There's been a couple of threads that have popped up lately about the CPA exam and whether it would be worth it for the authors try and pass it in lieu of other things, or in their spare time. Some of the comments by other posters lead me to believe there's a lot of misinformation or misconceptions about what a CPA actually is. I think it would be helpful to put some information out there to refer to later, as I feel these misconceptions might lead people away from the best path to achieving their goals.
This post is a mixture of my personal experiences as well as a lot of research on the subject, but seeing as there are other accountants/CPAs on this forum, I should note that this is based on my own personal view, and as such might differ from other posters' opinions.
So here we go
1. Passing the CPA exam makes me a CPA.
No. When people usually refer to a CPA (as an individual) they are referring to someone who is licensed by their state board of accountancy as a certified public accountant. While they do have to pass the CPA exam, there are other requirements that you have to meet in order to be a CPA. The main one that many outside of public accounting have issues meeting is the experience requirement, which is generally 1 or 2 years under the supervision of another CPA. If you're going into investment banking, a hedge fund, private equity, or otherfinance roles, the chance that you'll be working under another licensed CPA is remote, hence why it's pretty much pointless to try and become a licensed CPA in those roles. And just like the designation, just because you've passed the CPA exam does not mean you can go around calling yourself a CPA. That's a big no-no.
2. Passing the CPA exam shows that I'm good at accounting.
Not necessarily. The CPA exam covers a HELL of a lot of information, and most of it not financial accounting related.
The CPA exam is broken into four parts: REG, BEC, AUD, and FAR. Out of these, the only ones that are semi-relevant for finance positions are BEC and FAR. REG covers taxation and business law, both of those you'll probably leave to your firm's own lawyers and tax accountants. AUD covers how to audit financial statements, which seems like it might be helpful, but only covers things like sampling a population or what materiality is. Again, this role will be left to your firm's internal and external auditors.
BEC covers a hodge-podge of topics, including economics, finance, and information systems. If you did well in your econ and finance courses, you're not going to gain any additional knowledge from this test. FAR, which covers all the financial accounting (including governmental and non-profit accounting), covers so much material that it's all basic high level stuff. If you did well in your intermediate financial accounting courses, you're not going to learn any more studying for this test.
If anything, the only real thing passing the CPA exam shows is that you're good at absorbing a ton of information and then taking tests on it. Having studied for the exam, I would say that the Level 1 exam is 10x harder than anything the CPA exam puts out, so if you're looking to take a test, take that one.
3. Should I take the CPA exam to learn about accounting?
This is where I interject my personal opinion, so take it with a grain of salt. As noted earlier, only about two-thirds of one out of the four sections of the CPA exam covers financial accounting. None of it is new or more complex than what's covered in a financial accounting class. But if you have no accounting experience what-so-ever, would it be worth it to take it? I'm going to say no.
If you've taken an introductory accounting class, you've learned enough of the basics where it would be worth your time to pick up a book on, say, financial statement analysis or thestudy material on the topic than it would to study the financial accounting included in FAR. This is mainly because 1) FAR doesn't teach you how to put all the puzzle pieces together, and 2) a lot of the technical financial accounting is useless in your job (i.e. proper journal entries). That being said, building a better understanding of accounting can't hurt you either.
If you have absolutely no accounting experience at all, you'd be better off taking a couple classes and then picking up a financial statement analysis book.
4. Getting the CPA designation is essential to move up in finance positions.
What a lot of people seem to equate is that someone who is a CPA is good at financial accounting, which is not always true. I work in Tax at a Big 4 firm, and I'll have my CPA license in about 2 months. 98% of the time, my work doesn't deal with financial statements. So why then would I be good at analyzing them? Answer: I wouldn't be. Now, an auditor at a Big 4 who is also a CPA probably has a ton more experience than I do in that department, and would be better suited for that role. But if you're just looking for "CPA" on a resume, there's no way to tell.
Once a person is an accounting or finance-type role at a company, then it's also pointless for them to continue to be licensed CPAs. That's because the "P" in CPA stands for Public, which goes completely unnoticed by most people outside of public accounting. If you're providing attest work for public companies (i.e. auditing) as Big 4 accountants do, you have to be a CPA to sign off on stuff like tax returns or audit opinions. There's no rule or law that I'm aware of, though, that requires someone working at a company to be a CPA to do internal finance and accounting-type work.
That being said, there's a lot of public perception about CPAs. CPA = accountants, CPAs are (generally) trustworthy, CPAs are good at math/accounting, the list goes on. Former CPA/Big 4 accountants also like to hire CPAs/Big 4 accountants because of the standard they represent. That why a lot of accounting-related roles in private companies are littered with CPAs and former Big 4 accountants.
So if you're thinking you want to be a CFO down the line, I personally think it's more important to have relevant experience in the industry/role than it is to be a CPA. Not being a CPA is not going to stop you from being a CFO.
In short, becoming a licensed CPA can help you if you moving to an accounting-type role, if you have some relevant experience to back it up. But just passing the CPA will not give you a leg up against other candidates, especially if some of those candidates ARE licensed CPAs and have public accounting experience.