CPA Exam: IFRS is Coming (someday)

02. Apr, 2009 0 Comments

The Spring 2009 Uniform CPA Exam Alert came out in March, but I was too busy tinkering with my site’s WordPress conversion to write about it. Basically, the new Alert is an update of their release that I wrote about 11 months ago.

In short, Ethics and Independence are moving from REG to AUD; Business Structures is moving from BEC to the Business Law section of REG; BEC is getting a new section called “Corporate Governance” with IT getting tweaked to be tested from a management perspective; and FAR is hosting that mysterious rocker known as IFRS.

Here’s a few things to consider:

- The jury is still out on the extent of IFRS that will be tested. They will release an update sometime in 2009 (my guess is that it will be on the Summer 2009 update in June).

-Yes, AUD is getting harder, but REG is getting easier. For REG, you’re swapping ethics and independence for business structures…a trade I would make any day.

-The implementation date is TBD and will be announced when they update everyone on IFRS testing. My guess (and this is JUST conjecture, so don’t take this to the bank) is that they will announce everything in the Summer 2009 update and give all of the CPA review companies the summer to change their materials prior to the filming and printing of their 2010 product, which will take place in the fall of this year. Expect implementation for the 2010 exams (again – just my opinion).

As I said in May of last year:

My Thoughts: Auditing will go from the easiest section to pass (?easiest? is a relative term?least difficult is more accurate, probably) to the second-hardest overnight. If I hadn?t passed AUD already, I would make passing it before the change a priority.

Here are the proposed CSOs (content specification outlines):

Auditing and Attestation (AUD)
Old: Area I Plan the Engagement (22-28%)
New: Auditing and Attestation: Engagement Acceptance and Understanding the Assignment (12-16%)

Old: Internal Control (12-18%)
New: Auditing and Attestation: Understanding the Entity and Its Environment (including Internal Control) (16-20%)

Old: Obtain and Document Information (32-38%)
New: Auditing and Attestation: Performing Audit Procedures and Evaluating Evidence (16-20%)

Old: Review and Evaluate Work Performed (8-12%)
New: Auditing and Attestation: Evaluating Audit Findings, Communications and Reporting (16-20%)

Old: Communications and Reporting (12-18%)
New: Accounting and Review Service Engagements (12-16%)

Old: N/A
New: Professional Responsibilities (including Ethics and Independence) (16-20%)

Note: the original CSO change proposal had “Auditing and Attestation: Engagement Acceptance and Understanding the Assignment” at 51-57% and they knocked it all the way down to 12-16% in the new proposal.

They also added two new sections since last year’s update: Accounting and Review Service Engagements (12-16%) and Professional Responsibilities (including Ethics and Independence) (16-20%)

Business Environment and Concepts (BEC)
Old: Business Structure (17-23%)
New: Corporate Governance (16-20%)

Old: Economic Concepts (8-12%)
New: Economic Concepts and Analysis (16-20%)

Old: Financial Management (17-23%)
New: Financial Management (19-23%)

Old: Information Technology (22-28%)
New: Information Systems & Communication (15-19%)

Old: Planning & Measurement (22-28%)
New: Strategic Planning (10-14%)

Old: N/A
New: Operations Management (12-16%)

Note: changes have been made since the original CSO change proposal in Spring 2008 to put more emphasis on Corporate Governance, Economics, and IT, and less emphasis on Strategic Planning and Ops Management

Financial Accounting and Reporting (FAR)

Old: Concepts & Standards for Financial Statements (17-23%)
New: Conceptual Framework, Standards, Standard Setting and Presentation of Financial Statements (13-17%)

Old: Typical Items in Financial Statements (27-33%)
New: Financial Statement Accounts: Recognition, Measurement, Valuation, Calculation, Presentation, and Disclosures (27-33%)

Old: Specific Types of Transactions (27-33%)
New: Specific Transactions, Events & Disclosures (27-33%)

Testing for Governmental and Not-for-Profit Accounting are not changed (8-12%)

Note: the current CSO is basically the same as the previous one

Regulation Content (REG)

Old: Ethics & Professional & Legal Responsibilities (15-20%)
New: Ethics, Professional & Legal Responsibilities (15-19%)

Old: Business Law (20-25%)
New: Business Law (17-21%) (Independence and Ethics removed, Business Structures added)

Old: Federal Tax Procedures & Accounting Issues (8-12%)
New: Federal Tax Process, Procedures, Accounting and Planning (11-15%)

Old: Federal Taxation of Property Transactions (8-12%)
New: Federal Taxation of Property Transactions (12-16%)

Old: Federal Taxation of Individuals (12-18%)
New: Federal Taxation of Individuals (13-19%)

Old: Federal Taxation of Entities (22-28%)
New: Federal Taxation of Entities (18-24%)

note: nothing changed much since the last update

In closing: How does this affect you in 2009? Not much.

However, if you want to make sure you pass at least ONE exam in 2009, I would make it AUD. Next in line would be FAR. These new CSOs won’t materially change your exam experience, but those who still have AUD on the horizon can take advantage of the current CSO before it changes in 2010 (again – my guess/opinion).

Thanks for reading.

Concert pic photo courtesy of Flickr user marfis75 under this Creative Commons license.

Jeff - another71.com 03. Apr, 2009 at 3:53 pm

You were supposed to give me a pass on the state school MBA comment.
Anonymous 04. Apr, 2009 at 6:51 pm

does that mean , Aud Bec and Reg won’t change till 2010, or will the change apply now? I am sitting for audit in April and BEC in may
Nan 04. Apr, 2009 at 7:34 pm

They can’t change the test for a new standard until a good 6 months or so after it is implemented, and they will make an official announcement stating when it is eligible for testing. Since the SEC is still taking comments on the implementation of IFRS, chances are almost zero that IFRS will be on the exam before 2010.
nayaa 05. Apr, 2009 at 9:27 am

Jeff, I think the changes have already been implemented, coz I took Auditing exam on Feb 2009 and I had a simulation about (edited).(needless to say I was not prepared for it),Yes as you said it was probably tougher, coz After I took the test-I was confident I was going to clear it but the results said otherwise. Planning to attempt it again this month.
Jeff - another71.com 05. Apr, 2009 at 6:57 pm

Nothing will change in 2009. If it does, that loud sound you’ll hear is the collective groan of all of the review companies scrambling to change their materials around.
Anonymous 07. Apr, 2009 at 10:06 am

Nayaa…I also took AUD in Feb. since it is uniform our sims should have been the same and I didn’t see anything referring to IFRS?? Maybe you confused it with something else
Jeff - another71.com 07. Apr, 2009 at 10:22 am

re: anonymous

The exam is uniform, but no two candidates will get the same exam MCQs or sims.
Anonymous 07. Apr, 2009 at 12:14 pm

ah.. did not know that about the sims.. understandable about the MCQ’s considering some are more difficult…just another reason it appears the exam is curved…

where did you get this info? (i believe you of course! just curious)