FAQ's

I have compiled a list of questions asked on this blog and people ask me in person.

Question
Are your notes updated to reflect the content changes in the CPA Exam after you took the exam in 2007?

Answer
Unfortunately, my notes do not reflect the updates for CPA exam after 2007. I have posted my notes more as an example of how you should study. As I mentioned in my posts, the best way to pass the simulations is to complete as many practice simulations as possible. It sounds cheesy, but there really are no shortcuts. The body of knowledge from which the questions are constructed from has limits. As a result, the examiners can only ask a question in so many ways. So the more practice problem you complete, the closer you are to mastering the material.


Question
Why don't you updated your notes for the changes in the CPA material?

Answer
I created this blog because people always asked to borrow/use my notes for studying. So I created a centralized source to access my notes. I'm merely an individual who created this site not to make money but to share insight. In addition, I don't have access to the 2008 or 2009 material changes. I've aready passed the CPA exam so I'm not purchasing the study materials again. If you know what the changes are let me know and I'll update my notes.


Question
"Which exam is harder? CPA or CFA?"

Answer
Short Answer: The CFA is much more difficult

Long Answer: The CPA is essentially one exam split into 4 sections. You can master one of the sections in a month. And if you fail a section, you can take it again 3 months later. I consider the CFA three separate exams simply because the material covered in each exam is so expansive. In addition, if you fail the CFA exam you have to wait a whole year to retake the exam (except for level 1 in which case you have to wait 6 months)


Question
What are the education requirements for the CPA?

Answer
The education requirements for the CPA differ from state to state. Log onto the NASBA website and find the requirements specific to each state (http://www.nasba.org/nasbaweb/NASBAWeb.nsf/wpecusm?openform).


Question
How hard is the ethics exam for CPA candidates?

Answer
Only certain states require the ethics exam. I’m licensed in NY and the ethics part is not required (or wasn’t went I went through the process). From my understanding, the ethics portion is more of a nuisance than anything. And I actually thought it was a take home exam and then you mail it in – maybe I’m wrong. If you just put in the time, you’ll be fine.


Question
Why are you biased against the CFA?

Answer
I’m not biased against the CFA. I do believe the CFA holds value and that it will give an individual a competitive edge. However, my post compares the probabilities of switching careers. Graduating from a top 10 MBA program gives an individual a much higher probability of switching careers compared to completing three levels of the CFA. I am not bias but merely stating my observations based on experience and extensive research with various industry professionals.


Question
I've heard that accounting firms are pretty reluctant to sign off hours so quickly (especially if there aren't hours in areas such as planning). Did you ever experience any such difficulties in getting your hours signed off?

Answer
PwC (which I assume is the same at the big 3) tracks your hours in a firm wide time sheet database system. If you have 1 year worth of hours in the system you’ll have no problem getting signed off. At the big four, it’s not your manager or partner who signs off on your hours. There are special employees whose sole job is dealing with CPA licensing. These people don’t know you, they simply receive your CPA docs, reference the database, and sign off.

One caveat:
When I was leaving PwC, the firm was making attempts to better track how employees were spending their hours (planning vs control testing vs F/S tie outs, etc). So now there may be a way for firms to track where you spent your time. If that’s the case I have two pieces of advice (1) try to get more involved in parts of project that will meet your hours requirement (2) after 1 year of experience submit your CPA docs regardless. Cause like I mentioned, at big firms the process is standardized, so if you meet the "system requirements" you'll be signed off.


Questions/Post by Anonymous
Hi guys. Not sure if anyone will read this since the last comment was a few weeks ago.

Here is my situation: I am 37 today. I worked as a chemical engineer from 22-26, then an operations manager of a manufacturing plant from 27-31, and then as a controller for a manufacturing plant from 32 to 37. I got my MBA from a top school, which is one reason I was hired as a controller (without an accounting degree). To be fair, I was very good in my accounting classes during my MBA and always liked accounting, which is why I wanted to be a controller.

In the next 2 years, I may be moving to another part of the USA, and would like to begin planning for my next job. My initial idea was to sit for the CPA exam in a state that I would meet the qualifications for (some states accept an MBA as a sufficient prerequisite). That way, with a CPA in hand, no company would doubt my accounting ability (I can talk a good game and my 5 yrs experience helps, but there is always some guy on the other side of the desk who wants to see the 3 letters "CPA").

Any ideas or thoughts? Seems like my chemical engineering degree is more and more useless!

Answer/Response
I may not continually post to my site, but I’m always checking in on it.

In regards to your question. The best website to compare state requirements is http://www.beckercpa.com/state/index.cfm. However, I’m not sure you can just take the exam in any state, thereby, circumventing the education prerequisites. Either contact Becker or NASBA. Someone should be able to answer that question fairly quickly.

If you want to be an accountant, a CPA will always command a premium in the market place. However, it is not required for many jobs. The only job you actually need a CPA designation for is as partner at a public accounting firm (because they sign audit opinions). At what type of firm are you a controller at? In your job search apply to companies that are similar to your current firm. Accounting experience is industry based. Meaning if you were a controller at a manufacturing firm your experience will not carry over and help you as a controller at a finance firm (it’s relative but a general rule). There are many accounting nuances, rules and standards that only apply / are used by particular industries. I think you will be extremely competitive among candidates with a MBA from a top school, similar industry experience under your belt, and you interview well.

Planning, studying and taking the CPA at minimum takes 6 months to accomplish (with an average of about one year). So if you plan to move around that time frame, I would recommend concentrating on getting a job vs getting the CPA.

Like I said, industry experience will matter most, then your personality, then your MBA (which will essentially replace the CPA for an interviewer mentally). Hope this helps. Let me know if you have any other questions.


Questions/Post by Max Morland
Great blog. I'm in the middle of the CPA exam and am thinking about my post-exam career path. Currently I work in corporate accounting. I don't think I can use my work experience to qualify for the work requirement of the CPA license. For that reason I think there will come a time that I will need to go to work in public accounting, which I feel will be a step back in my career, but necessary to obtain a CPA license. Any tips about the direction of my post-exam career path? Do I shoot for a big 4 firm, or a local firm? Or, should I keep my job and freelance at a tax firm? The thought of going into auditing doesn't sound very attractive, but is something I'm willing to do to obtain the CPA designation. Thanks!

Answer/Response
Max,

In my opinion, auditing work is not attractive. However, I know many people who enjoy it (a lot depends on your team and your client).

I pretty much answered your questions in the comment post above yours in the "CPA vs CFA vs MBA" section. So re-read my comments there. A quick recap though:
1) double check and scrutinize the CPA work requirements in your state
2) Limit your prospective job options to those that can meet the work requirements
3) Pick a firm/job opportunity based on a number of quantitative and qualitative factors (salary, client opportunities, work/life balance, etc).

Hope this helps.


cpacfa


Questions/Post by Chris
Great post!

First of all, thanks so much for putting this website together. Your outlines definitely helped me with the CPA exam.

That being said, I too am trying to get away from public accounting and move into the consulting field. My plan this whole time was to go for a CFA right after I had passed the CPA. The idea was that the CPA / CFA combo would be enough leverage to get me out of public accounting and into a more "accounting consulting" role like TS. From there, I figured the move into a bigger consulting firm (or at least a top 10 MBA program) would be a lot easier.

But your experience seems to tell a different story as to how much clout the CPA-CFA combo really has on potential employers. I just wanted to ask then, is pursuing a CFA really worth it if you want to use it as leverage to get a better job outside of public accounting? Also, do you think that the CPA / CFA combo actually helps you get into a top 10 MBA program?

Do let me know your thoughts. Your plans in life (and even roadblocks it seems) sound so similar to mine, except you're much further along that I am.

Chris

Answer/Response
Chris,

Thanks for your thanks!

For star employees at big 4 accounting firms, there are (or were) plenty of opportunities in transaction service groups, forensic accounting firms, and general accounting based consulting roles. However, most groups/firms have put a freeze on hiring or mobility has become more difficult. That said, the CFA will always differentiate you in the marketplace, but I don’t believe it necessary to make the move into TS. My first piece of advice is search out, network, and set-up informational interviews with as many professionals in TS or forensic accounting groups as possible. Go straight to the source, do some due diligence, and most importantly, show your interest and make meaningful contacts. You may be able to make the switch without the CFA.

In regards to your career plan, you need to identity your ultimate goal. Is it to go to a top 10 business school (and then work in whatever interests you most)? Or is it to work at a top 5 strategy consulting firm? It’s my understanding that switching into strategy consulting from a different career is incredibly difficult. Therefore, coming from your background, you have to go to a top 10 business school to work at a top strategy consulting firm.

I’ve never heard of anyone with the CFA designation then going to business school. So I can’t give any detail on the impact the CFA has as a competitive edge to getting into a top MBA program. Remember, the CFA takes a min of 2.5 years to complete then 4 years work experience. For me, I did a 1 yr masters, the CPA and the CFA – I’m all studied out. The thought of studying for another exam is too much to handle. So if you are pursuing the CFA to get into a B-school, I think costs outweigh the benefits of that plan.

I firmly believe that the CPA / CFA combo is enough to switch careers in a global bull market. However, that path is by no means certain. The only way to ensure you can switch into any career is by attending a top 10 business school. Trust me, if you want to make a career switch study for 6 months and take the GMAT. If you don’t score high enough to go to a top 20 MBA school, then take the CFA. All in, the process of getting into a business school is 1 year (6 months GMAT prep, 6 months B-school applications) vs the CFA which is 3 years.

I'm interested to discuss further if you have additional questions or commments.


cpacfa


Question/Post by Mark
Hi,

Thanks for your help to the crowd.

Here is my background: I moved to America four years ago, and with luck, I unexpectedly got into Cornell. I graduated in this January with a finance major. Job market is tough plus I didn't prepare well for my interviews. I just decided to go for MBA in accounting, and get the CPA in the near future.

I passed almost all the top MBA deadlines, and the school I'm looking at now is Hofstra University (on Long Island, close to my house). I know that Cornell-->Hofstra doesn't really look good on my resume, but the program is not bad, and I probably will get in without work experience, also it's close to house, and very possible scholarships. Considering my situation and background, I think this is a good (and probably the last) opportunity for me. I want to start in this fall rather than 2010.

Any thoughts and advice?

My Follow-up
I think you know my answer. But before I give my thoughts, you need to clarify a few things on your current situation. Do you want to pursue finance or accounting? Are you currently employed? If so, is it a worthwhile opportunity? What is your ultimate career goal. My thoughts/advice will vary dramatically based on your answers.


Mark’s Answers
Thank you.

1. Do you want to pursue finance or accounting? I don't know. I studied finance in Cornell, and I'm sure that I like finance. Not sure about accounting, just feel that finance + accounting would be strong, and opening more doors.

2. Are you currently employed? No I am not. I graduated in December 08, didn't get a job.

3. What is your ultimate career goal? Director of a big corporation's China/Asia office.

Thank you.

Answer/Response
Well Mark, in my opinion your options are straight forward yet difficult to endure. Based on what you’ve said, you should not pursue an accounting MBA or CPA. As I’ve mentioned in previous posts, once you’re an accountant you’re an accountant for life. Based on what you’ve said, you should not attend Hofstra’s MBA program. Going to Hofstra is the easiest route but I believe it’ll be a detriment to your long term goals. You should be spending all your time doing 2 things: (1) recruiting for a job (2) studying for the GMAT.

(1) You should be connecting with the Cornell career center and various recruiting firms in New York. You have a finance degree from a prestigious school and you need to leverage the alumni base. Firms are hiring but the competition is fierce and the interview process is arduous (you need to prepare and study for interviews like you would a class)

(2) If you don’t go to a top 10 (maybe 20) MBA program you’re wasting money and time. Hofstra is a great school but the finance world is superficial and vain. Don’t take the easy route. Wait another year and apply to the top b-schools. Since you don’t have work experience. You need to crush the GMAT (get above a 700) and then go do volunteer work in Asia (learn a language or two) until you have to apply to schools next year.

If you land a good job – great! You can defer your GMAT score until you’re ready to go to grad school. If you do well on the GMAT – great! You can spend the next year differentiating yourself for applications.

Mark it appears you have the tools to achieve your goals. All you need is the desire. Both recruiting and studying are time consuming and exhausting (both mentally and physically). So you are going to really have to commit to the cause. Don’t view this year as wasted, view it as progression.


cpacfa


Question/Post by Greg
First off, thanks for such great notes. They're very useful in preparing for the CPA exam. Although you're going more of the finance route, I wanted to get your input on where you think I could possibly go with my background.

I'm currently taking the CPA exam and should be done by the end of the year. I passed the CISA exam last year (IT Audit) and am currently working for a Big 4 accounting firm. I don't want to be pegged to the accounting field for the rest of my life as you suggested is possible after passing the CPA exam and would like to to incorporate it into something IT-related, possibly being CIO of a company later on.

Do you think it's possible to be CIO without going for my MBA and just with CPA/CISA and public accounting experience? Are there any other paths you suggest I could take or would an MBA be the best route? Thanks again for your help.

Answer/Response
Greg,

I don’t know a great deal about the career path of a chief information officer. However, I do know that experience counts more than anything. And a MBA will help your career more than a CPA. IT executives attend grad school to gain additional business management skills and pedigree not technical expertise. If your goal is to become CIO of a corporation, I would recommend working in an IT consulting role at a prestigious firm (which sounds like you’re doing). Then differentiate yourself by attending a top MBA school. It will make you more marketable and open more doors for you in the long run.


cpacfa


Question/Post by Anonymous
I was googling over which is better - cfa or mba when i hit upon this website. I always wanted to do an mba but procrastinating about it made me cross the psychological 30+ age barrier. I've heard its tough to break in to IB in that scenario even if one is lucky enough to get a MBA from one of the top 10/20 schools.

The way the economy is going quitting jobs for getting MBA might not necessarily work out in your favor, so the other alternative i was thinking was to do CFA. Given that I've read people commenting having CFA didn't really help much, except to differentiate one from another who didn't have a CFA, would anyone know if i opt to do CFA might help or i should just pull up my socks and concentrate on doing MBA.

Am in IT for the past 9 yrs so definitely looking for a growth in my stagnant career even if it means some change from my current line.

Any comments would be highly appreciated.

Answer/Response
I think you answered your own question fairly accurately. I don’t have the CFA just yet, but what I’ve seen leads me to believe that a gaining a CFA will not directly lead to career switch. I’ve also heard that the older you get the more difficult it becomes to land an IB associate role from a top school.

However that said, in your position going to a top 10 school is your best choice to change career paths into straight finance. My advice is to worry about the big things first. And the biggest hurdle is not getting a good job after b-school, it’s going to a top 10 business school. As you said, pull up your socks and go to a top b-school. Then when you’re looking for a job – a door more meaningful than IB will open.


Question/Post by James
Hey there,

I just want to thank you for your blog and the valuable insights that you have shared. I have gained much more knowledge about the CPA/CFA combo from your blog than any other website or working professional I have come in contact with.

I also seem to be sharing the same path that you've taken. I'm taking REG for the second time this Sat, and assuming I pass, i will only have AUD left. I will have met my audit hours by the time I pass all exams so I should be receiving my certification shortly afterwards. I also plan on taking level 1 of the CFA this December, although it is quickly approaching.

However, I have become worried upon reading about your difficulties of making the switch into the finance industry with a CPA and level 3 candidacy on your resume. I was planning on making the same switch after passing level 1. Hopefully this transition will become easier with a bull market and a CFA certification.

But i have realized a potential roadblock to your CFA certification and plans to make the career switch. Doesn't a CFA certification require 4 years of investment related experience? So doesn't that mean your years spent at PWC doing audit work wouldn't count towards your CFA? I really hope i'm wrong. Because if not, I may have to seriously start considering whether or not a CFA is for me.

Regards,

James

Answer/ Response
James,

Thanks for the kind words. If you’re a smart and driven individual, there is no question that CPA/CFA will pay dividends in the future. It’s an incredibly elite and prestigious combo. I agree a bull market and industry friends will help facilitate a switch into finance. However, I’m merely cautioning based on your ultimate goal and unique circumstances.

You are correct, the CFA does require 4 years investment related work experience to actually receive the charter. An individual must spend at least 50% of their time in the investment decision-making process in order for work experience to qualify. As a result, my time at PwC will count for the other 50% and I’m working on the 50% investment decision making process portion now and probably for many years to come. If I pass level 3 (my fingers are crossed) I don’t expect to earn the charter until realistically 2012, maybe 2013.

For more detail:
http://www.cfainstitute.org/cfaprog/charterholder/membership/work_experience.html

However, passing all three levels of the CFA is the tough part (and the true value added of the designation). Any employer will see that you’ve passed the exam and will be willing to invest in you until you earn the hours for the charter. So don’t let the work experience requirement deter you from taking the CFA. You need to weigh all the different options, including pros and cons, based on your goals and circumstances. Hope this helps. Wish you the best.


cpacfa

8 comments:

Ash said...

Hi

Here is my background. I am a recent graduate from the University of Rochester with a double major in economics and political science and I am currently unemployed. I am seriously looking for a job, however I don't want to waste my time and I am also planning on doing the CFA. Here's the deal. I am very interested in consulting but as of now I have no entry points to get into consulting for the time being. So question, is do strategy/management consulting firms take cfa's in a consulting role? I hope to get my MBA after working for about 2 or 3 years. Do you think I should even consider getting a CFA if my career interests lie in consulting? Please note, I don't want to work in a consulting firm in a finance role, I actually want to be a consultant. Also, the kind of consulting I am looking at is management/strategy consulting.

I hope someone can answer my question

Anonymous said...

Hey,

Would you recommend the cpa to someone who has 6 years of experience in performance reporting at a private equity shop and 2 years at Goldman? The market is tough out there. Thanks

cpacfa said...

Ash,

It's my understanding that once you've worked for a couple of years there are two ways to break into a strategy consulting role 1) go to a top 10 MBA school and then recruit into a firm 2) you are a expert in a particular field and you are hired for your particular niche skill sets. The second way is much rarer.

Based on your comments, I would advise against the CFA and focus on doing really well on the GMAT and going to a top 10 school. The CFA is a great credential but in your situation I think the sacrifice to obtain it outweighs the benefits. Hopefully that helps.

-cpacfa

cpacfa said...

Anonymous,

CPA is another great credential and exam is not too difficult to complete. If you focus, you can pass all four parts in a year. However, being experience eligible is something different. Based on your experience, I assume you live in NY. So google "New York State CPA Experience Requirements" and see if your meet the requirements to receive the CPA (I think you need public accounting experience).

Have you looked into other certifications such as a CAIA (Chartered Alternative Investment Analyst) or CIMA (Chartered Institute of Management Accountants)? These are lesser known, but still known credentials. They might not get you in the door but they will surely differentiate from your peers.

Ultimately, the competitive edge you pursue depends on your future goals. Do you want to be CFO or Director of Risk Analytics at a fund. Dig deep and determine what you want. Then you'll be able to achieve it with that much more clarity.

Let me know your thoughts.


-cpacfa

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Zach Thalman said...

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williambrown said...

Hey thanks for this valuable article!! My final examinations are going to be in next month and I am preparing notes for accounts and economics. Now I need to download the eBook “Audit and Non-audit Fees and Capital Market Perceptions” that is published by Dr. Aloke Ghosh. I just wonder if you can provide the download link to this book!!