The new CPA Exam: Year-one trends and tips for success

As the demands on modern CPAs change, so also does the CPA Exam. Updates in the design and focus of the CPA Exam have been in effect for about a year now, and two AICPA experts joined the Journal of Accountancy podcast to discuss the changes, address misconceptions, and offer reminders on best practices.

Any preparation for the CPA Exam should include a look at the CPA Exam Blueprints, according to Joe Maslott, CPA, director–Examinations.

Mike Decker, vice president–CPA Exam and Pipeline, offers insights into the changes and reminds candidates that the CPA Exam should be respected but not feared.

What you’ll learn from this episode:

• Maslott’s review of why the CPA Exam was redesigned for the start of 2024.
• Decker’s comments on misconceptions about the new exam.
• The “relief valves” now offered for CPA candidates in exam timeframes.
• Best practices and strategies for approaching the new sections of the exam.
• Why pass rates are expected to rise.

Play the episode below or read the edited transcript:

— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Edited Transcript

Neil Amato: The new CPA Exam is just a bit more than a year old now, and this edition of the Journal of Accountancy podcast aims to explore some of how the exam has changed and also how it’s going. This is Neil Amato with the Journal of Accountancy. Joining me today, Joe Maslott, a CPA who serves as director–Examinations, and Mike Decker, vice president–CPA Exam and Pipeline.

They’re both my colleagues, of course. Joe and Mike, we look forward to learning more about the exam and how it’s going after about a year of changes. Thanks for being on.

Mike Decker: Thanks for having us.

Joe Maslott: Thanks for having us, Neil.

Amato: Glad to do it. Now, again, I said, it’s just a little over a year old now, the new CPA Exam. Let’s first quickly revisit the reasons for and the specifics of those changes at the start of 2024. First, why?

Maslott: Why CPA Evolution is a great question and one we get often. It’s an acknowledgment that there’s many paths to initial licensure for CPAs. When a candidate thinks about CPA Evolution, or anyone in the profession thinks about candidate flexibility.

All candidates must pass Core sections, Auditing and Attestation, Financial Accounting and Reporting, Taxation Regulation. Then candidates have a choice of completing one Discipline exam section that aligns to their interests, education, and passion. It’s really a change meant to help candidates and provide that flexibility in initial licensure.

Amato: That’s great. That’s the why. Let’s talk some about the how. What exactly is different?

Maslott: The look and feel of the exam is pretty consistent with prior versions. You have multiple-choice questions and task-based simulations, which are small case studies. What is different is the Core and Discipline model. All candidates must pass through the three Core exam sections, which align to pillars of the profession — Auditing and Attestation, Financial Accounting and Reporting, and then Taxation.

Then candidates get to choose between three Discipline exam sections, one being Information Systems and Controls, which aligns to IT Audit, SOC engagements. Or, if they’re going down a tax path, they can focus on Tax Compliance and Planning, which focuses on, you guessed it, taxes, tax compliance.

Then the final section, Business Analysis and Reporting, gets into higher-order concepts of leases, revenue recognition. It also has accounting for state and local governments and aspects of analyzing a business and financial statement analysis and business analytics and data analytics.

Amato: Thank you for that rundown. We’ll probably hit on some of those topics and their acronyms, BAR and FAR, etc., later in this episode. I guess for Mike, what are the biggest misconceptions around the new exam?

Decker: Yeah, there’s a lot of rumor and inaccurate information about the exam out there, and I think it just goes to the over-100-year history that the AICPA has owned the exam and developed the exam. I think the Exams team relies on our history, and it relies on where the profession is. Every five to seven years, we conduct a practice analysis, and that practice analysis investigates and researches what does it mean to be a newly licensed CPA? It’s always been about that one to two years of experience.

When you look at that one to two years of experience, what does a CPA do? What tools do they use? What data do they rely on? What don’t they do across the profession? It’s really based on what do they need to know and what do they do to protect the public interest. The exam follows rigorous psychometric standards, licensing examination standards, and we’re always focused on what that one- to two-year level looks like. I like to say that it’s not a graduation test, but it’s a licensure test.

When you look at the state boards and the various education and experience requirements, and you’re seeing changes in that regard, every state jurisdiction relies on the CPA Exam. It’s been incredibly consistent over the years. We don’t curve the exam. We don’t have a quota. We set an individual cut score for each of the sections, and then we monitor to see how the candidates perform on each section.

I think we’re going to get to it in a few minutes here, but I think what we saw in 2024 and what we’re seeing in 2025 is you’ve got a different population of students testing. It’s not what I would call a normal population, and you’ve got a brand new exam. New population, new exam, and that’s why we’re seeing some of the variability in the pass rates that we’re seeing.

Amato: Thank you for that. For all of the candidates and the potential candidates out there, what’s your message to them about the new exam and whether they should go and sit for it?

Maslott: Absolutely. I would go and sit for it. Changes in the exam are done so very carefully to minimize candidate disruption. There are a lot of resources out there for candidates to prepare for the exam, and just thinking overall about the value proposition to become a CPA with Baby Boomers retiring, with complexity of standards, whether those be financial accounting standards, taxation standards, providing services in new areas like SOC engagements, there is a great need for CPAs.

As the world gets more and more complex, you can certainly write your own ticket and be as successful as you want, whether that’s working at a very large firm, doing entrepreneurial type of engagements for yourself in your own firm, working for a multinational company, and we’ve seen that. We’ve seen that consistently over the years.

Mike mentioned that there’s a long history in the value proposition. We haven’t seen that change at all. There’s still a lot of desire for folks to become CPAs. So there is some news out there, and Mike talked about it with the misconceptions about the exam, but I wouldn’t let that deter candidates in the short term.

Decker: Even with the change that occurred to the exam, I think Joe and my recommendation would be that candidates should sit and should jump into the pipeline when they’re ready. We actually saw pass rates increase a little bit right after the pandemic, and we believe it was due to the candidates that were actually focused and studied during the pandemic. When we reopened test centers, they came in and tested, and the pass rates went up a little bit.

Even though the exam has changed, if candidates, again, have completed their education, they’re working with a review course provider. Hopefully, they’re working in accounting. They should sit based on a strategy that is true to their passion, their education, their experience. The exam isn’t something that should be feared. It should be respected, but we are seeing very strong candidates pass through quite easily, just like they always have.

Amato: Again, students have been taking the revised Core exam sections and the new Discipline sections since January 2024. I guess for Mike, what are you seeing in the choices those students are making?

Decker: Before we look at the choices, I mentioned earlier about different populations of candidates. Thankfully, as we approach CPA Evolution and the change to the exam, the state boards got together and provided numerous relief valves, if you will, for candidates. There was the credit relief initiative. They shifted from 18 months to 30 months to pass all four sections. They provided credit for candidates that had previously passed BEC, that there would be no need for them to take a discipline.

And then they extended credits for all credits I think, passed as of January of 2024 were good until June 30, 2025. Different candidates are taking the exam or have taken the exam in 2024 and 2025 than in previous years.

What we’re seeing is we’ve got candidates that are returning to the pipeline, candidates that haven’t tested for a while. We’ve got candidates figuring out what the concept of choice means for the first time ever in the CPA Exam. The volumes for Disciplines are extremely low because of the BEC passers. Those candidates are not testing, and many candidates are sitting for their Core sections first before they sit for a Discipline. We’re seeing changing candidate behavior, and then clearly there’s a lot of perceptions and expectations around the specific content, and that’s driving candidate choice.

Amato: Joe, as you add some detail, could you remind for me and the listeners, what does BEC stand for again?

Maslott: BEC stands for Business Environment and Concepts. It was introduced in the computerization of the CPA Exam in 2004, and it served us well up until 2023 when we transitioned to the Core and Discipline model. The BEC section went away, and we added in the three Discipline exam sections.

Amato: I guess for either of you, what else can you tell me about candidate choice and some of the trends you’re seeing?

Maslott: Candidate choice must be considered when we’re thinking about the Discipline exam sections. Under the model, candidates, again, have to pass the three Core sections and then a Discipline of their choosing. Now, a candidate doesn’t have the option to take multiple Disciplines. If a candidate takes a Discipline and passes, that’s the Discipline that they’re locked into for testing. That choice doesn’t restrict future practice. Professional standards dictate what engagements a CPA should take. But if a candidate takes a Discipline exam section and fails, they can choose to take another Discipline exam section.

So, when thinking about the populations of candidates testing and Discipline exam sections, you’ll see variations in pass rates. That’s because different populations are taking different sections. You have those who are highly comfortable [with] taxation taking Tax Compliance and Planning, being successful in that section at maybe a higher rate than other sections. You have candidates who are comfortable with IT, IT audit, SOC engagements, being successful in the Information Systems and Controls Discipline.

Then you also have the Business Analysis and Reporting Discipline, BAR. That’s a challenge. We’ve seen this be a challenge for candidates because of the disparate nature of the content in the BAR section, where you really almost have three smaller separate exams covering accounting for state and local governments, business analysis, and then some really technical accounting covering revenue recognition and leases.

Amato: Mike, anything to add?

Decker: Joe and I have this discussion a lot around, what does it mean to have the three Disciplines and in plain English, I think of maybe medical students or health care professionals having to sit for biology, chemistry, and potentially physics. I think people probably have a different inclination and a different ability in each of those three subject matters, and I think it’s very similar to tax, say, ISC, audit, and financial accounting, which is tested in the Discipline with BAR.

Just because TCP is showing as a higher pass rate, it’s because the candidates that are sitting for TCP already did well in REG. So they are aspiring tax professionals or current tax professionals, and that’s their area of expertise. So I’d like to say if you’re a biology major or biology is your thing, don’t sit for a chemistry test because you think it’s easier. It’s easier for the chemists. The physics exam is easier for the people that are well versed in physics.

I think Joe mentioned earlier as part of Discipline selection, test for where your passion exists. Test for where you have the most education, and test for where you have the most experience. Either way, whatever Discipline you pass, it’s a common CPA license, but don’t try to game the system, really focus on where passion, experience, and your education lies.

Amato: That’s great. There’s been a lot of good advice today and a lot of good insight about the exam. Any best practices for exam takers other than what we’ve already talked about so far?

Maslott: The best piece of advice that anyone I cross paths with starts with the CPA Exam Blueprints, which is a public document which outlines all the knowledge and skills that are assessed on the CPA Exam. The good thing about the Blueprints and the good thing about the testing structure today, you can tackle one exam section at a time.

Just go to that part of the Blueprint. First, read the section introduction, which is a two- to three-page description of how the content is structured on the exam and gives a nice overview.

Amato: That’s great. We’ll include a link in the show notes for this episode to those Blueprints. I think Mike’s going to add some advice, some best practices as well.

Decker: Again, since this is the first time ever in the history of the exam that the choice of sections is available to candidates, again, we’re seeing shifting populations and shifting candidate trends. The old recommendation that many of the test prep providers were recommending was to sit for FAR first. It’s believed to be the hardest of the three Core sections, and it is. Then if you pass FAR, then that leaves the most amount of time, or that starts the clock for the 18 months.

But now that the state boards have shifted to 30 months, and I think there’s one or two states out there that are 36 months, I think we’re questioning that advice. Instead of sitting for FAR first, should you sit for the one or two or potentially three sections that you’re most comfortable with and finishing them quickly. Let’s say you’re a tax professional, you sit for REG and TCP. Hopefully, you can get that done in six months. Well, that leaves 24 months to pass Audit and FAR, and you could focus on each one, taking almost a year to pass each one.

Again, changing rules and regulations and a changing exam allows for different candidate behavior, and maybe the last recommendation I have that we’ve heard is sit for the Discipline that closely matches the Core section, again, where your education, experience, and passion exists. Sit for that Discipline right after you’ve passed the Core. If you’re an auditor and when you sit for Audit, take ISC next because they’re the most brother-sister relationship between the sections. Again, we’ll have to see over time if those strategies play out in improved pass rates.

Amato: I guess for Joe, what are you seeing in the performance data in 2024 and then also, I guess, early in 2025?

Maslott: I think for 2024, what got a lot of people’s attention was looking at the quarterly pass rates for the fourth quarter. We had FAR and BAR [below 40%]. Historically, FAR has been in the low 40s. That’s a shock when you see that on a piece of paper on a website. Wow, we have two sections below 40%. Well, we took a hard look at this and, from years of administering the exam, we know that the fourth quarter can be low. We also had the shift toward continuous testing in the Core sections being implemented in 2025. We probably saw people pull back, not test as much.

Maybe those who tested weren’t as prepared, and we saw lower pass rates. That has us thinking, what’s going to happen in 2025 Q1, the next testing quarter? As expected, those pass rates rebounded, with FAR increasing 5% and BAR increasing 4% just from quarter to quarter. That theory of candidates not maybe being as prepared for the fourth quarter, whether due to holidays or impending policy decisions like the shift toward continuous testing, that might have had people on the sidelines not putting their best foot forward.

Amato: Just because they sound so similar, remind me again, FAR and BAR, what they stand for.

Maslott: Sure. Financial Accounting and Reporting, FAR, with an F, is a Core exam section that all CPA candidates must take. The BAR section, Business Analysis and Reporting, is a Discipline exam section that if you have the education, interest, passion, desire to go take that section, you certainly can.

Amato: There are a lot of things that you’re monitoring that as this progresses, you’ll continue to look at. But what happens next? What else is out there for the listeners to know about?

Decker: We meet with the test prep providers, the review course providers on a regular basis in two big meetings, one in April and one in August at the [American Accounting Association] conference. We’re meeting with them later this week in New York, so we want to hear candidate feedback. We want to hear the test prep providers’ feedback around candidate behavior and what sections. Then we do think that there is a performance difference between multiple-choice questions and the simulations.

We’ve heard from the review course providers historically that the candidates love to take the practice multiple-choice questions, again, because they’re easy to do and you get immediate feedback, but candidates shy away from practicing the more complex simulations. We’re seeing that in the performance data that candidates are definitely doing better on multiple-choice questions and not so well on the simulations.

Another recommendation for candidates out there is make sure you focus on the Blueprints as Joe outlined and especially on the higher-order skills that are assessed via the simulation. We’re going to meet with the review course providers. We meet with the Board of Examiners who oversees the administration of the exam. We meet with them in May to, again, look at the test volumes, look at some of the questions and the pass rates, and make sure everything’s in alignment.

Again, we’re in a wait-and-see mode as the candidate population shifts and we get some stability in the volumes. And, ultimately, I think you’ll see the pass rates increase, which they’ve done every time after we’ve launched a brand-new exam after a practice analysis.

Amato: It’s human nature that we fear change, and so it’s good to have these explanations today. I really appreciate the insight into the changes and how the population is adapting to those. As a closing thought, anything else? I’ll go to you, Joe, first, and then Mike, if you have anything.

Maslott: I would like to mention that as we look at the data, we’ve seen that candidates particularly struggle with the task-based simulations or small case studies in the FAR and BAR sections. We’re working with review course providers, our Board of Examiners, which is a senior committee of the AICPA, to really break that down, but we think that candidates are still adjusting to those task-based simulations.

For example, in FAR, the skill weighting – the weighting of questions, the number of questions – shifted with the launch of CPA Evolution to more analysis-based content, which are tested with task-based simulations. How candidates made that adjustment is something we’re exploring with our partners, with review course providers, with educators to make sure candidates are adequately preparing for those task-based simulations/case studies.

Now, the accounting we test is straight forward and appropriate for new CPAs, but candidates might not be putting the whole piece together in that case, where they have to consider multiple elements and synthesize an answer to address the accounting problem that they’re being asked. That’s a big takeaway from the shift to CPA Evolution.

Decker: The other thing, Neil, when I think about financial decisions made by consumers, we won’t buy something if it’s $100, but we would buy it if it’s $99.98. So, there’s that, “$100 I can’t do, but when it appears under $100, I might consider buying it.” We’re seeing that in some of the pass rates. Historically, FAR was definitely in the low 40s, and it’s still at about 40%, 42%. And BAR, not that we anticipated the low 40s, but we knew that that was going to be a somewhat difficult section.

The challenge for us from a reputational perspective or a communications perspective is it has dropped below 40%. We don’t design it to be in the 30s or design it to be in the 40s. I think in the next few years, it’ll come back up way over 40%, just like FAR and BAR was. I think we’re dealing with a few percentage points decline, but I think we’ve seen that after the launch of many new exams, and we’re seeing REG increase.

Again, different populations, different content, and over time, the pass rates do increase as the test prep providers get stronger, the candidates get more comfortable with the content in the Blueprints, and again, we’re seeing great changes in academia and improvements there as well. I don’t think there’s anything to fear, and I do think we’re going to see pass rates rebound fairly shortly.

Amato: That’s great. Mike Decker, Joe Maslott, thanks very much.

Decker: Thanks for having us.

Maslott: Thanks, Neil.