Passing all four sections of the Uniform CPA Exam is a major accomplishment, but it is not the last step in the licensing process. Most states require candidates to complete an ethics exam or ethics course before they can receive their CPA license. This requirement catches many candidates off guard because it is not part of the CPA exam itself and is administered separately.
In this guide, we explain the ethics requirement, break down what each state requires, and give you practical advice on when and how to complete this final hurdle.
The AICPA Ethics Exam
The most common ethics requirement is the AICPA Professional Ethics: The Comprehensive Course. This is a self-study course followed by an exam that covers the AICPA Code of Professional Conduct, which is the ethical framework that governs the accounting profession.
Key details about the AICPA ethics exam:
- Format: Self-study course with an online exam at the end.
- Length: The course material takes approximately 8 to 12 hours to complete.
- Passing score: 90 percent on the final exam in most states that use it.
- Retakes: You can retake the exam if you do not pass on your first attempt.
- Cost: Approximately $200 to $250 when purchased directly from the AICPA.
- Open book: Yes, you can reference the course material during the exam.
The exam covers topics including independence, integrity, objectivity, compliance with standards, and responsibilities to clients and the public. It is not difficult if you read the course material carefully, but the 90 percent passing threshold means you cannot afford to be careless.
State-Specific Ethics Requirements
Not all states use the AICPA ethics exam. Some states have their own ethics courses or exams, some accept alternatives, and a few do not have a separate ethics requirement at all. Here is an overview of the major categories:
States Requiring the AICPA Ethics Exam
The majority of states require the AICPA Professional Ethics exam. These include but are not limited to Alabama, Arizona, Arkansas, Colorado, Connecticut, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
Requirements can change, so always verify with your state board of accountancy before relying on this list.
States With Their Own Ethics Requirement
Several states have unique ethics requirements:
- California: Requires a separate California Professional Ethics Exam (PETH) that covers California-specific regulations in addition to general professional ethics. This is a 100-question, multiple-choice exam.
- Texas: Requires a Texas Rules of Professional Conduct exam administered by the Texas State Board of Public Accountancy.
- New York: Does not require a separate ethics exam but does require completion of a 4-hour New York State education requirement in professional ethics.
- Pennsylvania: Has historically accepted the AICPA ethics exam but has specific requirements about when it must be completed relative to the application.
- Illinois: Requires the AICPA ethics exam and has specific timing requirements regarding when it must be passed.
States Without a Separate Ethics Requirement
A small number of states do not require a separate ethics exam or course. However, this does not mean ethics is not important in these jurisdictions. Ethics content is covered in the REG section of the CPA exam itself, and all CPAs are expected to adhere to professional standards regardless of their state's licensing requirements.
States with no separate ethics requirement include Florida, Maryland, and Massachusetts, though they may have ethics-related CPE requirements for license renewal.
When to Take the Ethics Exam
The timing of the ethics requirement varies by state, and getting it right can save you from delays in your licensing process. Here are the most common timing options:
- Before applying for the license: Most states require you to have completed the ethics exam before you submit your license application. This is the most common approach.
- Within a specific window: Some states require the ethics exam to be completed within a certain timeframe, such as within two years of your license application.
- After passing all CPA exam sections: A few states allow you to take the ethics exam only after you have passed all four sections of the CPA exam.
- Anytime: Some states allow you to complete the ethics requirement at any point during the licensing process.
Our recommendation is to complete the ethics requirement as soon as you are eligible. There is no reason to delay, and completing it early ensures it does not become a bottleneck when you are ready to apply for your license.
How to Prepare
The ethics exam is not something you need to study for weeks. It is a manageable requirement that most candidates can complete in a few days. Here is a practical approach:
- Purchase the course: Buy the AICPA Professional Ethics course (or your state's required course) directly from the AICPA or an authorized provider.
- Read the material carefully: Do not skim. The course material is not long, and the exam questions are drawn directly from it. Pay special attention to specific rules, numerical thresholds, and case examples.
- Take notes on key concepts: Focus on independence rules, fee arrangements, confidentiality requirements, and responsibilities when discovering fraud or errors.
- Take the exam: Since it is open-book, have your notes and the course material accessible. Read each question carefully and reference the material when you are unsure.
- If you fail, retake it: Do not panic. Re-read the sections you struggled with and try again. The retake is typically free or low cost.
Common Topics Covered
Regardless of which state's ethics requirement you are completing, you can expect the content to cover these core areas:
- Independence: Rules about maintaining independence from audit clients, including financial interests, business relationships, and non-audit services.
- Integrity and Objectivity: The obligation to be honest and unbiased in professional work, including how to handle conflicts of interest.
- Confidentiality: Rules about protecting client information and the limited circumstances under which disclosure is permitted.
- Contingent Fees and Commissions: Restrictions on fee arrangements, particularly for attest engagements.
- Advertising and Solicitation: Rules about how CPAs can market their services.
- Responsibilities to Clients: Duties related to competence, diligence, and due care.
- Responsibilities When Discovering Noncompliance: What to do when you discover errors, fraud, or illegal acts during the course of professional work.
Cost Summary
Here is a rough cost summary for the ethics requirement:
- AICPA Professional Ethics Course and Exam: $200 to $250
- California PETH: $100 to $175
- Texas Rules Exam: Included with license application fee
- State-specific courses through third parties: $50 to $200
In the context of the overall cost of CPA licensure, the ethics requirement is a relatively minor expense. Some employers reimburse this cost as part of their CPA support programs.
Final Advice
The ethics requirement is the last formal hurdle between you and your CPA license. Do not let it intimidate you; it is straightforward if you prepare properly. But also do not dismiss it as trivial. The ethical standards you learn in this course form the foundation of your professional reputation.
As you work through the broader CPA licensing process, Think CPA is here to help with the most challenging part: passing the Uniform CPA Exam itself. Our study materials cover all four core and discipline sections with a focus on genuine understanding. Once you have conquered the exam and the ethics requirement, you will be ready to launch your CPA career with a strong ethical and technical foundation.