The CPA Exam is Changing — Again
The American Institute of CPAs (AICPA) Examination Team is responsible for maintaining the validity and relevance of the Uniform CPA Examination (CPA Exam). The team conducts periodic research to assess the current state of the profession and the evolving requirements for newly licensed CPAs. In this endeavor, the team’s primary research vehicle is called a Practice Analysis (PA), a comprehensive project to document the state of the profession and the current role and requirements for a newly licensed CPA.
Similar comprehensive exercises led to the computerization of the CPA Exam in 2004 and major CPA Exam updates in 2011 and 2017. The team began a new PA in early 2019 with a goal of introducing an updated exam later in 2020.
An observant student will notice from the above dates that the pace of change to the exams seems to be accelerating, something long-time practitioners have observed about the requirements of the accounting profession. As the rate of change accelerates, that acceleration itself is a new challenge. Adaptability and the ability to constantly learn throughout our careers are becoming increasingly important.
The Examination Blueprints
The AICPA developed the Uniform CPA Examination Blueprints to organize the content of the CPA Exam and assess the minimum knowledge and skills required of newly licensed CPAs. Changes in the workplace, especially the impact of technology, require changes in the exam and this Blueprint.
Another tool employed by the Examination Team is Bloom’s Taxonomy: remember and understand; apply and analyze; evaluate and create. This classification of different objectives and skills is used by educators across many different disciplines, not just accounting. In this hierarchy, learning at the higher levels (e.g., in the final year of an accounting program) is dependent upon attaining prerequisite knowledge and skills at lower levels (e.g., entry-level courses).
The AICPA has adopted a skill framework for the CPA Exam based on Bloom’s Taxonomy. The use of a framework like this ensures that core knowledge and essential skills are properly evaluated.
What is Changing
The challenge for this PA is to decide which topics to retain and which to remove from the Exam. There is a more comprehensive look at technology, data analytics and automation. In the PA’s first phase, several findings were identified that more broadly demonstrate technology’s impact on CPA practices. These findings, leading to new Exam questions, include:
- Understanding the business. It is not business knowledge for the sake of business, but rather applying business knowledge in financial reporting, tax preparation, audit, attest and review services.
- The need for a digital and data-driven mindset and the use of data analytics.
- Increased reliance on internal control over financial reporting — System and Organization Controls (SOC 1 reports).
In general, the new Exam questions involve moving higher in Bloom’s Taxonomy, from remembering to applying, from applying to analyzing, and beyond analyzing to evaluating.
What to Expect
“Candidates can expect to see more and more content related to technology going forward — from your more basic IT-related terminology, to understanding and analyzing automated processes and controls,” says Catherine Miskiv, CPA, exam content manager at the AICPA. “We also encourage all candidates to take the sample test. It will provide you with a good idea of how the exam works and includes Excel for you to use when answering questions.” The sample test is available at aicpa.org/becomeacpa/cpaexam/forcandidates/tutorialandsampletest.html.
How to Prepare for Change
Educators must enhance the curriculum by incorporating higher-order skills into the coursework. Group projects and presentations may be particularly helpful in applying business knowledge.
The biggest burden of these changes will, of course, fall on the candidates. The Exam was already rigorous, and, for many, it will be even more demanding. Yet, there are more resources available for candidates to help them understand the material. Those candidates who have practical experience will undoubtedly have an advantage.
Without a doubt, these changes will create distress for some candidates. However, in keeping with the desired goal to see that the Exam remains current, relevant and reliable, these changes are necessary. Moreover, everyone will benefit if standards remain high and a steady pool of candidates successfully completes the Exam.
This article appeared in the July/August 2020 issue of New Jersey CPA magazine. Read the full issue.