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How to Benefit From Helping Jr. Accountants Become CPAs

Jul 12th 2017
Owner Crush the CPA Exam
Columnist
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Many employers are willing to pay for the CPA exam, in full or part of it, because the certification is often perceived as a must-have for employees as they are taking on more responsibilities in accounting firms and, therefore, considered an important investment.

For junior accountants working at CPA firms, the certification is a must and the question becomes when and who’s going to pay for it.

CPA Exam Costs

Medium- to large-sized firms in the United States have education budgets set aside to invest in staff training, and what better way to use those budgets than turning Jr. accountants into full-fledged CPAs. Certified accountants hold so much more value for the company that any Jr. accountant who has been with the firm for a while and who is likely to be eligible for tuition reimbursement.

The Big Four firms offer $5,000 bonuses upon passing the CPA exam within the first year of joining the firm, and Jr. accountants who pass the exam before their first day of work will receive their bonuses one to two months after their start date. Usually the bonus amount is lower for employees taking longer to complete the CPA exam, so that the employee receives $3,000 if the exam is done within the second year and $1,000 if it’s done within the third year.

There are also a myriad of CPA exam review courses that firms of all sizes can buy in bulk in order to further cut costs while maintaining a high perceived value to their employees. Remember, accounting firms are basically investing in themselves by sponsoring accountants’ CPA exams or reward them with bonuses, as the employees’ new skills can help them achieve more and deliver more as a CPA than as Jr. accountants.

The Big Four’s bonus system is clearly acknowledging the benefits of certified accountants in their staff and how much they consider its worth with monetary rewards.

Bonus for Becoming a CPA

They not only give out hefty bonuses, but also cover the application and exam registration fees and give you a self-study course. Usually the expenses of the CPA examination and application fees, the CPA Exam review course fee, and the CPA Ethics Exam and Licensing fees add up to almost $4,000.

There is at least a 10 percent premium of being a CPA versus a regular accountant. The sponsoring employer may not immediately raise the salary to match the new worth, but will be able to bill their clients to reflect the new certification. It also adds credibility to their firm, so sponsoring their Jr. accountants is a win-win for both.

The concept of accounting firms sponsoring their Jr. accountants is so common that most firms have rules of what employer and employee should expect of one another. For example, some firms commonly have a no-pass, no-pay arrangement policy, meaning they only pay when the employee passes the exam.

Others propose an additional contract on the minimum number of years the newly certified accountant needs to stay after getting their exam sponsored. There may also be an agreement to repay part of the money if leaving the firm early.

Above and Beyond

Yet another concept as exemplified by one New England firm is to lend $3,000 to cover exam expenses with the following repayment plan:

  • Upon passing the exam, the employee is entitled to a $1,000 bonus, which functions as a first repayment, reducing the loan to $2,000.
  • On the first anniversary of passing the exam, 50 percent of the balance in the account will be forgiven.
  • Next anniversary, the rest of the balance will be forgiven.
  • The participating employee must repay the balance in the employee allowance should he or she terminate the employment, prior to the second anniversary date of passing the exam.
  • The “loan” is a bonus or sponsorship in disguise, ensuring that the employee stay for at least two years after being certified.

This is especially important, considering the real cost of employee turnover far exceeds retaining employees with proper incentives. Long story short, sponsoring a Jr. accountant to become a CPA is a smart investment, which accounting firms can and do benefit from immensely!

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