What Are CPE Credits & Why Do CPAs Need Them?
Understand CPE credits for CPAs. This guide explains their role in maintaining professional competence and ensuring continued licensure.
Continuing Professional Education (CPE) credits are a mandatory requirement for Certified Public Accountants (CPAs) to maintain their professional licenses. CPE ensures that CPAs remain updated in the constantly evolving financial landscape. This ongoing education helps accounting professionals uphold high standards in their field.
The purpose of CPE is to maintain the competency of CPAs as providers of professional services. It ensures that CPAs stay current with advancements in tax and accounting. By engaging in CPE, CPAs adapt to changes in regulations, technology, and industry best practices, serving their clients effectively and maintaining public trust.
Understanding CPE Requirements
CPE credit requirements vary by jurisdiction, as each state board of accountancy sets its own rules. However, common elements exist across most states to ensure CPAs maintain professional competence. The American Institute of Certified Public Accountants (AICPA) recommends 120 hours of CPE for each three-year reporting period.
Many states adopt a similar triennial reporting period, with a typical minimum annual requirement of 20 hours. Some jurisdictions may opt for biennial (two-year) periods requiring around 80 hours, or even annual reporting. For example, a state might require 80 hours over two years, with at least 20 hours completed each year.
A common requirement across most states is the completion of ethics training. This typically ranges from 2 to 4 hours of ethics CPE within a reporting period, often on a biennial or triennial basis. Some states may mandate that ethics courses be state-specific or approved by their own board. Additionally, some jurisdictions may specify a certain percentage of hours in technical subjects like accounting, auditing, and taxation, versus non-technical areas such as personal development.
Methods for Earning CPE Credits
CPAs have various avenues to fulfill their CPE credit requirements, offering flexibility to accommodate diverse learning preferences and schedules. A widely used method is attending seminars, webinars, and conferences, which provide structured learning and often include interaction with expert instructors. Webinars are popular due to their flexibility, allowing CPAs to participate from home or work.
Self-study courses are another common option, enabling CPAs to learn at their own pace through online materials, videos, or written programs. For these, credits are often calculated based on average completion time, with 50 minutes of coursework typically equating to one CPE credit. Many self-study programs require passing an exam to earn credit.
Beyond formal courses, CPAs can earn credits through other professional activities. Teaching or presenting on accounting-related topics can qualify for CPE hours, as can authoring articles or books. Instructing a course may earn credits for presentation and preparation time, though some states may place limits on total hours earned this way. Participating in peer reviews or technical committee work for professional associations may also be recognized for CPE credit.
Reporting Your CPE Credits
After earning the necessary CPE credits, CPAs must report them to their respective state board of accountancy to maintain their license. While some states still require active submission of CPE documentation, there is a growing trend towards an “honor system” where CPAs retain records and attest to completion during license renewal. Licensees are typically required to keep detailed supporting documents, such as certificates of completion, for four to five years, in case of a compliance audit.
The reporting period for CPE credits varies by state, with cycles that can be annual, biennial, or triennial. Some states may also use a “rolling” reporting period, where credits must be earned within a specific timeframe preceding the renewal date. CPE sponsors, often approved by the National Association of State Boards of Accountancy (NASBA), generally provide documentation that includes the course name, dates, and number of credits earned.
Submission methods for reporting CPE can include online portals, specific forms, or a certification statement on the license renewal application. It is the CPA’s responsibility to ensure that courses taken are from approved providers and meet the specific requirements of their licensing board regarding subject matter and format. Failure to comply with reporting requirements or maintain adequate records can lead to consequences such as fines, license suspension, or mandated additional coursework.