Apart from the three E’s needed to earn a CPA certificate (Education, Experience, and an Exam), there’s another E that many candidates must complete to obtain the CPA license: the Ethics exam. The CPA Ethics exam conducted by the AICPA is accepted by most state boards and can be taken any time – before, during, and after the CPA exam.
The exam covers the AICPA Code of Professional Conduct and Accounting Rules and tests candidates on how well they can handle situations related to professional ethics that might crop up during the course of their work. CPAs must exhibit a high degree of financial integrity and the Ethics exam strives to remind and refresh them of the conduct expected of them at work.
The exam consists of 40 multiple-choice questions in a self-study, open-book format. You must score at least 90 to pass and have up to 3 attempts to do so. The AICPA provides course materials for the exam that includes topics such as legal and regulatory issues, the importance of maintaining independence from client/employer, and the code of conduct of the AICPA.
Individual states have their own set of rules for the Ethics exam. California State Society of CPAs administers its own Ethics exam while New York decided in 2013 that to get a CPA license, it was no longer required to pass the Ethics exam. You should therefore research the requirements of the state boards where you want to get a CPA license to practice.
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Requirement of AICPA Ethics Exam for CPA License in States
The Ethics exam requirements can vary among U.S. states. Here are some examples of how a some states administer this exam.
California
The exam materials include detailed coverage of the AICPA Code of Professional Conduct and California Accountancy Act and Accounting Rules and Regulations. Candidates have a chance to pass the exam in 6 attempts with a score of 90 and above.
Illinois
The exam is conducted by the Illinois state society and candidates have to pass this test on the rules of professional conduct before they are issued with a CPA license. This on-demand exam can be taken by candidates even before they sit for the main CPA exam.
Virginia
The Virginia Board of Accountancy (VOA) requires candidates to complete the self-study Professional Ethics: AICPA’s Comprehensive Course (For Licensure) with a score of 90 or more. The state also requires all CPAs to complete the annual Virginia-Specific Ethics Course.
Texas
CPA candidates in Texas must complete the Ethics exam CPA on the board Rules of Professional Conduct before being eligible for a CPA license. Moreover, the state also has a 4-hour CPE ethics requirement for all CPAs who are licensed in the state.
Wisconsin
To be awarded the CPA license, candidates are required to pass the Ethics CPA exam after completing the four sections of the CPA exam. The curriculum includes the AICPA and the state rules governing conduct. Hence, candidates have to focus on both simultaneously during their study sessions.
Missouri
The CPA Ethics exam in the state is an open-book, multiple-choice test, and candidates can order, take, and submit at any time in the Licensure process. The exam is offered both online and offline and because of this flexibility, Missouri is taken to be among the most candidate-friendly states for the Ethics CPA exam.
Ohio
CPA candidates in Ohio must complete a Board-approved course in Professional Standards and Responsibilities (PSR). This should be completed in the last one year of being awarded the license. Additionally, Ohio CPAs must also meet an annual CPE requirement for PSR.
As the above list shows, the Ethics requirements for CPA licensure can vary from state to state, so be sure to check your state’s requirements before completing this step.
As of this writing, the jurisdictions of New York, Georgia, Pennsylvania, Arkansas, and Kentucky do not have the requirement of passing an ethics examination to be awarded the license.
How Do You Get Access to the Ethics Exam for the CPA?
Here are some CPA ethics exam tips for you.
First, how do you take and pass the CPA ethics exam?
To get started, sign up and purchase the CPA ethics exam review materials from the AICPA website. This is a digital course and you’ll have access for up to 1 year.
Go through the course materials thoroughly, then submit your answers. If you’re taking the exam online, hit Submit after all the questions have been answered.
If taking the offline in a paper form, simply mail it in and wait for the results to be declared in a few weeks.
One of the most critical CPA ethics exam tips – Send your offline paper answers by certified mail and keep a copy of the sheets with you in case the bunch is misplaced while in transit.
Do all boards require you to pass the exam before being awarded the license? No, 35 states have the Ethics exam stipulation. But this area is so important for CPAs that it would not be surprising if other boards made this exam mandatory to earn the CPA License.
Another CPA ethics and governance exam tip that you should know about is that this exam is very easy. All that you have to do to prepare for it is to read the digital guide you receive after registration. The exam is in a multiple-choice format and it will not be hard for you to score the required 90 marks to pass.
CPA Ethics exam course topics
The topics for the Ethics exam are as follows:
- Business relationships,
- Employment relationships,
- Financial relationships,
- Prohibited relationships and services,
- Loans,
- Non-audit services,
- Securities Exchange Commission and Government Accounting Office independence rules, and
- Definitions of client, objectivity, and covered member
Candidates who have already passed the CPA exam will find the CPA Ethics exam quite easy. The key to passing the CPA Ethics exam answer is to take it seriously the first time and so that you can pass and get on to earning your CPA license.
How to Submit Your Answers
This is not straightforward as there are different approaches depending if you’re taking the exam online or offline.
When taking the ethics exam online, simply hit the Submit button and you’ll get your test results immediately.
If taking the offline version, you’ll be provided with a package that includes the full instructions on how to submit your answers. Generally speaking though, you’ll have to mark the bubbles that denote the correct answers to the 40 multiple-choice questions.
Pro-tip: Don’t forget to mark the bubble that requests the AICPA to forward the results to your state board!
After completing the offline exam, follow the directions to send the answer sheet to the AICPA via mail. To pre-empt the loss of the answer sheet in the mail, make and keep a copy to be submitted again if necessary. Use certified mail and keep the receipt with you.
When taking the paper-based exam, a copy of the result will be mailed by AICPA to your state board and you will get your result within six weeks.
When Should You Take The CPA Ethics Exam?
AICPA regulation dictates that you pass the Ethics exam within two years of passing the actual CPA exam. Technically you can take the ethics exam any time during the licensure process, even before you sit for any CPA exam sections?
Most candidates prefer to take the Ethics exam CPA once they’ve passed the uniform CPA exam. The CPA exam can take multiple years to complete and should be your primary focus until you’ve passed each section. After that point, all you’ll have left is to complete the work experience requirement (if you haven’t already) and clear the Etchis exam.
For two-tier jurisdictions, you can obtain a CPA certificate after you pass the CPA exam and then apply for a full CPA License to be in the public accounting field once you meet the additional eligibility requirements.
Most of these states require CPA applicants to complete some if not all their educational requirements and allow the ethics CPA exam and experience stipulations to be done after the CPA exam is completed. The two-tier states are Alabama, Hawaii, Kansas, Montana, Nebraska, Oklahoma, and the District of Columbia.
Due to all these complexities, we recommend that you contact your board for the most up to date information and precise details about applying for your CPA license.
What Happens If You Fail The CPA Ethics Exam?
If you’re submitting the answers online, you’re allowed a maximum of three chances. If you do not pass in these three attempts, you can thereafter take the paper format route to crack the Ethics CPA exam.
After three online attempts, you are then allowed another three attempts in an offline, paper exam format. If you still fail to make it through, then you’ll have to buy the course materials from the AICPA again.
Conclusion
Most U.S. states include an Ethics exam component to earning the CPA license. While it’s relatively easy to complete compared to the CPA exam, treat it like you would any other exam and aim to pass it your first time through.
The sooner you can get the Ethics exam out of the way, the faster you’ll and earn your CPA license and reap the benefits in your career!
