How The Profession Is Organized In California
While many jobs that require accounting skills in California do not require licensure, certain roles—for example, that involve performing audits of public companies and preparing audited financial statements—require licensure as a Certified Public Accountant (“CPA”).
This guide assumes that you have not previously been licensed as a CPA in another state and provides an overview of how to become licensed as a CPA in California as a foreign-educated accountant.
Regulating Certified Public Accountants
The California Board of Accountancy (“Board”) regulates CPAs in California. If you describe yourself (or your business) as a public accountant or providing public accounting services, you must be licensed by the Board.
Trends In U.S. Accounting
Accounting is constantly evolving. Recent trends include:
- Increased regulation;
- Promulgation of new and updated reporting standards and requirements; and
- Development of new technologies (for example, automation and remote work).
Employment In Accounting
Salaries in the accounting field vary widely depending on education, credentials, experience, field of practice, and size of an organization. According to the Bureau of Labor Statistics, the median income of salaried (not self-employed) accountants and auditors was $77,250 in 2021.
There are a number of different types of accounting roles available. These include:
- Government accountants, who examine the records of government agencies (both state and federal) and audit private companies and individuals who are subject to governement regulation or taxation.
- Management accountants (also known as cost, corporate, industrial, managerial, or private accountants), who combine accounting and financial information to guide business decision making, such as by preparing budgets, evaluating performance, or partnering with financial managers on asset management.
- Public accountants, who work on a broad range of accounting, auditing, tax, and consulting matters. Some public accountants focus on specific areas of practice. For example, some specialize on tax matters, advising corporations about the tax advantages or ramifications of business decisions or preparing tax returns. Others may be forensic accountants, who specialize in investigating issues like financial crimes, bankruptcies, and contract disputes. CPAs also help publicly traded companies prepare submissions to the Securities and Exchange Commission (SEC).
Opportunities may exist for accountants with knowledge of International Financial Reporting Systems (IFRS) or the earlier International Accounting Standards (IAS). If you can show that you have practiced accounting according to these systems, private companies and accounting firms with an international presence may see this as a real advantage if they need people skilled in IFRS to facilitate international business. In addition, certain submissions to the Securities and Exchange Commission must be submitted using the IFRS taxonomy.
Eligibility For CPA License Or Registration
In general, foreign-educated accountants will need to (1) have their foreign credentials evaluated for equivalency, (2) pass the Uniform CPA exam and Professional Ethics for CPAs exam (“PETH Exam”), and (3) complete 12 months of experience in public or non-public accounting in order to be eligible for licensure as a CPA in California.
Certain foreign-educated accountants, such as those who have taken the Canadian Chartered Accountant Uniform Certified Public Accountant Qualification Examination (CAQEX) or the International Uniform Certified Public Accountant Qualification Examination (IQEX) may be able to rely on their passage of those examinations (with an original letter from AICPA/NASBA attesting to the forgoing) instead of taking the Uniform CPA Exam. These applicants still need to have their transcripts evaluated and take and pass the PETH Exam.
For more details on the licensing process, the Board publishes a Licensing Applicant Handbook, that is available on its website.
Credential Evaluation
The Board requires that CPA candidates have a bachelor’s degree or higher and have completed 24 semester units each in accounting and business-related subjects. Accounting subjects include accounting, auditing, external or internal reporting, financial reporting, financial statement analysis, and taxation. Business-related courses include accounting subjects (in excess of the 24 required), business administration, business communication, business law, business management, business related law courses, computer science and information services, economics, finance, marketing, mathematics, and statistics. Candidates are also required to have completed 20 units of accounting study and 10 units of ethics study.
Your first step towards becoming a CPA in California is to have your foreign credentials evaluated. Your credentials must be evaluated by a Board-approved foreign credentials evaluation service. A full list of the approved evaluation services can be found on the Board’s website, here.
Note that the Board will accept the foreign credential evaluation with your application or mailed directly to the Board by the evaluation service. In either case, the evaluation must be in an unopened envelope that is sealed by the evaluation service.
You should have all of your university educational record(s) evaluated—not just your accounting program. The Board will consider a range of courses to meet CPA educational qualifications. If you have also studied in the United States, you should also request that your school(s) send those transcripts to the Board as well.
Apply for and Pass the Uniform CPA Exam and PETH Exam
The Uniform CPA Exam
The Uniform CPA is administered by the National Association of State Boards of Accountancy (NASBA). To take the exam, you will need to apply for and receive a notification to schedule (“NTS”) from the Board, which can be done on the Board’s website. You will need to print and sign a remittance form and then mail your completed application packet, including the remittance form, foreign transcript evaluation (and any other applicable transcripts), and application fee, to the Board.
Once your application is complete, it may take some time for the Board to confirm that you are approved to take the Uniform CPA Exam. If the Board finds that your credential evaluation shows that you do not meet the exam’s education requirements, you will receive information about what types of courses you need to take to meet the requirements. If you cure within one year, you do not need to reapply and pay the application fee again.
The substance of the Uniform CPA Exam will be discussed in more detail later in this guide.
PETH Exam
The PETH Exam is administered by CalCPA. You can register for this exam through the CalCPA website.
While most candidates choose to take the PETH Exam after passing the Uniform CPA Exam, the PETH Exam can be taken at any point so long as you meet all requirements for CPA licensure within two years of passing the PETH Exam.
The substance of the PETH Exam will be discussed in more detail later in this guide.
The Experience Requirement
The Board requires that applicants complete 12 months of general accounting experience before they are eligible for CPA licensure. If you are seeking licensure with the ability to sign reports on attest engagements, you must also show that you have completed a minimum of 500 hours in attest experience.
The experience can be obtained through full-time or part-time employment, so long as the experience is equivalent to at least one year of full-time employment. For part-time employment, the Board considers 170 hours equivalent to one month of full-time employment.
Complete the California CPA License Application
The application for CPA licensure is available on the Board’s website. If you require that one be mailed to you, you can contact the Board’s Initial Licensing Unit at licensinginfo@cba.ca.gov or at (916) 561-1701.
Your application packet will include information such as:
- The application form;
- A certificate of general or attest experience;
- The foreign transcript evaluation and any U.S. transcripts;
- Your Social Security Number or Individual Taxpayer Identification Number;
- Your passage of the required exams.
As part of the application process, you will also need to submit fingerprints for a criminal background check with the Department of Justice and Federal Bureau of Investigations. The Board will provide fingerprint forms after the application for licensure is received.
As of January 2023, the processing fee for the initial application is $250. There are additional fees associated with obtaining fingerprints.
Once your application is received, the Board will send you an acknowledgement of receipt. The Board will also send a 30-day status letter, informing you of the status of the application and any documents that need to be submitted. Once all documents have been received, the Board will inform you of its decision on whether to grant the license. Note that applications must be completed within one year of notification by the Board of any deficiency. After that one year, you will need to restart the application process, including retaking the PETH exam if necessary.
Note: if you (1) are a refugee pursuant to section 1157 of title 8 of the United States Code; (2) were granted asylum by the Secretary of Homeland Security or the Attorney General of the United States; or (3) hold a special immigrant visa and have been granted a status pursuant to ection 1244 of Public Law 110-181, Public Law 109-163, or section 602(b) of title VI of division F of Public Law 111-8, the Board can expedite the processing of your application. You will need to provide “satisfactory evidence” of your refugee, asylee, or special immigrant status in your application, such as a Form I-94 with an admission class code such as “RE” or “AY”, a special immigrant visa, or a green card with a category designation showing admission as a refugee or asylee. For more information, please contact licensinginfo@cba.ca.gov.
If your license is approved, you will then pay a license fee that is separate from the processing fee.
Tests
Professional Ethics for CPAs (PETH) Exam
The PETH Exam is a 50-question multiple choice test on professional ethics administered by CalCPA that you must pass in order to be eligible for licensing as a CPA in California. The exam covers materials in the AICPA Code of Professional Conduct and California Accountancy Act and Accounting Rules and Regulations. Key topics include:
- Ethics in business
- Basic concepts and philosophy of professional conduct
- Code of professional conduct
- Independence, integrity and objectivity
- Interpretation of Security and Exchange Commission rules
- Commissions and fees
- Form of practice and name
- Advertising and solicitation
- Sanctions
- Tax services
- Accountancy Act and CBA regulations
CalCPA offers an exam preparation course and estimates that it typically takes about 16 hours to prepare for and take the exam.
The test is available in either an online format or a text format. As of January 2023, the exam fee is $175 for the online format and $195 for the text format. Once you have ordered the PETH Exam, you have one year to take the exam.
A passing score on the exam is 90% or above (i.e., no more than five missed questions). You have up to six attempts to pass the PETH Exam, after which you will need to repurchase the self-study course.
Uniform CPA Exam
The Uniform CPA Exam is a 16-hour, computer-based test comprising multiple choice questions, task-based simulations, and written communication tasks administered by NASBA.
NASBA regularly publishes a Candidate Bulletin, which you should read to familiarize yourself with the exam. The December 2022 edition of the Bulletin is available here.
Test Content
The exam is divided into four, four-hour sections:
- Auditing and Attestation
- Business Environment and Concepts
- Financial Accounting and Reporting
- Regulation
More information about each of these topics is available from the American Institute of CPAs (AICPA), which publishes Blueprints about the specific breakdown of each exam section and sample exams.
You must pass each of the four sections with a score of 75 or higher within 18 months. If you do not pass an exam section, you will need to re-apply to take the section again with the Board. There is no limit on the number of times you may repeat a failed section (though you will incur additional costs if you need to retake sections).
Fees and Scheduling
You will need to pay the Board a $100 application fee for approval to take the Uniform CPA Exam. There are separate fees to take each of the the sections of the CPA exam that are separately paid to NASBA. As of January 2023, the fees are:
- Auditing and Attestation: $238.15
- Business Environment and Concepts: $238.15
- Financial Accounting and Reporting: $238.15
- Regulation: $238.15
The total fee for all four sections is $952.60.
Once you have your NTS, you can schedule your exam at a Prometric testing center.
CPA Evolution
NASBA plans to release a redesigned CPA Exam in January 2024. The new exam will follow a core + discipline licensure model, where applicants will be tested on a core set of topics (accounting, audit, tax) as well as an elected specialty picked from tax compliance and planning, business analysis and reporting, and information systems and controls. For more information on the new examination, please see NASBA’s website.
Time and Costs
Successfully licensing or registering as a CPA in California depends on many factors. Just some of these include:
- The completeness of your educational and professional records;
- Your performance on the Uniform CPA Exam and PETH Exam; and
- Your free time and how much you can afford to spend.
Other Credentials
In addition to the CPA credential, you are also eligible for other credentials as an accountant. Some of these credentials do not require you to be a CPA, while others do require that you become a CPA before you are eligible.
No CPA Required
- Certified Management Accountant (CMA): this certification requires experience in management accounting, an exam, and continuing education requirements and is offered by the Institute of Management Accountants.
- Certified Internal Auditor (CIA): this certification requires work experience in internal auditing and an exam. It is offered by the Institute of Internal Auditors.
CPA Required
- Certified Information Technology Professional (CITP): this credential shows additional professional development in the area of business technology as it applies to accounting practice. The coursework and the exam are offered through the American Institute of Certified Public Accountants.
- Accredited in Business Valuation specialist (ABV): this credential reflects special expertise in business valuation and forensic accounting. The coursework and the exam offered by the American Institute of Certified Public Accountants.
Other Credentials
There are many credentials available to you as an accountant, some of which you can only earn after becoming a CPA. The Bureau of Labor Statistics Occupational Outlook Handbook for Accountants and Auditors provides many more examples.
No CPA Required
- Certified Management Accountant (CMA): this certification requires experience in management accounting, an exam, and continuing education requirements and is offered by the Institute of Management Accountants.
- Certified Internal Auditor (CIA): this certification requires work experience in internal auditing and a four-part exam. It is offered by the Institute of Internal Auditors.
CPA Required
- Certified Information Technology Professional (CITP): this credential shows additional professional development in the area of business technology as it applies to accounting practice. Coursework and exam are offered through the American Institute of Certified Public Accountants.
- Accredited Business Valuation specialist (ABV): this program reflects special expertise in business valuation and forensic accounting. Coursework and an exam offered through the American Institute of Certified Public Accountants.
Beyond Licensing
Setting Up Your Business
If you plan to have your own accounting business, you may need to register a Public Accountant Firm with the Board. Registration is required if your business is set up as a corporation or as a partnership. It is not required if you plan to do business as a sole proprietor (under “You Name, CPA” and working alone). For more information, please see the Board’s website.
Joining a Professional Association
State and national associations for CPAs provide opportunities for professional development and networking. They also help set help introducing new accounting standards, develop exams, and give information and opinions on policy in California and across the U.S. For CPA candidates, their websites may offer useful information the licensing and examination process, including test preparation. For CPAs, these associations also often provide Continuing Professional Education (CPE) opportunities to members as well.
There are many more professional associations for CPAs (and accountants generally), including associations that emphasize specific functional areas of accounting, different types of workplaces or sectors, race and ethnicity, gender, or religion.
Continuing Professional Education (CPE) Requirements
A CPA licensed in California must complete 80 hours of CPE during each 2-year period between license renewals. The Board has specific requirements for not only how many CPE hours must be completed within a single year but also what the specific distribution of those CPE hours should be amongst various technical and non-technical topics, which you should confirm to make sure that you are in compliance once you have been licensed. There are many opportunities for completing CPE hours, including opportunities offered by professional associations.
Licensing Mobility (Reciprocity)
California does not have any reciprocity agreements for CPAs with other states. In other words, California does not recognize reciprocity for accountants licensed as CPAs in other states. Likewise, other states do not recognize the California CPA license. Therefore, you may need to seek separate CPA licensure in another state if you plan to move there or do significant work there.
Tips
Volunteer: Volunteering your services is a great way to help you expand your practice, network, help others, and keep your skills current. Many accountants volunteer with nonprofits directly or through professional volunteering associations like the Taproot Foundation. You can help nonprofits with their accounting or help individuals prepare taxes or learn about personal finance and budgeting.
Speak Up: Be your own advocate throughout the licensing process! Seek clarification about questions and concerns directly from official sources. Organize your questions and ask for assistance.
Check Credit for Courses: If you need to take courses to meet Board education requirements before you can sit for the CPA exam, you should consider consulting with the Board directly before beginning any classes to ensure that the Board does not find them duplicative of courses you have already completed.
Your Identification Must Match: Your name should appear the same on all documents and identification you will use in licensing as a CPA. You will not be allowed to take the Uniform CPA exam and you will lose all of your fees if your forms of identification are not identical. If you have differences in the way your name is spelled or written on documents like your application or driver’s license, you will need to invest the time and money to correct them.
