The AICPA recently released its report covering the next version of the Uniform CPA Examination (AICPA, Practice Analysis Final Report, Apr. 4, 2016, http://bit.ly/294IHtx), launching in April 2017. The report provides detailed information justifying changes to the current exam, the steps taken in developing the next version of the exam, and insights regarding possible future changes. It notes the AICPA’s objectives of ensuring “the exam remains current, relevant, reliable, and legally defensible and supports the profession’s commitment to protecting the public interest.” The report also states: “Equally important is providing reasonable assurance to boards of accountancy that individuals who pass the exam possess the minimum level of technical knowledge and skills necessary for initial licensure.”

Update of the Current Exam

The update of the current exam began in June 2014 with the Board of Examiners (BOE) interviewing focus groups. Those interviews and additional work identified six areas of proficiency for newly licensed CPAs:

  • Critical thinking, problem solving, analytical ability, professional skepticism, and adaptability
  • Strong understanding of the business environment
  • Effective communication skills
  • Well-developed research skills
  • Ability to analyze data
  • Ethics and professional responsibilities (AICPA, Invitation to Comment: Maintaining the Relevance of the Uniform CPA Exam, Sept. 2, 2014, http://bit.ly/29pW1XM).

The invitation included questions that addressed increased testing of higher-order skills through tasks such as writing, research, and calculations. In November 2014, the BOE and the National Association of State Boards of Accountancy (NASBA) issued a content survey to 14,000 new CPAs and 52,000 supervisors of new CPAs. The survey included questions about topics, required skills, and depth of knowledge needed for a newly licensed CPA to be effective. In May 2015, the BOE published its Report on the Invitation to Comment. Groups responding included state boards/regulators, firms, and state societies; individual respondents were primarily employed in public accounting and industry. In September 2015, the AICPA issued an exposure draft and sought additional comments during the comment period ended November 30, 2015. The work culminated with the issuance of the report on April 4, 2016.

Next Version of the CPA Exam

Launch date.

The next version of the CPA exam will be given starting with the testing window in April 2017. The BOE is allowing candidates who have already passed sections of the current exam to keep their scores and combine them with passing scores on the next exam as long as the 18-month requirement to pass all sections is satisfied.

Exam structure by section.

The current four-section structure is maintained in the next exam: Auditing (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). Each section will have a total allowable time of four hours.

Focus on higher-order skills.

One of the most important changes in the next exam involves testing higher order skills and is based on modified theory identified in Bloom’s Taxonomy of Educational Objectives, as seen in Exhibit 1. The current exam primarily tests the two lower-level skills of remembering and understanding plus application. The next exam will include testing of the higher-order skill of analysis in all sections of the exam and evaluation skills in the AUD section. The allocation of questions by section for each skill level is summarized in Exhibit 2.

EXHIBIT 1

Skill Levels

Evaluation; The examination or assessment of problems and use of judgment to draw conclusions.
Analysis;The examination and study of the interrelationships of separate areas in order to identify causes and find evidence to support inferences.
Application;The use or demonstration of knowledge, concepts, or techniques.
Rememberingand Understanding; The perception and comprehension of the significance of an area utilizing knowledge gained.
Source:AICPA, Practice Analysis Final Report, 4

EXHIBIT 2

Allocation of Skill Level Questions by Section

Section; Remembering and Understanding; Application; Analysis; Evaluation
AUD;30-40%; 30-40%; 15-25%; 5-15%
BEC;15-25%; 50-60%*; 20-30%; –
FAR;10-20%; 50-60%; 25-35%; –
REG;25-35%; 35-45%; 25-35%; –
*Includeswritten communication
Source:AICPA, Practice Analysis Final Report, 5
AUD=Auditing
BEC=BusinessEnvironment and Concepts
FAR=Financial Accounting and Reporting
REG=Regulation

Blueprints.

Blueprints to assist candidates in preparing for the next exam are replacing the current Content Specification Outlines (CSO) and Skill Specification Outlines (SSO). A blueprint for each section is provided in Appendix A of the report. The four blueprints detail areas and content groups as well as topics. Each topic is then assigned to a skill testing level. The blueprints allow candidates to identify the level at which each topic will be assessed and are also designed to assist accounting educators in structuring curricula and to aid in the development of future content.

The blueprints allow candidates to identify the level at which each topic will be assessed and are also designed to assist accounting educators in structuring curricula.

Task-based simulations.

Task-based simulations are case study questions designed to test higher-order skills by requiring candidates to complete tasks directly related to practice. These simulations will increase in all sections, while multiple choice questions are reduced in AUD, BEC, and FAR. The time to answer simulations of higher-level skills is projected to be 15 to 30 minutes, in comparison to the current 10 to 20 minutes for the lower-level skill testing. Scoring of the next exam will be adjusted, with the AUD, FAR, and REG weighted 50% multiple choice and 50% simulations, while BEC will be 50% multiple choice, 35% simulations, and 15% written communication.

Total exam time.

The current exam allows a total of 14 hours of time: four hours each for AUD and FAR and three hours each for REG and BEC. The next exam will allow a total of 16 hours, with one additional hour allocated to both REG and BEC. Candidates will be allowed a 15-minute break at the midpoint of each section. Optional breaks that reduce the available testing time will still be an option for candidates.

Final design.

Appendix A of the report includes content areas and weighting for each section. The six current content areas for AUD will be reduced to four: Ethics, Responsibilities, and General Principles (15–25%); Assessing Risk and Developing a Planned Response (20–30%); Performing Further Procedures and Obtaining Evidence (30–40%); and Forming Conclusions and Reporting (15–25%). BEC is reduced from six to five content areas; the Strategic Planning area will be incorporated into the other five. Other minor changes to BEC include shifting and reorganizing some content areas. FAR will decrease from five content areas to four, with the Not-For-Profit Accounting and Reporting area shifting to the other four. Testing of IFRS is limited to one group, titled “Differences between IFRS and U.S. GAAP.” REG will shrink from six to five content areas and the topics will be reorganized; the current area of Federal Tax Process, Procedures, Accounting and Planning has been rein-corporated into the other content areas.

Minor changes.

The next version of the exam also includes a number of minor changes. For example, there will be an increase in cost associated with the exam related to the longer testing periods for REG and BEC. In addition, the AICPA cautions that during the transition period, score releases will be slightly extended to allow additional time to statistically validate the results.

Testing higher-order skills will introduce integration of some content among the four sections of the next exam; this result is consistent with actual professional practice.

Potential Future Changes

The AICPA report notes the goal of ensuring that the Uniform CPA Examination continues to reflect current practice in assessing the knowledge and skills required for competent newly licensed CPA performance. The report identifies Microsoft Excel as the most widely used spreadsheet application in the accounting profession today. Excel will be added to the exam in the future, and the staff will continue to evaluate the best ways to leverage Excel in future versions, possibly for data analysis tasks. The report also notes that the BOE and Content Committees do not perceive a need to add audio and visual components at this time, but they will consider the possibility in future versions, subject to cost/benefit considerations.

The AICPA consistently analyzes the Uniform CPA Examination to ensure it remains relevant in today’s world. The most recent practice analysis concludes that changes are appropriate to more clearly evaluate the tasks and skills required of individuals entering the accounting profession. Updating the exam helps ensure that new CPAs possess the skills necessary to protect the public interest. Testing higher-order skills will introduce integration of some content among the four sections of the next exam; this result is consistent with actual professional practice. The report notes that “the natural integration is consistent with the experiences of newly licensed CPAs as there is no segregation of content in practice.” Complete information regarding the next version of the exam is available at http://www.aicpa.org/BecomeACPA/CPAExam/nextexam/Pages/next-cpa-exam.aspx.

Teresa A. King, PhD, CPA is a professor of accounting at Georgia College & State University, Milledgeville, Ga.
H. Wayne Cecil, PhD, CPA is a professor of accounting at Florida Gulf Coast University, Fort Myers, Fla.