CPA Exam Passed vs. CPA Licensed

CPA Exam Passed vs. CPA Licensed: Understanding the Distinctions

CPA Exam Passed vs. CPA Licensed—what’s the difference? Many aspiring accountants wonder what distinguishes passing the CPA exam from achieving full licensure. Passing the CPA exam is significant, but earning a CPA license comes with additional privileges and responsibilities.

In this blog, we’ll break down the key differences, exploring what each status entails, the types of roles they allow, and how they impact your career in accounting.

CPA Exam vs. CPA License: What Do They Mean?

• CPA Exam: Successfully passing the CPA exam means you’ve completed all four exam sections, fulfilled educational requirements, and possibly taken additional exams like an ethics test. However, this doesn’t grant you the CPA title or legal privileges.
• CPA License: A CPA license requires passing the CPA exam, meeting work experience requirements, and submitting to the state’s licensing board for approval. This license gives you full legal authority to use the CPA title and perform specific functions restricted to licensed CPAs.

For more on the CPA exam requirements, see our detailed guide on CPA Exam Eligibility.

Employment Opportunities with CPA Exam Passed

Passing the CPA exam without a license still opens doors to various roles. Although you can’t legally use the CPA title, employers often view exam passage as a mark of dedication and competence in accounting.

Potential Roles Include:

• Staff Accountant
• Auditor
• Tax Associate
• Financial Analyst

Many firms hire CPA exam-passed candidates with the understanding that they are on track for full licensure. Completing your licensure requirements can allow you to gain valuable experience, enhancing your skills and credibility.

Fulfilling the Experience Requirement

To move from exam-passed to fully licensed, you must fulfill a supervised work experience requirement, which varies by state.

1. Within the Same Company: Many companies that hire CPA candidates have licensed CPAs on staff to supervise your work, making it convenient to meet the experience requirement on the job.
2. Public vs. Non-Public Accounting: You can meet this requirement in either public accounting firms or private roles if your duties align with state-specific criteria.
3. Flexible Timeframe: There’s usually no set deadline to fulfill the experience requirement after passing the CPA exam, allowing you to continue working in a related field while accumulating the necessary hours.

For more on state-specific experience requirements, refer to Understanding CPA Experience Requirements.

Title Restrictions: CPA Exam Passed but Not Licensed

You can’t legally use the title “CPA” without a CPA license in most states. You can state that you’ve “passed the CPA exam” but will need to use alternative titles such as “Staff Accountant” or “CPA Candidate.”

Many CPA exam passers work in roles that don’t require the full legal authority of a CPA, yet passing the exam remains a highly respected credential.

Explore our post on CPA Title Usage for Exam Passers to understand the implications of title restrictions.

Privileges of a CPA License vs. Passing the CPA Exam

A licensed CPA can perform specific functions legally restricted to those with the full credential. Here’s what a CPA license allows you to do that passing the CPA exam alone does not:

1. Signing Audit Reports and Attestation Services: Only licensed CPAs can sign audit reports, a critical function for publicly traded companies and organizations requiring audited financials.
2. Offering Public Accounting Services Independently: Licensed CPAs can provide tax, consulting, and other services independently under their CPA designation.
3. Using the CPA Title: Only licensed individuals can use the title “CPA” professionally.
4. Tax Representation Before the IRS: Licensed CPAs have unlimited rights to represent clients in audits and appeals before the IRS.
5. Signing and Attesting to Financial Statements for Regulatory Compliance: Licensed CPAs can sign financial statements for regulatory agencies, including the SEC.

Steps to Transition from CPA Exam Passed to Licensed

If you’ve passed the CPA exam, your next steps are clear:

1. Gain Relevant Experience: Work in a supervised role, preferably under a licensed CPA, to fulfill the state’s experience requirements.
2. Verify Experience: Ensure that your work experience meets state-specific criteria, which may include particular practice areas.
3. Apply for Licensure: Apply to your state board once you’ve met all requirements and prepared to meet any additional stipulations, such as an ethics exam.

Following these steps, you can transition from a CPA exam passer to a licensed CPA, significantly enhancing your career prospects.

Learn more about transitioning to full licensure in Steps to Become a CPA: From Exam to License.

What Can a Licensed CPA Do That a CPA Exam Passed Candidate Cannot?

A licensed CPA can legally perform services and use the CPA title, which brings a higher level of trust and responsibility in professional settings. Here’s a quick comparison: 

Conclusion:

While passing the CPA exam is impressive, obtaining the CPA license offers broader career opportunities and legal privileges. Each step in the journey, from passing the exam to fulfilling experience requirements, moves you closer to a fully licensed CPA status. With a CPA license, you can open your firm, sign audit reports, and enjoy full representation rights before the IRS—enhancing your professional credibility and career prospects.

Ready to move forward? Explore more on the journey to licensure in our blog series:

1. CPA CPE requirements
2. Eduyush Surgent review course
3. Navigating State CPA Requirements