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Professional Certifications In Accounting


by Rick Turpin, PhD, CPA; John Alvis, PhD, CPA; and Nancy Pogue Tyler

With an accounting degree in hand, there are many career paths that you can follow: a career in public accounting as an auditor, tax advisor, or consultant; a career with a corporation or a governmental organization as a management accountant, internal auditor, financial planner, or accounting systems manager; or a career as a high school or university faculty member. Regardless of the path you pursue, you may want to obtain a professional certification. Professional certification can increase your chances for advancement and promotion, enhance your reputation among colleagues and within the profession, and result in salaries that are higher than your non-certified peers.

There are several professional certifications available in the field of accounting, including Certified Public Accountant (CPA), Certified Management Accountant (CMA), Certified in Financial Management (CFM), Certified Internal Auditor (CIA), Certification in Control Self-Assessment (CCSA), Certified Information Systems Auditor (CISA), and Certified Fraud Examiner (CFE). Each certification has its own set of requirements. This article examines these requirements.

Certified Public Accountant (CPA)


CPA certification and licensing are required to practice public accounting. To qualify for the CPA certificate, you must pass the Uniform CPA Examination. To practice public accounting, you must obtain your certification and meet the licensing requirements of the jurisdiction in which you intend to practice. There are 54 jurisdictions in which you can practice public accounting: the 50 states, Guam, Puerto Rico, Virgin Islands, and Washington, D.C.

CPA Examination
The Uniform CPA Examination is offered every May and November, usually on the first Wednesday and Thursday of the month. While the exam is the same no matter where you take it, the requirements to sit for the exam vary by jurisdiction. To sit for the exam, you should obtain an application from the board of accountancy in the jurisdiction where you are seeking certification. Requirements to sit for the exam, especially educational requirements, vary among the jurisdictions. Some jurisdictions only require a bachelor's degree with a concentration in accounting, while other jurisdictions have adopted a 150 semester hour educational requirement. To determine the requirements of your jurisdiction, contact its board of accountancy or examine Digest of State Accountancy Laws and State Board Regulations, published jointly by the American Institute of Certified Public Accountants and the National Association of State Boards of Accountancy.

The exam last fifteen and one-half hours and contains four sections. The Business Law and Professional Responsibilities section (LPR) covers professional responsibilities and legal implications of business transactions as they relate to accounting and auditing. The Auditing section (AUDIT) covers generally accepted auditing standards and procedures. The Accounting and Reporting---Taxation, Managerial, Governmental, and Not-for-Profit Organizations section (ARE) covers federal taxation, managerial accounting, and accounting for governmental and not-for-profit entities. The Financial Accounting and Reporting---Business Enterprises section (FARE) covers generally accepted accounting principles for business enterprises.

The LPR, AUDIT, and FARE sections consist of multiple-choice questions, other objective answer format questions, and essay questions or problems. Certain essay questions from these sections are selected to evaluate your writing skills. Effective writing skills include six elements: coherent organization, conciseness, clarity, use of standard English, responsiveness to the requirements of the question, and appropriateness for the reader. Five percent of the total available points in these sections are based on your writing skills. The ARE section consists of multiple-choice questions and other objective answer format questions.

Each exam section is graded separately on a scale ranging from 0 to 100. A score of 75 is considered passing on each section. You will be notified of your exam scores approximately 90 days after the examination date. Of the 130,000 candidates who sit for the exam each year, only about 11% pass all four parts on the first try. Approximately 30% of the candidates who sit for any one section pass that section.

Licensing Requirements---In addition to having its own requirements to sit for the Uniform CPA Examination, each of the 54 jurisdictions in which you can practice public accounting has its own licensing requirements. In order to get your license to practice, you may have to meet certain work experience requirements. Most jurisdictions require at least two years of public accounting experience. Many jurisdictions also require you to take a course in professional ethics. To remain in good standing as a CPA, you will need to meet certain continuing professional education (CPE) requirements. CPE requirements vary by jurisdiction with most jurisdictions requiring 80 CPE hours per two year period or 120 CPE hours per three year period. To determine the various licensing requirements of your jurisdiction, contact its board of accountancy or examine the Digest of State Accountancy Laws and State Board Regulations.

Certified Management Accountant (CMA) And Certified In Financial Management (CFM)

The Certified Management Accountant (CMA) is a professional certification program that was developed in 1972 to objectively measure your knowledge about management accounting. The Certified in Financial Management (CFM) is a professional certification program that was developed in 1996 to objectively measure your knowledge about financial management. Both programs are administered by the Institute of Certified Management Accountants (ICMA), an affiliate of the Institute of Management Accountants (IMA). The IMA is an organization devoted to management accountants and financial management professionals. To obtain your CMA or CFM certification, you must meet several criteria, including passing the CMA or CFM examination and satisfying the experience requirement.

CMA/CFM Examination

While the requirements to sit for the CPA exam vary by jurisdiction, the requirements to sit for the CMA or CFM exam are the same throughout the world. To sit for the exam, you must meet one of the following criteria: hold a baccalaureate degree, in any area, from an accredited college or university; hold a CPA license or comparable international professional certification; or score in the 50th percentile or higher on either the Graduate Management Admissions Test or the Graduate Record Examination. Other criteria to sit for either exam include being a member of the IMA, submitting the names of two character references, and being employed or expecting to be employed in a position that meets or will meet the experience requirement.

The exams consist of multiple-choice questions and are offered daily (except Sundays and holidays) at Sylvan Technology Centers. Each exam is divided into four parts. Parts 1, 3, and 4 are the same for both exams. If you pass one exam, you need only pass part 2 of the other exam to receive credit for both exams. Part 1 of each exam is Economics, Finance, and Management; it covers several different areas, including micro and macroeconomics, international business, working capital policy, long-term finance and capital structure, and organizational structure. Part 2 of the CMA exam is Financial Accounting and Reporting and covers development of accounting standards; preparation, interpretation, and analysis of financial statements; and external auditing. Part 2 of the CFM exam is Corporate Financial Management and covers usage of financial statements, corporate financial management, risk management, external financial environments, and accounting standard setting.
Part 3 of each exam is Management Reporting, Analysis, and Behavioral Issues. It covers cost measurement; planning, control, and performance evaluation; and behavioral issues. Part 4 of each exam is Decision Analysis and Information Systems. It covers decision theory and operational decision analysis, investment decision analysis, quantitative methods for decisional analysis, information systems, and management controls.
The computer-based format of each exam allows you to determine your pass/fail status immediately after completing the exam. You may retake failed parts of the exam after a ninety-day waiting period. Credit for passed parts may be retained indefinitely, provided you remain a member of the IMA, complete twenty hours of continuing professional education per year, and take at least one exam part per year. Historically, approximately 15% of the CMA/CFM candidates who sit for all four parts pass the entire exam on their first try, while between 40 and 46% who sit for any one section pass that section.

Other Requirements---After passing the exam, you must satisfy the experience requirement to obtain your CMA or CFM certification. The experience requirement consists of two continuous years of professional experience in management accounting and/or financial management. Professional experience consists of employment situations in which you would use the principles of management accounting or financial management (e.g. financial analysis, budget preparation, management consulting). The experience requirement may be completed prior to or within seven years of passing the exam.

In addition to meeting the experience requirement, you must agree to comply with the IMA's standards of ethical conduct in order to obtain your CMA or CFM certification. Once certified, you will need to obtain 30 hours of continuing professional education per year to remain in good standing as a CMA or CFM.

Certified Internal Auditor (CIA)

The Certified Internal Auditor (CIA) is a professional certification program that was first offered in 1974. The CIA exam tests your knowledge of auditing standards and practices as well as your ability to identify audit risks, examine alternative remedies, and prescribe the best initiatives to control risks. The CIA program is administered by the Institute of Internal Auditors (IIA), an organization devoted to internal auditing professionals. To obtain your CIA certification, you must meet several criteria, including passing the CIA examination and satisfying the experience requirement.

CIA Examination
To sit for the CIA exam, you must hold a bachelor's degree or its equivalent from an accredited institution. The exam tests your knowledge of internal auditing and is offered twice a year in May and November. There are four parts to the exam and each part contains 80 multiple-choice questions. Part I, Internal Auditing Process, covers auditing, professionalism, and fraud. Part II, Internal Audit Skills, covers audit evidence evaluation, data gathering, and sampling techniques. Part III, Management Control and Information Technology, covers operations management as well as management control and information technology. Part IV, The Audit Environment, covers financial and managerial accounting, finance, and the regulatory environment. You are allowed three and one-half hours to complete each part. If you have already passed either the CPA, CMA, or CISA (to be discussed later) exam, you can receive credit for Part IV of the CIA exam. In May 1998, 2,809 candidates sat for the CIA exam and the pass rates by part follow: Part I, 54%; Part II, 55%; Part III, 49%; and Part IV, 40%.

Other Requirements---CIAs are required to complete two years of internal auditing experience or the equivalent. Experience in areas such as external auditing, quality assurance, or internal control qualifies as equivalent experience. A master's degree or professional business experience (e.g. experience in accounting, law, or finance) can substitute for one year of experience. You may sit for the CIA exam prior to satisfying the experience requirement, however, you will not be certified until you meet the requirement. To remain in good standing as a CIA, you must meet certain continuing professional development (CPD) requirements. CIAs who are performing internal audit functions must complete 80 hours of CPD every two years. CIAs who are not performing internal audit functions must complete 40 hours of CPD every two years.

Certification In Control Self-Assessment (CCSA)

The Certification in Control Self-Assessment (CCSA) is a new specialty certification offered through the Institute of Internal Auditors (IIA). To earn the CCSA designation, you will need to pass the CCSA exam. The first CCSA exam will be offered in 1999 and will consist of approximately 125 to 150 objective questions. It will be a computer-based exam that will be offered on demand at various facilities around the United States and Canada and will take approximately three hours to complete. The CCSA exam will test your knowledge of control self-assessment fundamentals, process, and integration. In addition, it will test your understanding of important related topics such as risk, controls, and business objectives.
In addition to passing the CCSA exam, you will need to meet certain requirements to earn your CCSA designation. CCSA candidates must hold a bachelor's or equivalent degree. A two-year associate's degree plus three years of general business experience may be substituted for a bachelor's degree. CCSA candidates must also have one year of control-related business experience such as auditing, quality assurance, or risk management. Upon certification, CCSAs will have to maintain their knowledge and stay abreast of developments in control self-assessment, however, the IIA has not yet established the continuing professional development requirements for CCSAs.

Certified Information Systems Auditor (CISA)

The Information Systems Audit and Control Association is a professional association dedicated to the audit, control, and security of information systems. The Association offers the Certified Information Systems Auditor (CISA) designation. Requirements for the CISA designation include passing the CISA examination, meeting experience requirements, abiding by the CISA's Code of Professional Ethics, and meeting the continuing education requirements.

CISA Examination
The CISA exam is offered once each year at over 120 sites worldwide. The 1999 CISA exam will be offered on Saturday, June 12, 1999. The exam consists of five sections or "domains." Domain 1 tests your understanding of information systems (IS) audit standards, statements, and control practices. Domain 2 tests your ability to analyze and evaluate IS strategies, policies, and procedures. Domain 3 tests your understanding of IS processes, including hardware and software platforms, network and telecommunications infrastructure, and utilization of IS resources. Domain 4 tests your knowledge of data validation, processing controls, and the IS testing process. Domain 5 tests your understanding of IS development, acquisition, and maintenance. Over 4,300 candidates sat for the 1998 CISA exam. Approximately 54% achieved a passing score.

Other Requirements---You must meet other requirements to obtain and maintain your CISA designation. CISAs must have a minimum of five years work experience in information systems auditing, control, or security. The experience must have been gained within ten years preceding your application for certification or within five years from passing the CISA exam. In addition, CISAs must earn 120 hours of continuing education in a three-year period with at least 120 hours per year. Finally, CISAs must abide by the Association's Code of Professional Ethics.
Certified Fraud Examiner (CFE)

The Certified Fraud Examiner (CFE) is a professional certification program offered by the Association of Certified Fraud Examiners, an organization dedicated to fighting fraud and white-collar crime. A CFE gathers evidence, takes statements, writes reports, and assists in investigating fraud in its varied forms. Most major corporations and government agencies have CFEs on staff. To achieve the CFE designation, you must at a minimum: 1. possess a baccalaureate degree, 2. have two or more years of professional experience in a related field, and 3. complete the Uniform CFE Examination.

CFE Examination
The CFE exam is a computerized exam that is made available upon request any time during the year. The exam contains 500 objective questions equally divided among four sections. The "Fraudulent Financial Transactions" section tests your knowledge of the types of fraudulent financial transactions incurred in books of account. The "Legal Elements of Fraud" section tests your familiarity with the legal ramifications of conducting a fraud examination, including rules of evidence, rights of the accused, and expert witness matters. The "Fraud Investigation" section tests your ability to conduct a fraud investigation, including interviewing, taking statements, and report writing. The "Criminology and Ethics" section tests your knowledge of criminological concepts and evaluates your understanding of the ethics of the fraud examination profession.

To pass the exam, you must achieve a score of at least 75% on each of the four sections. You will retain credit for sections passed for two years from the time you first took the exam. You may retake failed sections two additional times. Credit for sections passed will be lost if you do not pass the entire exam within three attempts. Note that fewer than one in four candidates pass all four parts on their first attempt
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Other Requirements
You will have to meet other requirements to obtain and maintain your CFE designation. CFEs must have earned a baccalaureate degree from a recognized institution of higher learning, however, no specific degree program is required. CFEs must have two or more years of experience in the detection or deterrence of fraud. You can meet the experience requirement in several ways, including being an internal or external auditor, a corporate security director or consultant, or a federal, state, or local law enforcement agent who investigates civil or criminal fraud or white-collar crime. To remain in good standing as a CFE, you must earn a minimum average of 20 hours of continuing professional education annually or 60 hours over three years.

Conclusion
Determining which professional certification is right for you will depend upon your career goals. Earning one of the accounting-related professional certifications is no easy task; however, earning and maintaining your certification can increase your chances for advancement and promotion, enhance your reputation among colleagues and within the profession, and result in salaries that are higher than your non-certified peers.


Rick Turpin is an assistant professor; John Alvis is a professor; and Nancy Pogue Tyler is an instructor. Turpin and Alvis teach at the University of Tennessee at Chattanooga, and Tyler teaches at both Dalton State College and Chattanooga State Technical Community College.

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