| EXECUTIVE SUMMARY | |
 THE NEW EXAM REPRESENTS STATE-OF-THE-ART
technology and provides a platform on which the
content can be continuously improved.
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| WILLIAM W. HOLDER, CPA, is the Ernst and Young Professor at the University of Southern California, Los Angeles. His e-mail is wholder@marshall.usc.edu . PAULA B. THOMAS, CPA, is the Advisory Board Distinguished Professor and Chair at Middle Tennessee State University, Murfreesboro. Her e-mail is pbthomas@mtsu.edu . |
seminal event occurred just over one year ago that
changed the licensing process forever—the launch of the computer-based
Uniform CPA Examination. It was the single most significant change in
the licensing of CPAs in the profession’s 100-year history. The
computer-based test (CBT) took more than five years to create and was
a collaboration of volunteers and the professional staffs of the
AICPA, the National Association of State Boards of Accountancy
(NASBA), Thomson Prometric and individual state boards of accountancy.
And the results are encouraging: Post-exam surveys showed that 97% of
candidates were satisfied with their test experience on the new exam.
The timing of the exam’s appearance was fortuitous. Though it had been on the drawing boards for several years before the big business scandals hit the headlines, the announcement of the new exam came out almost concurrently with the breaking news of corporate misconduct. While the image of the accounting profession has undeniably been tarnished by those scandals, the same events also made clear the importance of CPAs in the functioning of the nation’s economy and capital markets—and of an exam that must ensure that entry-level CPAs have the skills needed to protect the public interest. Public outcry over highly visible costly business failures led to the passage of the Sarbanes-Oxley Act of 2002 and highlighted the importance of the accounting profession’s roles and responsibilities in protecting the public interest. That protection is the paramount objective of the CPA exam; it is critical for those who rely on the work of CPAs to have faith in the licensing process.
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| The new exam represents state-of-the-art technology in testing and, equally important, provides a platform on which the content can be continuously improved. |
Assuredly, the revisions to content and administration are more important than the new computerized format. The knowledge and skills necessary to practice competently are not static; the pace of change is accelerating, and accounting pronouncements, as well as the work that CPAs perform, are becoming much more complex. For example, Dennis Beresford, former FASB chair and now an accounting professor, recently stated that in order to practice competently accountants “must search to see whether there is accounting literature on point and then decide how it applies to the issue under consideration. While computers help greatly in the identification of applicable literature, humans still must read the material and decide how it should be interpreted.”
THE EXAM TODAY
The accounting profession and the CPA exam must
respond quickly to changing demands in practice, and the CBT is one
mechanism for accomplishing that objective. Ongoing changes in the
exam should help ensure that future professionals remain well-prepared
for an ever-changing workplace and enhance the image of the exam with
our constituents.
The new exam represents state-of-the-art technology in testing and, equally important, provides a platform on which the content can be continuously improved. The primary reason the exam was computerized was to achieve a better alignment between the knowledge and skills required of entry-level CPAs and the requirements of current professional practice. It is critical that exam candidates be tested using tools that reflect, to the extent feasible, the demands of the workplace they will be entering. Through revised content, format and delivery, the new exam strives to evaluate the research, analytical, judgment and communications skills, as well as the technical knowledge, of entry-level CPAs.
A related component of a CPA’s competency and financial expertise is the ability to harness the power of technology. The expanding universe of information with which CPAs must be familiar is a powerful force that has greatly affected the practice of accounting. As the use of technology has become pervasive, CPAs are able to obtain almost unlimited amounts of information electronically. Accordingly, the ability to use technology to address and resolve client problems has become an important feature of practice. Successful CPAs must have the ability to find and use information as needed.
In the past, many candidates prepared for the paper-based CPA exam by memorizing rules. But the exponential growth in the number of accounting and auditing pronouncements and their growing complexity make that approach less desirable. Memorized information quickly becomes outdated and forgotten. In today’s business environment, CPAs must be able to research issues in order to make appropriate business decisions.
Some professionals have criticized the new exam for being easier since candidates can “look up the answers.” The reality is that candidates have access to professional literature only during the simulations, so the skill being tested is the candidate’s ability to find the right answer. A practicing CPA simply cannot know the answers to many practice questions as they arise but rather needs the ability to find such answers. Well-trained candidates will focus more on higher-order skills and develop a mental framework for finding an appropriate solution.
Pass rates for the first year of the CBT have exceeded pass rates for the paper-based exam. However, it is difficult to draw generalizations from such short time periods, primarily because the first individuals to take the CBT may not be representative exam candidates. The higher pass rates may result, in part, from more focused preparation for the sections taken, a greater percentage of partial-credit candidates finishing needed sections and/or more capable candidates. The pattern thus far: Most candidates are taking two exam sections over a six-month period.
WORK YET TO DO
While the promise to deliver a computerized CPA exam
has been fulfilled, some kinks have yet to be smoothed. Operational
and administrative issues have been identified and are being
corrected. The AICPA, NASBA and state boards of accountancy are
working diligently to reduce the time it takes to report scores.
Candidates also continue to gain familiarity with the new examination
and administrative processes.
Candidates are encouraged to review the exam tutorial and sample tests, available at www.cpa-exam.org , as candidates who have reviewed these materials have far fewer test-taking problems. The computer-based CPA exam uses proprietary software and systems, some of which have unique functionalities and are different from commercial and/or Internet-based products. Therefore, it is extremely important that candidates become familiar with these features before taking the exam. However, the AICPA is improving the functionality of the examination to reduce these inconsistencies.
Other aspects of the CPA exam vision are yet to become reality. For example, one of the attractions of the computer-based exam is the ability to incorporate changes quickly. Historically, there was quite a lag between issuance of a new pronouncement and its being incorporated into the paper-based exam because of the time it took to write and pretest exam questions. Though the time span from pronouncement to test questions is shortened, it’s still longer than ideal.
Most important, perhaps, is that a number of exam features should be further developed to replicate practice more closely. Simulations should continue to be enhanced to require candidates to demonstrate greater communication, research and analytical/critical thinking skills. Such improvements would better evaluate the ability of candidates to perform competently in the complex and judgment-laden environment that represents the contemporary practice of accounting.
CANDIDATE HEAD COUNT
Currently, exam candidate volume is below original
projections; this has many long- and short-term implications.
Alarmingly, if candidate volume does not reach projected levels on a
long-term basis, the profession faces a scarcity of qualified
professionals. And in the short term, volume drives cost. Many
constituents are concerned about the higher cost of the CBT.
Paradoxically, as we are experiencing lower-than-anticipated test
volume, many accounting programs are reporting increases in the number
of students enrolled. These seeming contradictions imply that
qualified candidates are not sitting for the exam as quickly as they
once did. A number of reasons have been suggested to explain this.
Foremost among them is the Sarbanes-Oxley section 404 work related to
internal controls that has increased the demands of practice;
candidates may be postponing taking the exam until workloads diminish.
Others have suggested the increased availability of testing options
diminishes candidates’ perceived urgency to take and complete the
exam.
The AICPA, NASBA and Thomson Prometric have formed a joint task force to determine why the number of test sections taken during the first year of the CBT was lower than expected. This task force commissioned research into employer and candidate attitudes, concerns and examination-taking strategies. While the final report is due out shortly, preliminary results made clear that there was no single reason for lower-than-expected volume and no easy answers.
The research conducted to date showed that candidates and employers continue to view the CPA credential as valuable and an important part of their career and business strategies, but many potential candidates said they didn’t have enough time to prepare for the exam. This is something the profession must address. One recommendation the task force is considering is to work with employers in accounting firms, companies and government to develop and consistently implement programs that support employees in taking the Uniform CPA Examination. Generally, the programs should
Reemphasize the importance of setting the tone at the top
of the firm that becoming a CPA is a core value of the organization.
Develop examples of policies and procedures that
employers can adopt to ensure employees make becoming a CPA a top
priority.
Provide tools to educate human resources departments on
the role they can play in encouraging employees to make becoming a CPA
a top priority.
Encourage the use of a tracking system to follow employee
progress in preparing for and taking the exam.
IMPLICATIONS FOR EDUCATION
Historically, many schools took pride in not teaching
to the CPA exam, but that was before the exam began testing the skills
that are critical to competent practice for today’s entry-level
professionals. Many schools already are well-equipped to prepare
students for the computerized exam; others may need to change
curricula and pedagogy. Not all classroom changes add cost. Following
are steps educators can take to better prepare students for the CBT:
Include writing assignments in coursework and grade them.
Incorporate some written assignment across the
curriculum, and be sure instructors grade them to underscore the
notion that writing skills (that is, the ability to communicate
clearly the appropriate resolution of accounting problems) matter.
Include assignments that help students deal with ambiguity.
Numerous studies have shown that many students are
attracted to accounting because they perceive it to be “black and
white.” CPAs know how much judgment is involved in the practice of
accounting, and it is the intent of simulations to evaluate the use of
that judgment. Educators can do their part to prepare students by
including assignments that force students to work with problems that
have no clear-cut answers.
Require students to conduct research using professional
literature. Include assignments that require
students to find appropriate answers rather than to memorize them.
Schools and educators now can get access to databases of professional
audit and accounting literature at substantially reduced cost. CPA
candidates who have applied to take the exam, been deemed eligible by
their state boards and received a valid Notice to Schedule can get a
free six-month subscription to an online package that contains AICPA
professional standards, FASB current text and FASB original
pronouncements. Go to
www.cpa-exam.org to find more information and subscription
links. The key is to become familiar with professional literature.
Give some open-book exams. We believe an
essential goal of accounting education (as it relates to financial
reporting, auditing and taxation) is to teach search skills rather
than foster memory skills. Practice with open-book formats makes
students more comfortable performing professional research in a
reasonably time-constrained environment.
Give exams on a computer. It may seem like a
simple step, but students frequently react very differently to
computerized exams if they are accustomed to only a paper-based
format. Educators should give students an opportunity to develop
self-confidence in a computerized testing environment.
Encourage students to visit the www.cpa-exam.org Web site
to
Use tutorials.
Review sample questions.
Become familiar with the examination’s user interfaces
(see “ Mastering the Technology, ” below).
WHAT IT MEANS TO FUTURE CPAs
The new CBT is more appealing and
marketplace-connected, and more clearly reflects the work environment
candidates will be entering. The paper exam was limited in that
students could not research technical issues and did not have access
to word processing and spreadsheets. Preparing for the exam now is
more comparable with preparing to enter the workplace in that
candidates are focused on knowledge and skills that are relevant to
entry-level practice.
The testing of communication skills will underscore just how important such skills are in the business world. Candidates’ career success will be significantly affected by their ability to communicate and interact with colleagues and clients. While these skills have always been critical success factors, testing writing skills on the exam enhances their visibility.
Candidates must take responsibility for their own exam preparedness. Schools have different resources, so if their university doesn’t adequately prepare them for the exam, they must determine how to bridge the gaps. Despite the fact that most jurisdictions require candidates to have 150 hours to sit for the CPA exam, it is a rare program indeed that covers all technical content tested on the exam. Accordingly, candidates must review the content specification outline (CSO) (available on the exam Web site www.cpa-exam.org ) and identify gaps in their individual knowledge. Candidates also must be familiar with exam interfaces. They should take the sample tests and gain experience dealing with the software so that valuable test time is not lost learning these skills while taking the exam.
PRIDE AND THE PUBLIC INTEREST
The successful launch of the computer-based CPA exam
and the accompanying changes in content and administration are a
source of pride for the profession and its stakeholders. The exam has
made great strides in testing skills that are much more relevant for
entry-level CPAs and consistent with ensuring the public interest is protected.
By Natalie Tatiana Churyk and Katrina Mantzke
Savvy advice for CPA exam candidates: Practice, practice, practice to save yourself the frustration of wasting time when you take the computer-based Uniform CPA Examination. You should become adept at using the exam technology well before the test so you can focus on the technical content of the exam. Practice using the technology at www.cpa-exam.org by working through the online tutorials and sample tests. In addition, be aware of the following:
Allotted time. Your session time for each
section of the exam is 30 minutes longer than the exam time. During
this time, you will sign in and complete a brief survey. Note,
however, that even if you complete these tasks quickly, your exam time
is not increased.
Automatic shutdown. Once you have signed in
and logged on to the workstation (this should take about 5–10
minutes), begin the exam. If you take too long to start, the computer
will lock you out and register the session as a failed attempt.
No backtracking. Each section of the exam is
broken into testlets. You must take the testlets in the order in which
they are presented, but you can answer questions within a testlet in
any order you choose. Once you leave a testlet you cannot return to it
to review or change any of your answers.
The ticking clock. The exam clock counts down
the amount of time you have remaining. Budget your time wisely so you
have enough time to complete each of the testlets.
The unknown. During the simulation testlets,
you will be required to research relevant databases and use
spreadsheet and word-processing software to craft your solutions.
However, it’s likely you will be unfamiliar with these databases and
software since they are not the commercial products most firms use
regularly in practice. Practice online to become familiar with their
unique features.
Blind spots. In the simulation testlets, you
may have to perform matching across several columns of data. Due to
the amount of information displayed, you may be unable to see all of
the columns simultaneously. If your computer mouse does not allow you
to move to the other columns, use the arrow keys on the keyboard.
Computer problems. Some candidates have
reported their computers froze during the exam. Fortunately, the exam
is programmed to back up your solutions every 30 seconds. If your
computer freezes, have the exam site assistant reboot the computer.
You will reenter the exam after the last saved portion. Also, a
candidate should communicate any difficulties such as, for example,
misplaced commas in problems or typographical errors.
NATALIE TATIANA CHURYK, CPA, PhD, and KATRINA MANTZKE, CPA, PhD, are assistant professors in the department of accountancy at Northern Illinois University College of Business, DeKalb. Their e-mails are nchuryk@niu.edu and kmantzke@niu.edu , respectively.
