What do accountants do after failing the CPA exam?

August 18, 2008 8:19 AM

What do accountants who fail the CPA exam/fail to get CPA designation do for a living? How much do they get paid?

I know that only 30% of the CPA test takers actually pass all parts of the CPA exam. So what do the other people do for a living? Do they have to find non-accounting jobs or do they end up working in accounts receivable/payable? Or what?

Or is it that having the CPA designation is not necessary for the majority of accounting jobs anyway?

posted by onepapertiger to work & money (10 comments total)

Is that 30% of people who take the test or 30% of tests taken? I don't know about CPAs in particular, but I suspect that the vast majority of those who fail the test will pass it on a subsequent attempt. This seems to be the pattern for other similar tests.
posted by winston at 8:30 AM on August 18, 2008

Yeh, CPA is tough - it seems that while the nationwide pass rate is about 44%, one can always attend a Uni or other training program to improve one's odds.

I haven't seen any aggregated data reflecting how many people who embark upon the CPA course of study ultimately complete (or alternatively drop out), but I can tell you a CPA isn't necessary for a large number of accounting jobs.

While at a Tier 1 Investment Bank I worked closely with Fixed Income Controlling; out of a team of a dozen there was only one CPA (the manager, in fact) and yet this team was fully responsible for the books a US Government Securities trading desk running maybe a US $5B book (perhaps $50M in capital).

I honestly don't know much about their numbers, but they did receive full banking benefits e.g., dinner, cars home when they worked late, end of year bonus, etc. I was good friends with these guys and there were very happy (overworked, but that's another question). Keep in mind though that investment banking jobs pay sharply above scale for same work in different fields.

For the last eleven years I've been living and working in Europe, and here we don't see that many CPAs. We do, however, see lots of alternative accounting qualifications e.g., ACCA or CIMA (I'm a member of CIMA and have found it an immensely useful qualification).

So yeh, lots of jobs in accounting. Any course of study leading up to an CPA exam would give you very marketable skills. Double plus good if you're taking an accounting degree as well.
posted by Mutant at 9:29 AM on August 18, 2008 [1 favorite has favorites]

There's still plenty of work in the private sector for accountants who haven't passed the CPA exam. A friend of mine has a bachelor's in accounting, went on to get a Master's in finance and worked for about 10 years in various executive positions in the reimbursements department of two different hospitals. She finally got around to taking the exam (took her two tries to pass it), mainly just so she could add "CPA" on her list of credentials.
posted by Oriole Adams at 9:49 AM on August 18, 2008

As I understand it, the CPA credential is not necessary for a good number of accounting jobs, and there are plenty of skilled accountants doing fine work in the field without the credential. (I hope to be one of them when I graduate next year). Salaries are generally higher for CPAs, though.

It definitely seems to be true that in the USA, the CPA is the most widely recognized accounting certification. In the UK and Canada the equivalent is CA (Chartered Accountant). Whenever I tell people I'm an accounting student in a post-baccalaureate certificate program, invariably the next thing they ask is "Are you planning to be a CPA?" No, I'm not, but I may end up with some kind of credential in the future. I am still at an intermediate level of study and have a lot to learn, so I haven't decided yet. The coursework in my program will qualify me to sit for the CPA exam, but I'm not planning to go into public accounting or seek Big Four employment anyway, so I am not planning to take it.

Interesting note: a fellow student informed me that the AICPA goes to great lengths to promote the CPA credential as the standard for the profession, and as a result of their efforts, other certifications such as the CMA (Certified Management Accountant) are nowhere near as widely known, even though the CMA exam is just as difficult to pass as the CPA exam.
posted by velvet winter at 10:55 AM on August 18, 2008

I passed 3 out of 4 parts first try, then completed the 4th part 6 months later.
Either way, with or without the accreditation, accountants don't necessarily make a lot of money.
To get a decent income it requires a niche or specialization because there is so much to know, it would be impossible to be knowledgeable across the board on financial matters.

An accounting degree or CPA certificate can be a stepping stone to business management, knowledge of financial statements can make you a better candidate for analyzing investments, work in pulic accounting can lead to being a business valuation consultant, tax know how and negotiation skills can make you an agent for those dealing with the IRS - the degree and/or certification alone only offers the chance at steady work - no windfall.

So the learning is in the doing and watching for opportunities that present themselves. I think the passing of the CPA exam can be only a minor leg up.
posted by readery at 10:56 AM on August 18, 2008

Someone I currently work with already works as a staff accountant. He's currently taking the CPA. His salary is $55k, at a non-profit. I think that his only reasoning is the same as Oriole Adams' friend.

Someone else here in the same position with his CPA makes $72k. Again, it's a non-profit in New Orleans. I have no idea where those numbers fall in an overall range.
posted by mitzyjalapeno at 10:57 AM on August 18, 2008

You don't have to be a CPA to work for an accounting firm. You simply must be in the process of taking the test. It takes a lot of them several times to pass. And some more than that with re-takes.
posted by CwgrlUp at 5:13 PM on August 18, 2008

As someone who has worked very closely with the organization that administers the CPA exam, I can attest that many accountants who fail the CPA exam the first time will continue to take it again and again until they pass. I'm also aware that a number of people give up, and reattempt the exams after a couple of years. I have seen a ton of people persevere through spectacular failures on any/every section to eventually pass all sections of the exam within the requisite timeframe.

A lot of companies have promotions for their accountants, contingent upon them getting their CPA designation. I guess those who do not pass and quit attempting the exam will continue working in accounting, albeit at a lower level.
posted by madforplaid at 8:57 PM on August 18, 2008

Well, the average pass rate for each exam (there are four parts) is 42-44%. But you have to remember that many people take it when they aren't prepared for various reasons - for example, they got busy at work. Most cpa exam candidates are working in their first accounting jobs and there are times that it is very busy or other life obligations come up. Most people pass within one to two tries (3x for a particular section is the most I have seen). It takes time and dedication, but it is just everything that you should have learned from school. The hard part is that the volume of material is very extensive - think about putting 4 years worth of business school (mostly accounting) into 4 exams, and you have to know the material quite well to pass. Is it worth it? Yes! Definately if you want to work in any public accounting job - you won't get promoted to manager if you don't have it. Private industry - many jobs have a very high preference for a cpa credential. You will always make more money, and have greater opportunities if you have it - regardless of what you do in accounting. It is highly respected as it is the only true leveling line (each school's programs can differ in rigor quite a bit, for example). If you pass the cpa exam - you truly understand accounting, and this is why it means something. I can personally say that after taking each cpa exam section, it completely solidified the entire universe of accounting for me. I can completely understand why it exists and why it is respected. It is a bar for the profession to be the "best" - so why not try to be so? Yes, there are a million different jobs in accounting, some pay well, some not so much... so broaden your opportunities and show the world you are are part of the best of the profession. Having a professional licensing exam that is so rigorous only adds to the respect for the profession and thus the $. Go for it!
posted by Xmeit at 9:37 PM on August 18, 2008

One last add - I would totally recommend Becker Review. It is amazing. It is very hard to pass if you don't equip yourself with some kind of review material. Wiley is good to supplement. Most public accounting firms (not just Big 4) pay for Becker. As an aside, it is becoming common for new associates at middle market to Big 4 accounting firms to pay a bonus of $5,000 if you pass within one year of hire - this just started with this year's recruits. That alone would make it worth it if you have such a job (they also pay for the costs of the exam which is about $1,200 for one try per section). It is a total pain in the butt to have to study so much post graduation, after already studying so much in school - but trust me - your future will thank you. Just push through it and do it.
posted by Xmeit at 9:44 PM on August 18, 2008 [1 favorite has favorites]