Demand for accountants is at an all-time high, according to the American Institute of CPAs (AICPA). In a 2013 report, the AICPA noted that public accounting firms hired 40,350 accounting graduates in 2012, 41 percent of whom held master’s degrees in accounting. Nearly 90 percent of those firms expected to keep hiring over the coming years.
The Bureau of Labor Statistics (BLS) backs up those positive hiring trends, citing a 13 percent employment growth for accountants and auditors over the next decade, particularly as the overall economy continues to improve. Accountants also benefit from increased regulation of the financial services industry in the wake of several high-profile corporate stumbles. Tighter internal auditing practices mean more work for experienced accounting professionals.
Higher demand and higher salaries
The highest demand for accountants — and therefore the highest salaries — is reserved for licensed Certified Public Accountants (CPAs). To become a CPA, you must satisfy the education and experience requirements of your state and pass the four-part Uniform CPA Examination.
In 2010, PayScale.com analyzed its salary database to figure out if CPAs earned more than unlicensed accountants, and by how much. PayScale.com compared 20-year veteran tax accountants who were licensed CPAs to 20-year veteran tax accountants without a CPA license:
- CPA salary range: $65,000 to $110,000
- Non-CPA salary range: $60,000 to $85,000
On the highest end of the pay scale, CPAs earned nearly 30 percent more than accountants without a CPA license.
Licensed CPAs can expect to earn at least 10 to15 percent more annually than accountants who aren’t licensed, according to the “2014 Salary Guide in Accounting and Finance” published by Robert Half, a global financial recruiting firm. Accountants who hold a master’s degree in accounting also earn more than accountants with only a bachelor’s degree.
The BLS echoes Robert Half’s findings in its “Occupational Outlook Handbook, 2014-15 Edition,” stating, “Accountants and auditors who have earned professional recognition, especially as Certified Public Accountants (CPAs), should have the best prospects. Job applicants who have a master’s degree in accounting or a master’s degree in business with a concentration in accounting also may have an advantage.”
From master’s degree to CPA
As the BLS and Robert Half reports indicate, job candidates with a master’s in accounting and CPA licensure command higher salaries and are in greater demand than those with only a bachelor’s degree in accounting.
For someone who is already working in the accounting field, a two-year online master’s degree offers a convenient way to satisfy the education and experience requirements for CPA licensure while earning a valuable graduate degree.
Here’s how it works:
- Accounting master’s degree programs are usually a minimum of 30 credit hours. When you add those hours to a typical undergraduate accounting degree (120 hours), they satisfy the 150-hour education requirement for CPA licensure in many states.
- Online master’s degree programs are designed for working professionals, with coursework spread out over two years.
- By the time you complete an online master’s degree in accounting, you will have also satisfied the two-year CPA work requirement. (Requirements vary state by state, of course, and all graduate programs must be duly accredited.)
CPA licensure requirements
One reason CPAs command a higher salary is the rigorous CPA licensure process. Employers can hire CPAs with confidence, knowing that anyone who has passed the strict education and experience requirements, plus the CPA Exam, is fully prepared to be a professional and ethical accountant or auditor.
CPA licensure is managed by each state’s Board of Accountancy. The requirements vary from state to state, but the two most important criteria are education and experience.
Click here to find your state's CPA requirements
Education requirement: 150 hours
According to the AICPA, all states require 150 credit hours of higher education, including a minimum number of accounting and business courses, to qualify to sit for the CPA exam. The Virgin Islands is the only U.S. jurisdiction that does not require the 150 hours of education for licensure. The average four-year bachelor’s degree equals 120 credit hours. The remaining 30 hours can be completed through individual professional development courses or a full graduate degree program in accounting. Because a master’s degree adds value for job candidates, many people choose the master’s route to completing this 150-hour education requirement.
Experience requirement: two years
As a general rule, states require two years of professional experience in public accounting to qualify for licensure as a CPA. As part of the application process, a licensed CPA must certify that the applicant has completed the required hours under his or her direct supervision.
States currently use two different methods to satisfy the experience requirement: the one-tier system and the two-tier system. In the one-tier system, CPA candidates must complete both years of work experience before certification and licensure as a CPA. In the two-tier system, candidates can take the CPA exam after only one year of on-the-job experience and receive temporary certification to work as a CPA. Full licensure, however, doesn’t come until the candidate finishes a second year of work experience.
Passing the CPA exam
The four-part CPA exam is one of the hardest professional licensure exams in America. The AICPA releases quarterly reports on the pass rates for the CPA exam. For all of 2013, the AICPA reports that the cumulative pass rate for the CPA exam was below 50 percent in three out of the four test sections. The national pass rate for the Bar Examination, for comparison, was 68 percent in 2013, according to the National Conference of Bar Examiners.
The CPA exam contains a mix of multiple-choice questions and “task-based simulations” in which the candidates must analyze spreadsheet data or evaluate a real-world business situation and derive a workable solution. Total testing time is 14 hours, but sections can be completed one at a time over the course of 18 months.
One reason that states require CPA candidates to complete 150 hours of education and two years of work experience is to be fully prepared to pass the CPA exam. Without a comprehensive understanding of accounting, auditing and finance — gained through graduate education and on-the-job experience — it would be extremely difficult to pass the test.Learn More: Click to view related resources.
- "2013 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits," American Institute of CPAs
- "Occupational Outlook for Accountants and Auditors," Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2014-15 Edition, Accountants and Auditors
- Bridget Quigg, "A Close Look at CPA Salaries," PayScale.com
- "2014 Salary Guide, Accounting & Finance," Robert Half Finance & Accounting