Preparing for a Doctoral Program

Should I work in industry before getting a Ph.D.?

If you do, make sure to consider important aspects of the accounting industry as it makes several important points about gathering contacts while working.

Pros

Working in industry prior to entering a Ph.D program, you will gain valuable experience that will lend to your credibility as a teacher. Working will give you a taste of what goes on in the "real" world. This can provide a valuable context for you as you think of research ideas and read research papers in a Ph.D. program. The people you work with will be valuable contacts. These contacts could provide access to subjects or data for research projects. Additionally, many students enjoy hearing "war stories."

Some schools prefer Ph.D. applicants with public accounting work experience. In 2007, the AAA surveyed the Accounting Ph.D. programs in the United States and found that 53% of programs either preferred or required some work experience. Some schools are less willing to hire new Ph.D.s in auditing and tax if you do not have "meaningful" professional experience.

By working, you could potentially take advantage of the Accounting Doctoral Scholars program. This program has been designed to help current practitioners transition from the professional to the academic world. The AICPA provides an annual stipend is provided to selected students who have worked in public accounting for at least three years. The Accounting Doctoral Scholars program has been designed to help at least 120 students entering Ph.D. programs in Tax and Audit by 2012. In addition to the ADS website, the AICPA also provides additional information on the Accounting Doctoral Scholars program.

Despite substantial tuition waivers and annual stipends for teaching and research, working may help you save money for living expenses during the doctoral program.

Working may help you decide if academia or industry is the best route for you. If you love working in industry there may be no reason to go back to school for 4 or 5 more years. Also, working first may give you options to fall back on in case you start a PhD program and find that you do not wish to continue.

Sometimes it can be easier to pass The CPA Exam and become a CPA. Some accounting firms provide a bonus for passing the CPA Exam during your first or second year of practice in addition to reimbursing the testing fees and paying for a review course. However, just because you may go straight into a Ph.D. program doesn't mean you can't get a CPA license. However, it is debatable whether having a CPA license is desirable and/or useful as an accounting professor (see pros and cons on The CPA Exam page).

Cons

By working in industry, your mind may become more results and application oriented. While these skills are valued in accounting practice, academic research requires a different skill set. The ability to have an open mind and thinking creatively can be more important than knowing how to get from step A to step B. In addition to building different skills in industry, you may lose your math, statistics, and SAS programming knowledge and skills.

Your experience may be outdated and irrelevant by the time you leave a doctoral program. Accounting and business practices change frequently. Standards and practices may change significantly over a period of 4-5 years. Especially for capital markets related research, it is not clear that a few years of public accounting experience will be helpful in generating research ideas. The skills you develop working in industry may not be very helpful in research.

You might never go back to get a Ph.D. Once you have begun to live off a normal salary, it makes it harder to take a pay cut upon entering a Ph.D. program. In other words, the longer you work, the greater the opportunity cost of returning to school. You are delaying earning a relatively high salary (hopefully) 4 to 5 years in the future for a relatively small salary now. This may not be a positive net present value decision.

Teaching Before going in

While not imperative, it is useful to have classroom experience before you enter a Ph.D. program. The benefits are two fold, (1) you discover if this is something you want to do for the rest of your career, and (2) it helps prepare you to be a more effective teacher in your Ph.D. program. If teaching your own course is not available, you may consider being a teaching assistant for a professor. If you chose this later route, make sure you let the professor know that you are interested in learning how to be a better teacher. The professor may let you lead a class discussion, an entire class period, develop some teaching materials, or have a positive learning experience in some other way if you express interest in helping.

CPA Exam

Introduction

The Certified Public Accountant Examination (CPA Exam) is administered to test one's knowledge of accounting and general business practices. Acceptable completion of the CPA Exam bestows the title of Certified Public Accountant (CPA) on the candidate, assuming all other state requirements have been met.

Reasons to get, and not to get, the CPA designation

On its website, the AICPA asserts that the "CPA credential is a symbol of trust and professionalism in the world of business. It's a highly challenging professional track, but the reward is that CPAs are considered the most trusted advisors in business." In the business world, the CPA designation adds potential for career growth and entitles the CPA to receiving extra trust in serving in advisory roles for clients. Usually, the easiest and most convenient time to take the CPA exam is right after finishing the accounting program at BYU and before entering a Ph.D. program or the workforce.

However, accounting academics will be able to receive different benefits from earning the CPA designation. The CPA designation may add credibility in the classroom (This is not proven, but is a great empirical question). Some schools want you to have professional certifications, in particular, schools that are more teaching oriented. Also, receiving the CPA desgination is probably more important for those with research and teaching interests in audit and/or tax.

Similar to working as a practitioner, the academic may be able to secure consulting opportunities in the profession because of the CPA credential. It also gives you credibility with practitioners. Additionally, if you ever decide to leave academia, this is a helpful certification for employment. The CPA designation is also useful for expert witnessing or serving on a corporate board.

For academics, there are also several reasons not to take the CPA exam. Early in one's career, time may be better spent on conducting research or improving teaching effectiveness. Keeping up on CPE credits may be a hassle. Also, some schools (most likely research intensive schools) may view it as a negative signal of where you are devoting your time; i.e., you are not a serious researcher.

Exam Content

Because of planned changes to IFRS for SEC filings, current exam content as of Spring 2009 includes the following sections:

Auditing and Attestation (AUD)

The Auditing and Attestation portion lasts 4.5 hours. The following six topics are part of this section:

1. Auditing and Attestation: Engagement Acceptance and Understanding the Assignment (12-16%)
2. Auditing and Attestation: Understanding the Entity and Its Environment (including Internal Control) (16-20%)
3. Auditing and Attestation: Performing Audit Procedures and Evaluating Evidence (16-20%)
4. Auditing and Attestation: Evaluating Audit Findings, Communications and Reporting (16-20%)
5. Accounting and Review Service Engagements (12-16%)
6. Professional Responsibilities (including Ethics and Independence) (16-20%)

Business Environment and Concepts (BEC)

The Business Environment and Concepts portion lasts 2.5 hours. The following six topics are part of this section:

1. Corporate Governance (16-20%)
2. Economic Concepts and Analysis (16-20%)
3. Financial Management (19-23%)
4. Information Systems and Communication (15-19%)
5. Strategic Planning (10-14%)
6. Operations Management (12-16%)

Financial Accounting and Reporting (FAR)

The Financial Accounting and Reporting portion lasts 4.0 hours. The following five topics are part of this section:

1. Conceptual Framework, Standards, Standard Setting and Presentation of Financial Statements (17-23%)
2. Financial Statement Accounts: Recognition, Measurement, Valuation, Calculation, Presentation, and Disclosures (27-33%)
3. Specific Transactions, Events and Disclosures (27-33%)
4. Governmental Accounting and Reporting (8-12%)
5. Not-for-Profit (Nongovernmental) Accounting and Reporting (8-12%)

Regulation (REG)

The Regulation portion lasts 3.0 hours. The following six topics are part of this section:

1. Ethics, Professional and Legal Responsibilities (15-19%)
2. Business Law (17-21%)
3. Federal Tax Process, Procedures, Accounting and Planning (11-15%)
4. Federal Taxation of Property Transactions (12-16%)
5. Federal Taxation of Individuals (13-19%)
6. Federal Taxation of Entities (18-24%)

FAQ

In addition to the following questions, which are geared towards future academics, the AICPA also answers some Frequently Asked Questions regarding the CPA exam and the CPA credential. The official web page for the Uniform CPA Exam also answers many Frequently Asked Questions about the exam itself.

What resources are available to help me review for the CPA exam?

• Becker CPA Review is generally considered to be the best CPA review course. Most students who use Becker choose the in-class instruction option, which provides course manuals, offers in-class instruction several nights each week, and assigns homework for each class. This method is purported to have a very high success rate; however, it is also very expensive.
• Wiley CPA Exam Review is not quite as structured as Becker, perhaps, but it is much cheaper and is sufficient. If you've done relatively well in your courses at BYU, this should be enough to help you pass the exam. Though, additional material is on the CPA exam that is not covered in BYU's accounting program. In particular, accounting for non-profits and governmental entities on the exam but is not taught at BYU.

Where can I find information about the CPA exam requirements for each state?

The Becker CPA Review website has a comprehensive listing of the CPA requirements for each state.

Additionally, you could try the National Association of State Boards of Accountancy (NASBA). While they possess all the information you would ever need, accessing the information is difficult. Each state has a NASBA representative assigned to it, and the helpfulness of the representatives varies wildly by state.

The AICPA has also created a document that lists all of the requirements for certification and a permit to practice in each state.

How can I be a CPA without any work experience?

There is a difference between passing the CPA exam, receiving certification, and meeting the necessary requirements for licensing and public practice. In most states, once you meet the minimum degree and course requirements, you can sit for the CPA exam. After this point, most states require those who pass the exam to meet certain work requirements before they can receive a certificate showing that they passed the exam. This requirement is met by crossing one of two thresholds, either (1) working a specified minimum number of hours or (2) working in professional practice for a certain number of years after finishing your degree. Each state sets its own requirements for certification.

Additionally, some states require that certified professionals receive more experience beyond the aforementioned requirements before they receive a license to practice.

Though, keep in mind that some states do not have experience requirements for certification or licensing to practice; e.g., Colorado, Florida, Maryland, and Puerto Rico. Others allow substitution of additional education for experience. The AICPA has created a document that compares the educational and experience requirements for each state. Note: The posting date for this comparison is not listed, so always be sure to check with each state's own board of accountancy for current requirements.

How can I study for the CPA without a firm to purchase study materials?

Without proper study materials, taking and passing the CPA exam may be difficult. In addition to buying the materials, there are many different ways to obtain study materials. Several options are available to the diligent seeker.

• Financialprep.com offers a free trial version of their practice test software, which contains 100 questions per section. 100 questions is sufficient to give one a general sense of how the questions on the test are.

• If you are currently a doctoral student, you may approach one of the companies that provides CPA study material. They sometimes give free copies to future professors. Contact the representative who services your school to discuss this possibility.

• Becker has several ways in which to get free or discounted materials. If you work as the one campus representative for BYU, then you can get a Becker course for free. Dr. Black has something to do with the selection process for campus representatives. Further, you can help set up the classroom for the classroom reviews Becker does, and they will give you a $500 discount.

• You can purchase hugely discounted Becker (as well as other brands) materials from Amazon.com or eBay.com. The ethicality of this is in question. While the 100 Hour Board at BYU claimed it was fine and legal, many (especially Becker and other test prep publishers with financial incentives to do so) would tell you it is not.

• Consider borrowing materials from someone who has already taken the test. However, the same ethical issue is involved as in purchasing it from Amazon or eBay.

• Some of the preparation courses are actually reasonably priced, between $300-400. Still a lot for a starving student, but this is a far cry from the $2700 Becker wants. One that has recently worked for a recent Ph.D. Prep student who passed all four sections the first time is the Wiley CPA software and books.

• The Accounting lab at Utah Valley University has a current, full set of the Gleim materials for use in the lab. You could go over there or somehow petition Gleim to outfit our lab as they have the UVU lab. The BYU library currently has limited materials in its collections.

• You might consider just taking a couple of the sections without studying, and see how it goes. BYU has a very good program and you might find that you pass without much, if any, preparation. Do this at your own risk, as it is somewhat expensive to retake exams. But you might save on prep materials and extra working hours. Though, keep in mind that not all topics on the CPA exam are taught in the courses at BYU.

How long will it take to get the CPA?

In the summer of 2008, there were several Ph.D. prep students who decided to sit for the CPA exam. The goal was to finish all portions of the exam before Ph.D. programs began. So far, the endeavor has been successful. Before you decide to take the exam consider two important questions: (1) how long will it take to study for the CPA and (2) is it worth it? The first question is considered on this page, the second question is considered in the above section on the benefits of receiving the CPA designation for academics.

The first question is quantitative in nature, but can vary greatly by candidate. One student who took the exam in the summer of 2008 kept track of all the studying he did for it, in order that other candidates might be able to see how long it takes. About this student: He had not taken advanced financial, audit, or managerial accounting, and is not naturally inclined to do well in accounting. Given this, much more study was required for him that would be required for an average Ph.D. prep track student doing the professional stem. Some of his cohorts in the prep track who took the test studied considerably less (50-80% less time), and did equally well.

Further, note that a 75 is required to pass the exam. Any score above a 75 can be viewed as over preparation for the exam (of course, assuming one is interested in the acquisition of accounting knowledge, scoring higher is a good thing). This student exceeded 75 on all the tests--and was thus over prepared for all four sections of the exam. Further, there were some logistical problems that created issues, requiring even more study time for this person.

Those three qualifiers being stated, here is a spreadsheet that contains the hours studied and the results of the CPA exams for this student. Hopefully they will help you have a better idea of how much time is required to pass the CPA exam.

External Links

For additional information, take a look at the following websites:

• The Uniform CPA Exam - This is the official site for the CPA exam. It has a lot of information about the CPA exam itself. Also, interestingly enough, it contains press bulletins listing passing rates for each of the four portions for the past several quarters (currently about 50%).
• Wikipedia: The CPA Exam - This is a great resource that describes the actual examination process.
• Wikipedia: Certified Public Accountant - This resource explains a little bit about what CPA's do. Additionally, it contains links to many international professional accounting organizations.
• Wikipedia: AICPA - This site explains some of the basics about the American Institute of Certified Public Accountants (AICPA), which is the professional organization for CPA's in the United States.
• Wikipedia: NASBA - This site explains some of the basics about the National Association of State Boards of Accountancy (NASBA), which is the umbrella group of state boards of accountancy.
• NASBA - The official website for NASBA.
• AICPA - The official website for the AICPA.

Gmat Stuff=

Introduction

The GMAT, or Graduate Management Admission Test, is a standardized test designed to measure a candidate's aptitude for graduate management studies.

Strategy

Here are a couple of suggestions on basic GMAT-taking strategies:

1. Study, Study, Study - The GMAT claims it cannot be studied for because it simply measures your intelligence. This is not completely true. One helpful suggestion is to study for 20-25 hours a week for 7 or 8 weeks; this will make a difference.
2. Familiarize Yourself With the Test - Become familiar with the test. You could start by taking a practice test on MBA.com so that you have a starting point from which to benchmark performance. Also, most GMAT preparation books, Kaplan for example, include examples of each section with practice problems. This will help you to understand the kinds of questions that are asked and the correct answers to those questions.
3. Learn Test-Taking Strategies - After familiarizing yourself with the exam, focus on test-taking strategies. The Princeton Review book is a good resource for learning what kinds of strategies are useful. This will help you know how to attack the test and understand some of the tricks the test writers use. One of the best strategies is to focus a little more on the verbal section. It is very difficult to set yourself apart in the math section (most likely due to the quantitative skills that GMAT takers may have). However, a higher score in the verbal section will really skyrocket your overall score. With a little bit of extra time here, you can really learn how to attack the verbal questions.
4. Take Practice Tests - This is where you should devote a significant portion of your time. One source suggests taking between 8 to 10 practice tests. MBA.com has realistic tests that you can take multiple times without seeing too many repeat questions. One great place to find practice tests is 800score.com, which is an affordable, helpful resource. It costs around $40. 800score.com contains some typos and errors, but it contains a lot of information and some very difficult practice tests. One person who used this website admitted that scores from practice tests were generally much lower than on MBA.com and actual tests. One of the most valuable things to learn from 800score.com's tests is time management. The math sections for these practice tests are more challenging, and hence you may not finish in the time limit. Time management is critical for performing well on the GMAT. Additionally, doing lots of practice problems really help.
5. Sit for the Test - One former test taker commented, "When I was taking the test, I chose an answer and then realized I had forgotten to take the square root to calculate the final answer. I spent the entire test trying to win a mental battle with myself. When I took a break between the math and verbal sections, I told myself to let it go and focus on making up for any deficiencies on the back-end. Before deciding to report my scores, I was tempted not to because I knew I had missed an easy question. I'm glad I decided to report my score, because I did well. " One thing to keep in mind is that not all questions are counted (about 1/3 aren't counted in your final score). That means, if you miss a question, don't worry about it. Just focus on doing well on the remainder of the test. You can definitely make up for one missed question. If you're lucky, that question won't even be counted!
6. Report Your Scores - After the test is over, make sure to report your scores. Even if you are worried about one question that you missed, report your scores because it is hard to gauge personal performance on the actual test.

GMAT Facts

• You can register to take the GMAT at www.mba.com.
• The closest testing center to Provo is in Draper, Utah.
• The cost to take the GMAT is $250 globally.
• Your GMAT score is good for five years.

Study Resources

• The internet has several resources for preparing for the GMAT.
  • MBA.com
  • 800score.com
  • kaplan.com
  • veritasprep.com
• The BYU library had study material available to use on their computers (on first floor in the business section). I believe they had the entire Kaplan course that you could study in the library.
• Many second-hand stores such as Deseret Industries have GMAT prep books. However, be careful to note the year the book was published. The GMAT evolves over time. Therefore, saving $40 and studying from a book that was published in the 90's might not be ideal.
• BYU also has a GMAT prep course that is held on campus.

Suggestions from Past Test Takers

Several Prep Track students have taken the GMAT and offer their advice to future test takers. The following are suggestions from these past test takers:

• How I increased my GMAT score 180 points in 8 days.
• If I had to take the GMAT again

External Links

For additional information, take a look at the following websites:

• MBA.com - The Official GMAT Web Site, which includes registration and other information about the exam.
• Wikipedia: GMAT - This site explains the individual sections of the test.
• 800score.com - This site offers an affordable set of test preparation materials and resources.
• Graduate Management Admission Council - The Graduate Management Admission Council manages the exam.
• BYU GMAT Prep - This is the link to the BYU GMAT prep course.