Last time we talked about what a CPA really is, in my attempt to break the misconception that all CPAs just do tax work. In this second part of our three part series on the CPA Misconception, we are going to talk about a CPA’s education. You’ll notice that taxes are just about 1/4th of our education.

This is where the dorks unite, because we’ve all had the same basic education and background. If you get a bunch of us in a room together, it doesn’t matter where we went to school – we’ll find something in common about our curriculum or how we got through the exam. Ever wonder what is involved? Here’s the basic background of almost every CPA you know or meet.

First Year – Basics of financial accounting and management accounting
Second Year – Intermediate accounting I and II (the overachiever schools can do more)
Third Year – Advanced accounting and audit

Now, that is just learning the accounting side of things. We all also had some type of Individual and Corporate Taxation classes (or more). And if that wasn’t enough, we had to understand the basics of business as well – taking Business Law, multiple Economics classes, Management, Statistics, and Strategic Management.

Here are 4 different schools’ curriculum that lay out pretty much the same thing: University of Florida, Oglethorpe University (my alma mater), Clemson University, and University of Georgia. Now, the similarities don’t just stop with our education, the next grueling step after getting our 150 hours of credit is to pass the CPA Exam.

The CPA Exam is managed by the National Association of State Boards of Accountancy (NASBA). It is a uniform exam for certification in the United States. All CPAs have a story about the exam (maybe I’ll share mine one day). We’ve all suffered months of studying to pass the 4 parts. We all had to know a shockingly array of information to get this certification. In fact, I’ve heard several times that the CPA Exam is harder than passing the Bar – but I’m done with these tests so I’ll never personally know!

So, what do we have to know? Here is how the current sections breakdown:

  • Auditing & Attestation – planning the engagement, how to determine if a firm is independent in the engagement, understanding the internal control structure and risks involved of businesses, how to consider fraud within the engagement and the possible impact on the financials, different types of procedures (analytical vs substantive) used during the audit process and how they relate to the standards, how to gather evidence to support the financial statement assertions, the standard reports (memorized by paragraph!), the difference between the various accounting and attestation services, and our professional responsibilities involved with all of the above.
  • Business Environment & Concepts – understand how businesses are governed and who has what duties (Board vs. Management), economics of the macro and micro-type, business finance, financial modeling, financial ratios, how IT impacts the business in design, structure, security (yes IT!), strategic planning, management report, operational understanding, etc. – Does your brain hurt yet?
  • Financial Accounting & Reporting – basic accounting concepts and the theories we all live by – better known as the conceptual framework, understanding the different bases of accounting, how to account and disclose for about any issue that comes up – pensions, inventory, consolidated statements, available for sale investments, revenue recognition, goodwill & impairment, blah, blah, blah, governmental accounting, non-profit accounting, and how those last two are COMPLETELY different than the normal accounting we spent numerous accounting classes learning about.
  • Regulation – Ethical and legal responsibilities of being professionals, business law – including understanding public offerings and other SEC related work, Uniform Commercial Code (seriously), Contract law, business structure options, taxation – individual, partnership, corporation, estate and their legislation process and federal procedures.
So, I get two things out of all of this: (1) No wonder I suck at trivia, because my brain is full of all this stuff and (2) while taxes are involved, there is far more that we ALL had to know to become a CPA. What do you think? Is this surprising or does it just sound like I’m complaining? Leave your comments below and stay tuned for our final post in this series. I’ll be exploring all the different places where you might find CPAs.