Why Bother Becoming A CPA? A Guest Post From Roger Philipp
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.
Cost:
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)
Totals:
Time commitment: 450-550 hours
Financial commitment: $4500 or more, depending on exam success and state fees.
Benefit:
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.
Totals:
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?
@cpachaser – I’m surprised you can’t get anything with your credentials (not even with a second or third tier firm). You may want to geographically expand your search if you’re open to relocate. You may also, especially in this tough market, want to consider local CPA firms. I would imagine it’s easier to get you foot inside the local firms. Have you also considered joining networking orgs in your market (like a local young professional group or accounting network)? There, you can make lots of connections that can hopefully place you in the right direction. Hope this helps.
Thank you for responding. The dilema still exists. Passing the exam without having the good fortune of having been signed off on, in either public or private industry, is discouraging. I’m still trying……
To CPAChaser who passed the exam and can’t get into a CPA Firm. I was in your situation. Most firms are weak handed. They are terified that once you get certified you will run…they should realize you will not run if they had a great organization and paid well. My advise to you is continue searching firms that are not chicken Sh*t and one who values your time at the firm, no matter how long you gonna stay.
If It is true that you intend to leave after certification, don’t say that in their faces. Try to tell them you finally passed the exam, your life long dream of becoming a CPA is near completion, and you like to make it your profession. This way, they see a true dedicated employee for many years to come. (So it is a small lie, so what?). You must do what you must, who knows, it may well be your long term profession.
I did it and landed a great firm that handles huge accounts. I was searching for the longest until I figured the reasons for not being hired. And conveyed to them that my intentions are for longevity with the firm.
Look at your whole package-yes a whole bunch of C’s and other leters after your name is great, however,there has to be more than that.I don’t think there is any conspiracy by anyone not to hire people who have already passed the exam.
Anon111,
Thanks for the post. I’ll try every way possible and hopefully, some path will bear fruit.
Is there an age limit to where a firm will not consider hiring you?
15 years of accounting experience, not really that interested anymore in accounting but need to eat. turning 47 in a week. question – is it worth getting the cpa license NOW even though i dont have any public experience? i guess i a am trying to hedge my bets with staying employed by adding those three initials after my name but no audit experience at all. california allows cpa certification without audit hours… thanks
I’m similiar to your situation, bobo. I’m 40, same years of accounting experience, passed the CPA exam, and have struggled to work with or for an active cpa or to obtain the interest of a local or regional CPA firm. Tough field/industry to obtain professional designation.
hey cpachaser,
yea, its tough when you are older. i see myself in a few years maybe going solo with a bookkeeping business, business advisory type of business. not interested in hard core auditing, just doesnt interest me at all. considering the economy as it is and its still not getting better, getting the cpa MAYBE will give me the edge if i am not able to go on my own. working for a firm at the entry level you really have to accept the fact you wont have a personal life, its secondary to their needs. they know they can hire fresh grads for cheap and work them hard for a couple of years until they move on. if audit work is what you really want, you have to work for the small local firm that will probably have people your age or close to it that may just believe in work balance. i personally liked accounting in the beginning of my career but the hours really killed me, i refused to keep working so many hours at the expense of not being home with my family and when i was, i was too tired to do anything!!
Dear All,
Though this message of mine do not correspond so much with the forum but I am writing this here because I see my fellow mates here who have similar work exp or education. I am from Asia and currently in US for more than a year on dependent visa. I have Chartered accountant degree from my hometown and completed my CPA here in less than 5 months. I have work exp of almost 6 years. As I am on dependent visa here, this country rules doesn’t allow me to work. I applied to almost 1000+ jobs and got some interviews, but rejected in all coz of visa issues. I wonder with such a qualification, work exp with Big 4, why are they afraid to apply for my visa and that too when many visa are left..I am still patiently applying for jobs and trying m luck.
My appeal is, if there is anyone, who knows about any opportunity which can suit my profile, then please let me know, I am very keen for this job and will put my life in to it. Thanks
How probable is it that by passing the CPA exam, one would increase their earning potential by $18,000 a year and to extrapolate that across a career? Is it just me or does that seem highly overstated!
I have twelve years experience, five in public accounting. I have my CPA. I moved to San Diego and could not get hired in 3 years. (I am in my early 50’s). I moved back to My smaller home town where I am in demand. For those of you struggling to find a job – try smaller towns as opposed to the big cities. There Re fewer jobs, but there is far less competition.
@Anonymous
Thanks for that insight. 🙂 Smaller cities and smaller firms with industry niches value prior experience more than the Big Four who want to replicate the collegiate experience for new grads.
I have my CPA but have never used it professionally. I could not afford to keep up the CPE while unemployed [for nearly 3 years] after being cut from the Big 4 in 2009. Thankfully, my state gives the option of “inactive” licenses, so I have been inactive since 2010. I have an okay position in government accounting right now, but it does not require me to use my CPA license [or perform work that would be considered the work of a CPA.] Might consider reactivating in a few years if I decide to move on to a different position/agency that has more of a financial focus [current agency is healthcare based and I’m more of a support person.]
When job searching I was always told that I was sort of “neither fish nor fowl” because I had the combination of a CPA license but almost zero experience [the minimum required to be a CPA in my state] so my designation didn’t really bring anything to the table for employers other than not having to pay for CPA materials/fees or time off for taking the exam. The bonus I got at my firm for passing it is the probably only tangible thing I’ve ever gotten from it, although I might not have gotten my current position without it [don’t worry, I did fully disclose my inactive status.] Still hope that someday my license might come into play again, but it’s looking like that’s going to be a long time from now, if ever.