CPA Certification – A Ready Reckoner

There’s so much information about the CPA certification online that sometimes it’s difficult to sift out the most relevant parts. For aspiring students this can be problematic and confusing. Not to worry. We at Orbit Institutes have created this guide specifically for you. What exactly does a CPA certification entail? Read our ready reckoner to clarify all your doubts about it. 

The CPA Examination: The Certified Public Accountant(CPA) examination is a computer-based test that comprises four sections. The four sections are:

  1. Auditing and Attestation (AUD)
  2. Financial Accounting and Reporting (FAR)
  3. Regulation (REG)
  4. Business Environment Concepts (BEC)

Syllabus of the CPA Examination: Each section of the examination is designed to test ones expertise in different aspects of finance.

1. Auditing and Attestation (AUD):  These are one of the most important aspects of a CPAs job. Simply put, auditing is the process of examining a company’s financial statements. While attestation is the process of declaring that financial statement as accurate and reliable.

To do an audit one needs to understand how the client’s business functions & the internal checks and balances they have in place. The auditor must also provide an opinion on the basis of certain procedures. The AUD section of the exam, tests all of this. Below is a table that details the areas tested and their weightage.

AUDITING AND ATTESTATION (AUD)

Content Area

Allocation

Ethics, professional responsibilities, and general principles

15–25%

Assessing risk and developing a planned response

20–30%

Performing further procedures and obtaining evidence

30–40%

Forming conclusions and reporting

15–25%

You will be allotted a total of 4 hours to complete this section. To prepare for this section you need to memorize everything from your audit opinion letter to the internal controls.

2. Financial Accounting and Reporting (FAR): This section of the exam is considered the widest. It covers subjects such as aspects of financial reporting, the differences between the GAAP & the IFRS basis and the compilation, evaluation and analysis of financial statements amongst others. The below table broadly shows the weightage given to each section.

FINANCIAL ACCOUNTING AND REPORTING (FAR)

Content Area

Allocation

Conceptual Framework, Standard-Setting and Financial Reporting

25-35%

Select Financial Statement Accounts

30-40%

Select Transactions

20-30%

State and Local Governments

5-15%

The FAR section is 4 hours long. The syllabus is vast and often candidates don’t give themselves enough time to prepare between the other examinations. On average one should schedule 7-8weeks of preparation time before attempting the FAR. To prepare for the FAR make sure you are well-versed with your journal entries.

3. Regulation (REG): This section of the CPA is designed to test you on federal taxation, business ethics and business law. It broadly covers tax concepts, your ability to understand legal responsibilities, tax issues and tax implications. The content area and weightage is as follows:

REGULATION (REG)

Content Area

Allocation

Ethics, Professional Responsibilities and Federal Tax Procedures

10-20%

Business Law

10-20%

Federal Taxation of Property Transactions  

12–22%

Federal Taxation of Individuals

15–25%

Federal Taxation of Entities

28–38%

Remember, the ethics & taxation sections are equally important in this paper. It is important you don’t underestimate either section.

4. Business Environment Concepts (BEC): This section of the CPA tests the candidates understanding of business concepts and their understanding of their responsibilities while making business decisions. The BEC exam covers subjects such as corporate governance, financial management and operations management etc. Below is a detailed table.

BUSINESS ENVIRONMENT CONCEPTS (BEC)

Content Area

Allocation

Corporate Governance

17-27%

Economic Concepts and Analysis

17-27%

Financial Management

11-21%

Information Technology

15-25%

Operations Management

15-25%


The fact that the BEC section of CPA is perhaps the least technical shouldn’t make you underestimate its difficulty. There are also far less task-based simulations & multiple choice questions in this section as compared to the others, making it tough. This section also has a different question format i.e. – Written Communication.

As you can see, the Certified Public Accountant (CPA) examination is not just one exam,rather it consists of 4 different exams. Cracking this exam involves detailed planning & time management which Orbit Institutes can help you with. No matter how one chooses to approach it; the advantage of this certification is that you could achieve it within just a year.

Trending Career Profiles in Finance

Career in Finance

If money makes the world go round, can you imagine the importance of finance professionals! Apart from those who renounce their worldly possessions, finance is a part of everybody’s lives be it at a commercial level or an individual level. As a student of finance there are a number of doors of opportunity for you. A career in finance employs a range of skills & interests from the extremely niche to the more general. We at Orbit Institutes show you a glimpse of the trending career profiles in Finance.

Corporate Finance: As the name suggests, this involves working for corporations. These could be of any size. A corporate finance specialist helps a company manage their financial strategy. Apart from managing these finances at a macro-level, corporate finance also involves predicting profits & loss, reducing financial risk, preparing financial statements and in some cases even handling mergers & acquisitions. Within a corporation there may be more finance roles such as auditors & treasurers.

Commercial Banking: A commercial bank is a financial institution that grants loans, accepts deposits and offers a range of financial services to the general public. They are what most people refer to as ‘banks’. A job role in commercial banking could involve being a bank teller, loan officer, account manager, branch manager etc. Within this sector it is possible to grow from a local branch position to a position at the corporate headquarters. This would open the doors of international opportunities for you.

Investment Banking: To put it simply an Investment Bank helps organizations raise capital and provides advice on their financial strategy. There are various roles that one could adopt in an investment bank. Some investment bankers specialize in mergers and acquisitions. Others choose to become underwriting specialists (those who help assess risk) and some become venture capitalists, who help new businesses. While careers in the investment banking sector can be quite well-paying and glamorous, they can also be intensely gruelling.

Hedge Funds:  Hedge funds use a pooled investment structure. They are largely unregulated private investment funds. A hedge fund manager works towards raising external funds and then investing them according to a strategy. Hedge funds are usually specialized in a certain field. Working at a hedge fund could involve being a portfolio manager, compliance officer or even an analyst or trader.

Insurance: The insurance sector relies on finance professionals for various roles. Actuaries are people who help insurance companies calculate and set insurance rates. Risk managers recommend the level of risk an insurance company should take, while still staying financially secure. Then of course there are Chief Financial Officers or CFOs who oversee all financial operations of the insurance company.

Public Accounting: Public accountants are in-charge of helping companies maintain a record of their income and expenditure. They are also responsible for boosting sales; increasing revenue and helping the company achieve their long-term financial goals. They usually work in accordance to the Generally Accepted Accounting Principles or GAAP or the International Financial Reporting Standards (IFRS).Public accountants work for both the commercial and private sector.

Financial Planners: Financial planners or advisors are people who help individuals define, develop and achieve their financial goals. Along with an individual’s personal financial data, a financial advisor will use sound financial knowledge and assumptions to guide the individual on where they can invest and how they can further improve their financial situation. A financial planner may also help with taxes, retirement plans, investment growth and wealth preservation apart from other things.

Stock Brokers:  Stocks refer to the shares sold by a company. Stock brokers are those who guide clients on which stocks to invest in for greater returns. Stock brokers are well-versed with the stock markets. They guide people on when to buy or sell. This career path is considered fast-paced and highly lucrative. A stock broker usually receives a commission on every transaction.

Portfolio Management: Portfolio management involves overseeing the investment policies of a company or an individual without getting into the nitty-gritty details of each investment. It also involves doing a SWOT analysis for the client in order to maximize profits and minimize risks.

As you can see the finance sector has varied career options for both experienced professionals and beginners. An individual must work towards finding a role that s/he enjoys and has the skill set for.  At the end of the day, knowledge is power and anyone entering the finance world should make themselves aware of the opportunities available. We at Orbit Institutes are happy to guide you through career options in the finance sector.

3 Globally Recognised Certifications for Finance Professionals – CPA, CMA, CFA

CPA CMA CFA Certifications

There’s no denying that the world of Finance is both highly lucrative but at the same time highly competitive. Young professionals need to have an edge over their competitors. Certifications are the answer. Professional certifications significantly boost ones career prospects. They indicate to the employer not just qualifications but also the individuals’ commitment to mastering their trade. In this article, we at Orbit Institutes show you the three most important certifications for global finance professionals i.e. – the CPA, CMA & CFA.

Certified Public Accountant (CPA): The Certified Public Accountant (CPA) is amongst the top accounting credentials in the United States and is similar to the CA Qualification in India. Though the exam is administered by the American Institute of Certified Public Accountants (AICPA, the world’s largest accounting organization), the certification is recognized across industries globally.

An accountant is one who handles all the financial transactions of a company. This includes bookkeeping, auditing, taxation etc. A Certified Public Accountant (CPA) is one who has achieved what is considered the ‘gold standard’ of certifications in the finance world. While the role of an accountant and a CPA may overlap there are two things a CPA can do that a regular accountant cannot.

  1. A CPA is licensed to file reports with the United States Securities & Exchange Commission or SEC. This is mandatory for all public companies in the United States.
  2. A CPA can represent clients in front of the Internal Revenue Service or IRS.

A world of opportunity opens up for those who have cleared the CPA examination. These candidates can work in hedge funds, investment banks, research firms and so on and so forth. For Indians who have done a CA, M.Com or B.Com, the CPA is an important way to move their careers forward drastically.

Certified Management Accountant (CMA): The CMA certification is awarded by the Institute of Management Accountants (IMA), the world’s leading organization dedicated to empowering accounting and finance professionals. The course covers financial accounting and strategic management.

A CMA is essentially an accountant who has the skills and certification to help companies take financial decisions. Planning, budgeting, profitability analysis, risk management and investment decisions all come under the purview of a CMA.

Unlike a CPA, the process of qualifying for the CMA is far more streamlined. This doesn’t mean that the course is easier; it just means that one can focus on the exam rather than eligibility rules.

A CMA can hold different positions in different organizations. Chief Financial Officer, Budget Analyst, Financial Manager & Treasurer are a few designations you will see that are held by CMAs. CMAs are highly valued by companies as they are directly responsible for financial decisions. Earning yourself a CMA degree will help you rise to the executive level of your company, which may not have been possible earlier.

Chartered Financial Analyst (CFA): The Chartered Financial Analyst (CFA) designation is a symbol of distinction and excellence in the investment management field. It is given by the CFA Institute which is a global body.

Management usually prefer hiring CFAs at senior-level finance positions as most CFAs work largely with portfolio management. However, CFAs can also work as stock brokers, risk managers, asset manager and financial consultants.

Many people prefer to obtain a CFA as opposed to an MBA as the examination fee is cheaper, the course structure makes it is easier to study for while doing other things like working and the pay at the end is much higher.

One of the biggest advantages of doing the CFA is that it establishes that you have a high level of integrity and ethics.

Obtaining a professional certification is something every student of Finance should consider seriously. We at Orbit Institutes will guide you right from helping you choose the best certification for yourself to receiving the final certificate. To know more visit our website.