taking the CPA Exam, itself.
Not surprisingly, these are the main reasons why only about half of accounting students choose to go on to become CPAs. However, neither of these reasons should be enough to hold you back from this exciting and lucrative career choice.
Difficulty: It’s Not As Hard As You Think
Candidates imagine the CPA Exam to be far more difficult than it actually is. That’s not to say that the exam is easy — far from it. In fact, according to the AICPA, only about 47% of candidates pass the CPA Exam. But it’s important to note that the main cause of the low pass rate can be directly attributed to inadequate studying. Furthermore, out of the students who continue their attempts to the CPA Exam, as many as 75% percent eventually pass. In short, with the right commitment and preparation, it can be done. As we at Roger like to say, the CPA Exam is not an IQ test – it’s a test of discipline! If you study, you will pass!
Cost: Earning Your CPA Makes Cents
For many, cost is the decisive factor when a person considers becoming a CPA. There’s no question about it: it’s an expensive proposition. The good news is that you don’t have to shoulder the full cost all at once. The costs arrive in stages, beginning with college tuition and ending with CPA license fees.
Additionally, your initial investment will pay off quickly. Once you are a licensed CPA, your entry level earning potential increases by as much as 15% over uncertified accounting professionals (2008 Robert Half Salary Guide). This gap can continue increasing over the course of your career, eventually adding as much as $11k-$18k more to your annual earnings.
According to a recent report by the Institute of Management Accountants, the average CPA earns $131,726 per year before extra compensation while non-CPAs only earn $98,912. This is a difference of 32,814 or 28.5% higher.
To reinforce the point, let’s perform a cost/benefit analysis of becoming a CPA.
Bachelors Degree with 150 hours (in most states)
300-400 hours preparing for the CPA Exam
CPA Exam Fees (more than $1,000 in some states, more if retesting is required)
CPA review course costs ($1,600 – $2,500 depending on course)
Licensure fees (more than $1,000 in some states)
Time commitment: 450-550 hours
Financial commitment: $4500 or more, depending on exam success and state fees.
Increased earning potential of up to $18,000 per year. Duration: grows annually
Potential employers perceive CPA’s to be disciplined and committed. Duration: entire career
Potential for advancement opportunities and management or partnership. Duration: entire career
Personal growth and development. Duration: life
Business opportunities not available to uncertified accountants, such as financial consultancy, signing audit opinions, working for the FBI, or providing independent accounting services to the public.
As much as $720,000 (assuming a 40 year career, with an 18k of increased annual income)
Inestimable value of other benefits
Many accountants currently working with firms will tell you that they’re driven to take the CPA exam by the prospect for promotions. Because most firms won’t promote uncertified accountants past the managerial level, your ‘promote-ability’ skyrockets once you’ve become a licensed CPA. Of course, with promotions come even more salary increases and bonuses.
As you can see, becoming a CPA enhances your earning potential and upward mobility over the course of your entire career. The question shouldn’t be whether you can afford to become a CPA, but rather can you afford not to?