Today's CPA devotes time and energy to focus on areas not even in existence a generation ago. As a result of technology and other changes in business, there is a need for updated testing of the skills needed to become a licensed CPA. Lori Kelly, CPA, lead manager–Exam Content for the AICPA, explains how the 2024 CPA Exam, based on proposed Blueprints, will look; why the changes are being proposed; and why feedback between now and Sept. 30 is vital.
Also, here are three links to related resources:
- The CPA Evolution site.
- The 2024 CPA Exam exposure draft.
- Journal of Accountancy coverage of the release of the CPA Exam Blueprints.
What you'll learn from this episode:
- Why the 2024 CPA Exam will look different from the current version.
- The redesigned exam's link to the CPA Evolution initiative.
- How the 2024 CPA Exam, in Kelly's words, is going to "adapt to this current environment."
- The exposure draft timeline and contact method for those wanting to supply feedback on the CPA Exam Blueprints.
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.
Neil Amato: The CPA Exam in 2024 is going to look different than the current version. Why is that happening? And what are the particulars? This episode of the Journal of Accountancy podcast takes a closer look at the changes coming with Lori Kelly, a CPA who is an AICPA senior manager–Exam Content. Lori's talking to me, the JofA's Neil Amato, right after this brief sponsor message.
Amato: Welcome back to the Journal of Accountancy podcast. This is your host, Neil Amato. Joining me for this segment is Lori Kelly. Lori is a CPA who is lead manager–Exam Content for the AICPA.
We're going to talk some about the 2024 version of the CPA Exam and how it ties into the CPA Evolution initiative. Lori, first, for people just hearing about this for the first time, what is the CPA Evolution initiative?
Lori Kelly: Neil, for those that might be unfamiliar with CPA Evolution, it's a joint effort between NASBA [National Association of State Boards of Accountancy] and the AICPA to transform the CPA licensure model to be responsive to the evolving needs of the profession.
Advances in technology and outsourcing have really changed how newly licensed CPAs work and what they're responsible for doing. Now, newly licensed CPAs are being asked to perform higher-order tasks earlier in their careers than they ever have before.
It's requiring them to exhibit strong critical-thinking skills, problem-solving ability, and professional judgment. Responsibilities traditionally that have been assigned to more experienced CPAs are now being pushed down to the staff or the newly licensed level.
The CPA Evolution model was really developed to respond and to recognize the changing skills and competencies that are required of newly licensed CPAs today. What the model does, CPA Evolution will introduce a core and disciplined model to the CPA Exam.
The core will include three exam sections, and those exam sections, all candidates will be required to take. It's going to focus on the foundational knowledge and skills that's required in accounting, audit, and tax that all newly licensed CPAs will need in order to protect the public regardless of the path that they choose.
However, under this new model, candidates will have a choice of selecting one of three disciplines which align with their interests to demonstrate knowledge and skills in that particular area.
For instance, they'll have the opportunity to choose one of three disciplines, whether it's Business Analysis and Reporting, Tax Compliance and Planning, or Information Systems and Controls.
Let me just reiterate, the core is going to focus on the knowledge and skills that all newly licensed CPAs need regardless of their intended area of practice or focus, whereas the discipline is going to really focus on topics that apply to newly licensed CPAs engaged in that area of practice, but might be less likely to be encountered by newly licensed CPAs who are not focused in that particular area.
I want to point out, though, that regardless of the discipline that a candidate passes, it still will result in one CPA license that has the same rights, the same privileges, and the same responsibilities as the current license today.
Amato: One aspect of the CPA Evolution initiative is obviously, as you've mentioned, there's going to be an updated version of the CPA Exam. I guess some people out there may be asking, "Why is it necessary to change the exam?" What would you say about that?
Kelly: That's a great question, Neil. As we all know, there has been a significant growth in the standards, rules, and regulations, and seemingly there's no end in sight yet. The CPA Exam and its current format only has so much testing time.
Right now there are four sections of the exam, each four hours long, for a total of 16 hours of testing time. Instead of trying to pack in all of that content into the current model of the exam and cover that content with less depth, we knew that wasn't the right answer, so we recognized that the model needed to change to adapt to this current environment.
Technology is enabling the work that CPAs do, but technology is also requiring newly licensed CPAs to bring a different skill set to the table. They're now working more as reviewers than preparers in many instances. They really need to think critically, be able to identify errors or anomalies, be able to interpret data, and ask the right questions about what that data is telling them.
The advances really are great, and they're helping newly licensed CPAs to work more efficiently, but they're also expanding the skill set required of them. Newly licensed CPAs really have to have a strong understanding of systems now, controls, as well as data analysis, to be able to do their jobs effectively.
The evolution model allows us to focus on what's critically important to all newly licensed CPAs so that that knowledge and skill will be assessed in the core. Again, that's the foundational knowledge required in accounting, audit, tax, and technology.
But it also allows us to move some of the topics that might be more complex, less routine, more specialized in nature to a discipline so that only candidates pursuing that discipline will need to demonstrate knowledge and skills in those areas. For instance, a financial statement auditor certainly needs to understand tax, and that foundational knowledge of tax will be tested in the taxation and regulation core that all candidates will have to take. But they don't necessarily need to understand complex individual tax issues or personal financial planning issues that maybe only a tax professional would likely encounter in their work.
Those types of topics are going to be moved into a discipline and assessed in the Tax Compliance and Planning discipline that not all candidates will need to take. Similarly for an IT auditor, an IT auditor needs to have a solid understanding of business processes. Those types of knowledge and skills will be assessed in the audit core. They have to also be aware of IT infrastructure and data management, which would be assessed in the Information Systems and Controls discipline.
But they don't really need to understand some of the more technical accounting topics, like business combinations or derivatives and hedge accounting, like a financial statement auditor or a CPA working in industry would. Those types of content would be moved into the BAR [Business Analysis and Reporting] discipline. Again, not what every newly licensed CPA would need to take. It really allows candidates to tailor their exam experience to be more in line with their interests and perhaps where they see themselves working.
Amato: Now the exam's exposure draft is open for comment, and we'll address the process for commenting in just a bit. But first, tell me a little bit more about what's going to be new about the exam
Kelly: Sure. A few things. First and foremost, as I was mentioning, not all candidates will take the same four sections any longer, like they do today and like they always have done in the past. The great thing is candidates will now have the opportunity to choose which discipline they want to take based on what most aligns with their interests and where they see themselves working.
That's a huge change in and of itself and probably the biggest change ever in the history of the CPA Exam. But I also want to point out that they're based on our practice analysis research, which needs to be conducted whenever we're making changes to the exam. There's also been some new content areas that have been identified that need to be assessed to be responsive to the needs of the profession.
These new areas we'll particularly be focusing in on the Information Systems and Controls [ISC] and Tax Compliance and Planning [TCP] disciplines, topics that we have not previously assessed on the exam. For instance, as part of our research, we identified a significant increase in SOC reporting related to controls at a service organization. With respect to security, availability, confidentiality, and privacy, the ISC discipline is going to focus on the knowledge and skills that are required of a newly licensed CPA to perform those types of SOC engagements, as well as other IT audit or advisory services.
The TCP discipline is going to also test some new content related to tax planning as well as personal financial planning, which we've not tested in the past. Our research has indicated that newly licensed CPAs often get involved with this type of work as a natural extension of the tax compliance work that they might be doing.
Based on the focus groups and interviews we've conducted, newly licensed CPAs working in this space need to have a basic understanding of qualified retirement plans, understanding risks associated with different investment options and the related tax consequences of those decisions as well as an understanding of how to use insurance to mitigate risk. Those types of topics will be assessed in the TCP discipline.
Amato: You've obviously mentioned the 2024 Exam having three core areas and three discipline areas. Do you want to talk more about those and about how that's different from the CPA Exam that people take today?
Kelly: Well, as I was mentioning there, all candidates today take the same four sections AUD, FAR, REG, and BEC, and they really have no choice in the matter. The benefit of [CPA] Evolution is now candidates will have a choice, and they can select one of the three disciplines, as I was mentioning. But you'll notice that I never mentioned BEC.
The BEC section of the exam will not remain as part of the Evolution-aligned exam in 2024. But that does not mean that we're not going to be testing that content. We did a great deal of research to align the current exam content to what will be assessed in the 2024 exam and as part of that research, we substantially allocated most of that content that's currently assessed in BEC, either to the core sections of AUD and FAR or the discipline sections of BAR or ISC. Very little has been removed. Some has, but very little.
Amato: Can you remind me and maybe others what those AUD and FAR and BEC, all of those stand for.
Kelly: Of course. It's second nature to me working on the exam. AUD is Audit and Attestation; FAR is Financial Accounting and Reporting; REG is Regulation, which includes tax and regulation; and BEC is Business Environment and Concepts, which are the same four sections all candidates today have to take.
Amato: Great. What is the process and timeline for those who want to supply feedback on the exposure draft?
Kelly: The exposure draft has been published. It's available to view on our website. It's going to be open for public comment for a period of 90 days. It's going to be open until September 30 of this year, and it documents our research process and the results of that research. It provides a high-level description of what's to be tested on each of the exam sections.
But it really points the readers to the detailed exam Blueprints, which lists the knowledge and skills that will be assessed on each section of the exam via a detailed listing of representative task statements and those that are unfamiliar with the Blueprints task statements represent what a newly licensed CPA would reasonably be expected to know or do in practice, and therefore translate to the knowledge and skills that would be assessed on the exam.
We're really seeking feedback from the profession on the contents of those Blueprints. We want to know if the core exam Blueprints and the discipline exam Blueprints include the knowledge and skills required of newly licensed CPAs to protect the public interest. Responses to our requests to comment should be sent directly to a dedicated mailbox, which is email@example.com.
Amato: Great. Speaking of that .org email address, there's also more information available for those who want to learn more about CPA Evolution at the site evolutionofcpa.org. Lori, this has been great. Anything you'd like to add as a closing thought?
Kelly: Sure, Neil. Over the past couple of years, we have done a great deal of research and due diligence to get to this point. At each point in the process we've continued to refine the Blueprints based on the feedback that we've received. It's really been a very iterative process, and the exposure draft and the requests for comment is the critical last step in this research process. We're really looking forward to the feedback that we receive from various stakeholders across the profession. Your input is valued, and it's critical to the process.
We'll be sure to consider all of the responses that we received through September 30 to continue to refine those Blueprints before they're finalized and published in January of 2023. So that will allow candidates, educators, and review course providers a full year to prepare themselves before the exam launches in January of 2024. Thanks in advance for listening, and we really hope that you take the time to provide your feedback.
Amato: Lori, thank you very much.
Kelly: Thanks, Neil.
Amato: Again that was Lori Kelly. We mentioned some of the resources available for those seeking more info. Those resources will be linked in the show notes for this episode, which if you're listening on a platform that doesn't support such links, you can find at journalofaccountancy.com/podcast. Thanks for listening to the JofA podcast.