CPA credential delivers high value

Analysis shows that passing the CPA exam leads to rewards in small, medium, and large companies.
By Gregory L. Krippel, Ph.D.; Janette Moody, Ph.D.; and Sheila Mitchell, CPA

CPA credential delivers high value
Image by studiom1/iStock

Accountants are skilled at making valuation decisions, not only for their organizations but also for their personal lives. However, there is one factor with career-spanning consequences that may not have been considered. Specifically, few may have actually computed the value of earning the CPA credential by considering the costs in time and money associated with acquiring and maintaining it versus the payoff in terms of salary enhancements over a typical career. CPAs in corporate accounting are largely convinced that the certification increases their earning potential, but by how much? And at what stage of one's career is there the most bang for the buck? Conversely, is it ever too late to benefit from becoming a CPA?

Knowing the net present value (NPV) of obtaining a CPA license is important for those who are considering sitting for the CPA exam and for those mentoring new hires in their companies. Knowing the career-span value of being a CPA can help a 22-year-old new hire make this important decision. It can also help established professionals who have already invested some years as an accountant determine whether they can improve their future earnings by spending the time and effort necessary to achieve it now.


Studying for and passing the CPA exam requires candidates to make difficult choices in terms of time and money. It involves trading short-term goals (enjoying free time, not spending money on review courses, etc.) for a long-term goal. Many demands compete for time and attention, and balancing them is never easy.

But if the unbiased numbers confirm the payoff of these sacrifices in clear, reasonably expected terms, would that help justify and support taking the more challenging path?

This analysis provides those reasonably expected numbers by showing the NPV of putting in the work and sacrifices required to earn the CPA credential, based on the lifetime wage premium (the CPA return on investment, or CPA ROI) enjoyed by those who passed and maintained the certification versus those who did not. Using publicly available data provided by staffing services firm Robert Half for CPA and non-CPA salaries, the consumer price index (CPI), and other relevant indicators, this article presents a stage-by-stage analysis of the net earnings advantage that can be achieved by becoming a CPA. This article and the accompanying charts provide a year-by-year analysis based on CPAs' earnings in small, medium, and large companies.


As would be hoped, these numbers are significant. The table "NPV of CPA Earnings Premium in Total and Per Study Hour for Ages 22—59 (Small Companies)" provides the present value (PV) and NPV of the CPA premium for professionals ages 22 through 59 who work in small companies. (Tables that illustrate the PV and NPV of the CPA premium for professionals ages 22 through 59 who work for medium-size and large companies are available here (for medium-size) and here (for large companies).)

The chart, "Assumptions for Lifetime NPV of Passing the CPA Exam," provides the detailed assumptions that form the basis for the analysis. As the chart notes, this is a conservative NPV because it assumes each individual pays his or her own expenses. However, many CPA candidates may be fortunate enough to have an employer cover all or part of the expenses. In those cases, the NPV will be higher, increased by the amount of the expenses the employer pays.

For example, as seen in column 2 of "NPV of CPA Earnings Premium in Total and Per Study Hour for Ages 22—59 (Small Companies)," a 22-year-old working in a small company will have earned $220,242 more than his or her non-CPA counterpart if they both worked until age 65. While these numbers are encouraging, the PV of earnings does not tell the whole story—the analysis can't stop there. It is necessary to include not only the lifetime earnings benefits of passing the CPA exam but also the associated costs of time and money required to prepare for and take the CPA exam, as well as the cost to maintain certification throughout one's career.

Therefore, although the same 22-year-old will have to spend $14,751 (column 3) to prepare for and take the CPA exam and will also incur a lifetime cost of $76,042 (column 4) to maintain certification, he or she will still have netted a premium of $129,449 (column 6). So did that initial investment of 400 hours of study and preparation pay off? As column 7 shows, each hour of study paid off to the tune of an additional $324, far more than what would be earned in many other activities that might occupy a young accountant's time.

Is this a beneficial outcome only for professionals just starting their careers? Although younger accountants, who earn less per hour, are giving up relatively less in hourly wages when they put in those 400 hours of study time, those further along in their career paths with higher hourly wages can still benefit from the CPA earnings premium. As shown in the table, a 38-year-old can enjoy a lifetime earnings CPA premium of $231,630, with an NPV of $152,812. His or her initial investment of 400 hours of study and preparation provides a return of $382 per hour, further solidifying the payoff of his or her endeavors.

NPV increases as salaries typically rise steadily through age 39. The cresting of the NPV at age 39 is a reflection of an individual's promotion from manager to assistant controller with its associated increase in salary, thereby spiking the CPA premium. Although it may appear that delaying passing the exam until age 39 is a rational decision to maximize the CPA ROI, the reality is that delaying also means that increased work and personal responsibilities may dilute the time available for studying. In addition, although difficult to measure but widely understood, the lack of CPA credentials during the early years can result in missed or delayed promotion opportunities.

In both the case of the 22-year-old and the 38-year-old, these metrics are based on continuing to work for the same size organization throughout one's career and achieving the controllership position but no higher. However, as experience shows, earning the CPA credential opens many doors for additional career paths, so those who begin with a small company and move on to a medium or large company will earn even larger premiums.

The CPA ROI is significantly larger for those working in medium and large companies, for two reasons. First and foremost, the PV for medium and larger companies isn't just proportionally higher—it's almost 100% higher from small-to-medium companies and almost 125% higher from medium-to-larger companies. The second reason is that some medium and many large companies may be more likely to cover some of or all the costs of attaining and maintaining the certification.


What 22-year-old, noncertified accounting major in an entry-level position and unencumbered by other duties or circumstances would turn down an offer of $324 for an hour of overtime? Furthermore, suppose this offer is extended for two overtime hours each of the five weekdays and 10 hours on Saturday for a full 20 weeks. A 22-year-old who is not currently studying for the CPA exam is turning down that offer. Since a professional accountant is presumably a rational person, his or her next move should be to make the rational decision. That would be to visit to acquire his or her home state CPA exam requirements or call the AICPA at 800-CPA-EXAM to start the process of becoming a candidate for the next CPA exam.

Finally, this can be viewed from another perspective. Suppose the noncertified accountant is not motivated by mere money but is more interested in quality time. That is also a rational goal that can be attained by becoming a CPA. The CPA ROI shows that using an entry rate of $23.94 per hour (based on a Robert Half Salary Survey for 2014) requires working an additional 2.7 years to earn the $129,449 salary gap. The computation is straightforward: $129,449 ÷ $23.94 per hour = 5,407 hours or 2.7 years (5,407 ÷ 2,000 hours). Therefore, every hour invested in studying earns 13.5 hours of future salary; i.e., an accountant can choose to study for one hour or work an additional 13.5 hours. Thus, increased quality time is actually the result of successfully passing the CPA exam.

About the authors

Gregory L. Krippel ( is a professor of accounting and chair of the accounting department at the E. Craig Wall Sr. College of Business Administration at Coastal Carolina University in Conway, S.C. Janette Moody ( is an associate dean and professor of accounting and information technology at the School of Business at The Citadel in Charleston, S.C. Sheila Mitchell ( is a teaching lecturer at Coastal Carolina University.

To comment on this article or to suggest an idea for another article, contact Ken Tysiac, editorial director, at or 919-402-2112.

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