Most future CPAs know they have to pass the 4-part CPA Exam, but did you know that some candidates also must take the CPA ethics exam as well?
So, there are the 3 E’s of the basic CPA requirements:
However, some would-be CPA candidates don’t realize that many states have a 4th E – ethics – covered by an ethics examination that must be taken in addition to the “core” CPA Exam.
Don’t worry: the ethics exam is not nearly as lengthy or involved as the “core” exam. But since many states require the exam, it’s important to take it seriously. You don’t want to let this last CPA requirement trip you up.
Most states use the CPA Ethics Exam written and administered by the AICPA (American Institute of Certified Public Accountants). The exam helps aspiring CPAs prepare for complicated ethical problems they might encounter in their professional careers. Since CPAs deal with sensitive and confidential information, they need to have a clear understanding of ethical codes to ensure their financial integrity.
Before taking the exam, candidates should study the profession’s rules of professional conduct. The exam will assess how potential CPAs will address complicated situations within appropriate ethical principles.
The CPA Ethics Exam is required by many (but not all) state boards for CPA licensing in the US. Most candidates take the exam after passing the Uniform CPA Exam. Since most states require you to complete the Ethics Exam within one to two years of passing the CPA Exam, you don’t have to rush to take it.
While some states administer their own ethics exam or courses, most state boards use the AICPA Professional Ethics Exam.
The exam is an open-book, multiple-choice test that covers essential accounting ethics concepts. It is graded by the American Institute of CPAs. Also, to help you prepare, AICPA offers a self-study Ethics Course. The course can be taken online or through mail correspondence.
No, only 35 or so state boards require their soon-to-be CPAs to take an ethics exam. To learn how to check on the requirements in your state, check out my post CPA Requirements by State.
Please double-check and see if this exam is necessary – it’s not that hard if you follow my steps to passing it the first time, but you still don’t want to waste your time and money if you don’t need it in your state.
(And speaking of not spending too much of your money, remember that I have exclusive offers for discounts and promo codes to help you save money on your path to becoming a CPA.)
No. Although most states use AICPA’s Comprehensive Ethics Course and Exam, some use their own materials.
Not really. The exam is more like a self-study, open-book test. You will have plenty of time to take the test and answer all of the questions. However, since the passing score is 90%, you have to be careful when reading and selecting the correct answer for the questions.
I know that by the end of your journey to becoming a CPA, you’re tired of sitting through long exams. The AICPA ethics exam is 11 hours long, but you don’t have to use all of that time if you don’t need it. Furthermore, if you follow my advice on how to prep for the exam, I promise that the ethics exam will take less time to pass than the CPA Exam.
Yes, the exam is timed. However, you will have enough time to look up materials in your study book if you are unsure of any answer.
In most states, yes – you can take the Ethics Exam before you pass the Uniform CPA Exam. But a few states don’t allow it, like Washington, so check the rules where you live.
In general, I recommend that you focus on the “core” exam first. You can always tackle the Ethics Exam at a later stage, especially since in most states, you don’t have to pass it until one to two years after you pass the core exam. The CPA ethics exam is a necessary evil for those who are required to complete it — it’s not hard, but you have to do it.
Maybe. Some states allow you to credit this course towards your CPA continuing education obligations. Again, you should check your state’s requirements. NASBA maintains a list of contact information for the State Board of Accountancy in each jurisdiction in the United States.
You are limited to three attempts for online submission. After that, you will have to mail the answer sheet to the AICPA.
If your plan of working in State B is quite permanent, you can ask the AICPA to send your score to State B directly and transfer your CPA exam credit from State A to B at the same time. Additionally, you’ll need to have fulfilled State B’s education and experience requirements for licensing before the transfer. Generally speaking, if State A is a substantially equivalent state, there shouldn’t be an issue.
The AICPA Professional Ethics Comprehensive Course is a self-study course that may be taken online or through mail correspondence. The course reviews the AICPA Code of Professional Conduct, why professional accountants need the code, and how to follow it. Moreover, the course reviews good ethics practices that all CPAs should respect and actions that might discredit a CPA.
The AICPA tries to make the course more interesting by adding interactive elements (like slideshows) and real-life scenarios to explain the AICPA Code of Conduct, the concept of “independence,” and new rules from the Sarbanes-Oxley Act.
It feels a bit like a tiny version of the REG (or Regulation) section of the CPA Exam. So, studying topics on federal taxation, business law, and business ethics for the REG section is going to help you prepare for the ethics exam, too.
Although many states require future CPAs to take the AICPA ethics course, some states have their own exams administered by state CPA societies. California CPA requirements state that candidates take an ethics self-study course offered by CalCPA, for example.
You should also check on the expiration period for the ethics exam in your state. While some states require you to take the ethics exam within one year of passing the “core” exam, others have different conditions. Take Illinois, for example. The CPA ethics exam in Illinois is slightly different than in other states because you can take it before or after the core exam, and until you become a CPA, it doesn’t expire.
Since the ethics exam is meant to help future CPAs prepare for potential professional challenges, it covers a lot of different – but related – accounting topics. For example, you’ll review how to be objective and make decisions based on sound ethical principles.
Other topics you will cover include:
If required, your state board will tell you how to take the exam after you pass the Uniform CPA Exam. You may also check it out on the AICPA website. The cost of the course ranges from $189-$245, depending on whether you are a member of AICPA.
In case this link doesn’t work for you, the pack you should purchase is called “Professional Ethics: The American Institute of Certified Public Accountants’ Comprehensive Course – Online (for licensure).”
You don’t need to spend the full 10+ hours on the course (what torture), as long as you don’t skip around and don’t miss some important points. You should study the broad ethical principles that the course discusses. Finally, review the case studies – they will really help you understand the concepts and apply them in the real world.
Here are some additional tips:
Remember, since you need a 90% passing score, you can’t afford to make careless mistakes! You can only miss four questions to get a 90%, so every answer is important!
You can take this exam anywhere. However, if you opt for the online exam, you can take it anywhere with a good internet connection.
More exam-taking tips:
(i) Submit electronically
You’ll submit your answers as part of the online ethics exam. Additionally, you will get the results immediately upon submission.
Once you successfully pass the exam, keep your AICPA Ethics Exam Certificate of Complete in case you need to submit it to your state’s accounting board.
If you prefer the traditional way and purchase the book version, fill in the bubbles and mail your answer sheet to the AICPA according to the instructions in the package. It may take up to 6 weeks to get your results using this method.
Tips for snail mail:
I think that the ethics exam is much easier to pass than the “core” exam. Also, you’ve probably already studied most of the exam topics in your college classes. You’ve also reviewed many of the issues for the REG section of the core exam. But still, the topics are critical for all CPAs to understand, so make sure you are familiar with all of the study materials.
You can contact the AICPA Service Center Operations if you have questions concerning their Ethics Exam.
I am the author of How to Pass The CPA Exam (published by Wiley), and I also passed all 4 sections of the CPA Exam on my first try. Additionally, I have led webinars, such as for the Institute of Management Accountants, authored featured articles on websites like Going Concern and AccountingWeb, and I'm also the CFO for the charity New Sight. Finally, I have created other accounting certification websites to help mentor non-CPA candidates. I have already mentored thousands of CPA, CMA, CIA, EA, and CFA candidates, and I can help you too!