As the business environment has changed, a shift has occurred in the type of work newly licensed CPAs perform.
Technical proficiency of accounting, auditing, and tax concepts remains important. Following the AICPA Examinations team's most recent practice analysis, feedback from the profession indicated that the Uniform CPA Examination should evolve so that it will continue to measure the knowledge and skills a newly licensed CPA uses on the job.
As a result, the CPA exam's historical assessment of remembering and understanding and application skills is being modified, with an increasing emphasis on higher-order analysis and evaluation skills. In April, the AICPA announced the details of the updated CPA exam design, which will include assessment of those higher-level skills (see the chart, "New Focus for the CPA Exam," for a comparison of how the questions will be distributed on the next exam).
The next CPA exam will debut in April 2017 in its first major update since 2011.
"Remembering and understanding certain fact patterns isn't enough," said Michael Decker, AICPA vice president—Examinations. "Outsourcing and technology have dramatically impacted the work that newly licensed CPAs undertake earlier in their careers. Newly licensed CPAs have to be able to assess situations and apply professional judgment. So it's not just being book-smart, but the young CPA's ability to apply that knowledge in completing tasks they will encounter as a newly licensed CPA."
WHY THE EXAM IS CHANGING
The CPA exam is designed to provide state boards of accountancy reasonable assurance that those who receive passing grades have sufficient technical knowledge and skills to be licensed. The AICPA periodically conducts a practice analysis to ensure that the exam measures the right knowledge and skills to protect the public interest and meet the needs of the boards of accountancy as they license CPAs.
A practice analysis launched in early 2014 collected input from boards of accountancy, state societies, public accounting firms, academics, standard setters, regulators, and business and industry on the knowledge and skills needed by newly licensed CPAs. The research revealed that because of advances in technology and outsourcing of routine tasks, newly licensed CPAs increasingly need to use higher-order cognitive skills and professional skepticism while performing tasks such as planning and reviewing the work of others.
As a result, the research showed, the profession supports changing the exam to enable more testing of higher-order skills that would align more closely with the tasks newly licensed CPAs regularly perform.
"With this practice analysis, we heard from the profession that newly licensed CPAs not only need to have the knowledge, but they need to have higher-order skills," Decker said. "They need to analyze financial and tax information. And they must be able to think critically and problem-solve in their day-to-day jobs."
The next CPA exam will continue to test in the familiar four sections—Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). The exam will place less emphasis on remembering-and-understanding skills, enabling higher-level analysis and evaluation skills to be tested:
- The number of task-based simulations, a highly effective way to assess higher-order skills, will increase. Task-based simulations will be added to the BEC section for the first time, and the AUD, FAR, and REG sections each will have their number of task-based simulations increased to eight or nine.
- Total testing time will increase from 14 to 16 hours. This will accommodate increases of one hour each for the BEC and REG sections. The extra time is being allotted partly because of the increase in task-based simulations. A review found that there is sufficient time for prepared candidates to complete the AUD and FAR sections.
- Multiple-choice questions and task-based simulations each will contribute about 50% toward the candidate's score in the AUD, FAR, and REG sections. In the BEC section, multiple-choice questions will contribute about 50% of the scoring, with 35% coming from task-based simulations and 15% from written communication.
In the past, multiple-choice questions were weighted about 60% in the total scoring of the exam. That will decrease to about 50% in the next exam.
"The profession is demanding stronger critical-thinking skills from newly licensed CPAs," Decker said. "They need to be able to form conclusions in basic areas and identify issues in more complex and riskier areas. And, based on the feedback from our stakeholders, we have designed each of the exam sections based on a task and skill framework to meet those requirements."
NEW BLUEPRINTS FOR PREPARATION
To prepare for the next exam, candidates will be able to use new blueprints that will replace the current Content Specification Outline (CSO) and Skill Specification Outline (SSO). The blueprints will provide candidates more detail about what to expect on the exam.
The blueprints contain about 600 representative tasks, which are aligned with the skills required of newly licensed CPAs, across the four exam sections. The blueprints are designed to provide candidates with clearer information on the material the exam will test, and will show educators what knowledge and skills candidates need as newly licensed CPAs.
In addition, the blueprints will provide candidates with sample tasks that align with both the content and the skill level at which the content will be tested.
"The blueprints are an amazing tool for the candidate," said Rich Gallagher, CPA, director of content for the AICPA Examinations team. "... They will give a tremendous amount of insight to exam candidates as they prepare for the exam."
"It's all about greater clarity with the blueprints," added Joe Maslott, CPA, CGMA, senior technical manager for content development for the AICPA Examinations team. "Each section's blueprint vastly expands on the information of the current CSO and SSO to demystify the content a candidate will face in a testing center."
Many other resources will be available to candidates as they prepare for the exam. At aicpa.org/nextcpaexam, candidates can take sample tests as well as see the new Document Review Simulation (DRS) questions that will debut on the exam in July 2016 (see the sidebar, "New Type of Question Debuts in July 2016," below). At ThisWayToCPA.com/examinfo, candidates can find tools to learn the requirements for the exam and licensure process, get advice from CPAs who successfully passed the exam, and start planning their study schedule. The AICPA's LinkedIn exam candidate group can provide additional information and support, and review course providers also may provide a valuable service to candidates.
Historical data show that whenever a different version of the exam is ready to be launched, there is a rush of exam takers in the months preceding the launch. It is anticipated that this will be the case in 2016, and steps have been taken to address the potential influx of candidates. The opportunities for candidates to take the exam will be increased, as 10 days are being added to each quarter's test window beginning in April 2016. The 10 days will be added in the traditional dark months, for a total of 40 additional test days annually. The lone exception to the 10-day extension will be during the launch window in the second quarter of 2017. The 10-day extension will not be available during that window as additional time is needed to establish a new standard score for the exam.
The next exam has been designed to remain a fair and accurate test of candidates' knowledge and skills. The exam questions are subject to a thorough process to ensure that they are technically accurate and meet the exam design as outlined in the blueprints. The exam team acknowledges that a different type of candidate may pass this next version of the exam.
"In the past, maybe somebody who could memorize an entire book would do really well on the exam and not do so well when they showed up on their first day at work," Gallagher said. "This is looking to make sure that the candidates who are going into the profession are able to think and solve problems."
Gallagher said accounting educators can help students prepare for the exam by incorporating more case studies into their curriculum. The task-based simulations that will appear in greater numbers on future exams are basically small case studies. Placing material into a real-life situation and asking students to solve problems will help prepare them for success on the exam and as professionals, he said.
Candidates won't have to wait long to learn how they performed, as exam scores will continue to be released within 20 days, except during the first few testing windows. During the first testing window after the launch of the exam, it will take approximately 10 weeks to report scores as experts will have to analyze candidates' performance and set the passing standards for each section of the exam. In the next two windows, there may be a delay of 10 days to allow for further evaluation of exam data. After that, exam officials expect that the 20-day rolling window for exam results will be observed.
Another feature of the next exam is a 15-minute, standardized break. Near the middle of each exam section, candidates will be offered a 15-minute break that does not count against testing time. It is hoped that this will alleviate some of the stress of taking the exam.
ADDITIONAL FUTURE CHANGES
The launch of this exam sets the stage for more enhancements in future years. In the past, the exam has been updated about every seven years, Decker said. After this update, he anticipates that the Examinations team will be able to conduct a practice analysis and adjust the exam approximately every two years—as warranted and without wholesale changes. The Examinations team has implemented lean methodologies and software development methods that will enable the AICPA to update the exam more quickly. Strong relationships with regulators, the profession, and business and industry will provide a feedback loop for potential changes to the exam. This is expected to enable updates to keep the exam current with the rapid pace of change in business.
"The goal is to keep the exam on the cutting edge of assessments," Decker said. "At the same time, we're exploring all the things that a newly licensed CPA needs to do and when they need to do them. Because the rate of change in business and the profession is so great, we really need to make sure the exam stays on par with that evolution."
New focus for the CPA exam
The following chart compares the content in the current Uniform CPA Examination with the content that will appear on the next CPA exam beginning in 2017:
New type of question debuts in July 2016
‘Document Review Simulations’ will present realistic scenarios.
The ability to analyze and interpret documents is a critical part of a CPA’s job.
From reports to memos to emails, CPAs spend a lot of time preparing and reviewing documents.
The ability of CPA candidates to perform this work will be evaluated through a new type of question that is making its debut on the Uniform CPA Examination in the third quarter of this year. Questions called “Document Review Simulations” will present CPA candidates with a document, for example, a memorandum, which they are required to review and edit. As part of completing the simulation, candidates would consider information provided in related documents such as ledgers, invoices, emails, and contracts. The candidates must determine what information is or is not relevant and make edits or changes as appropriate.
“The Document Review Simulation will add an aspect of authenticity for the candidate,” said Jessica Gray, CPA, a content manager for the AICPA Examinations team.
About the author
Ken Tysiac is a JofA editorial director. To comment on this article or to suggest an idea for another article, contact him at firstname.lastname@example.org or 919-402-2112.
- Application for CPA exam candidate affiliate membership, aicpa.org
- "How One Accounting Department Is Preparing Students for the Updated CPA Exam"
- The Next Version of the Uniform CPA Examination, aicpa.org/nextcpaexam
- ThisWayToCPA Exam & Licensure page, ThisWayToCPA.com/examinfo