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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
.
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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