The AICPA has released their final update on the makeup of the 2011 CPA Exam.

Auditing and Attestation (AUD)

Current Structure
? 3 Multiple-Choice Question (MCQ) testlets containing a total of 90 questions
? 2 Simulations in current (long) format
? 2 Written Communication tasks
? Current Testing Time: 4.5 hours

? Multiple Choice Questions Weight: 70%
? Simulations Weight: 20%
? Written Communications Weight: 10%

CBT-e Structure
? 3 Multiple-Choice Question (MCQ) testlets containing a total of 90 questions
? 1 Testlet containing 7 short Task-Based Simulations (TBS)
? CBT-e Testing Time: 4 hours

? Multiple Choice Questions Weight: 60%
? Simulations Weight: 40%
? Written Communications Weight: N/A

Business Environment and Concepts (BEC)

Current Structure
? 3 Multiple-Choice Question (MCQ) testlets containing a total of 90 questions
? No Written Communication tasks
? Current Testing Time: 2.5 hours

? Multiple Choice Questions Weight: 100%
? Simulations Weight: N/A
? Written Communications Weight: N/A

CBT-e Structure
? 3 Multiple-Choice Question (MCQ) testlets containing a total of 72 questions
? 3 Written Communication tasks on BEC topics
? CBT-e Testing Time: 3 hours

? Multiple Choice Questions Weight: 85%
? Simulations Weight: N/A
? Written Communications Weight: 15%

Financial Accounting and Reporting (FAR)

Current Structure
? 3 Multiple-Choice Question (MCQ) testlets consisting of a total of 90 questions
? 2 Simulations in current (long) format
? 2 Written Communication tasks
? Current Testing Time: 4 hours

? Multiple Choice Questions Weight: 70%
? Simulations Weight: 20%
? Written Communications Weight: 10%

CBT-e Structure
? 3 Multiple-Choice Question (MCQ) testlets consisting of a total of 90 questions
? 1 Testlet containing 7 short Task-Based Simulations (TBS)
? CBT-e Testing Time: 4 hours

? Multiple Choice Questions Weight: 60%
? Simulations Weight: 40%
? Written Communications Weight: N/A

Regulation (REG)

Current Structure
? 3 Multiple-Choice Question (MCQ) testlets consisting of 72 questions
? 2 Simulations in current (long) format
? 2 Written Communication tasks
? Current Testing Time: 3 hours

? Multiple Choice Questions Weight: 70%
? Simulations Weight: 20%
? Written Communications Weight: 10%

CBT-e Structure
? 3 Multiple-Choice Question (MCQ) testlets consisting of 72 questions
? 1 Testlet containing 7 short Task-Based Simulations (TBS)
? CBT-e Testing Time: 3 hours

? Multiple Choice Questions Weight: 60%
? Simulations Weight: 40%
? Written Communications Weight: N/A

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Get a good CPA Exam review course and pass the CPA Exam in 2010.

The CPA Exam is officially changing in January 2011. In addition to IFRS being tested, portions of all four Exam sections will change – some significantly. As discussed at the August 2009 meeting in New York City, the new Content Specification Outlines (CSOs) would be coming in September 2009 and it was just released.

You can read about the changes to the CPA Exam here.

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I attended a meeting with the AICPA examination team in New York City this morning where they discussed the changes to the CPA Exam in 2010. In attendance were representatives from all of the major CPA exam review courses along with myself and a few others.

Here is what I learned about what you can expect on the CPA Exam in 2010:

Very little will change on the CPA Exam – if anything, in 2010

I went to the meeting today fully expecting to hear about huge changes in regards to IFRS being tested or more about the new Content Specification Outline, but the AICPA played it pretty close to the vest.

Here is what I *did* learn that might be of interest to those taking the Exam in 2010 and beyond:

• BEC is eventually going to get “simulations” but they’re not sims in the sense that current candidates are used to. BEC is going to absorb the written communication sections from AUD/FAR/REG and the written communication sections are all going to be based on BEC topics. So ~ no more writing about REG, FAR, or AUD once the change takes place. BEC will not have any simulations other than the written communication section.
• 20% of BEC grading is going to be based on the written communication section.
• Auditing, Regulation, and Financial Accounting and Reporting simulations are going to change from the classic simulation format to “task-based” sims. Candidates will have 6 or 7 smaller tabs in each simulation that are independent of each other instead of having one set of facts that affects most of the simulation in the current set up. This will promote faster score reporting according to the AICPA.
• Overall, the CPA Exam is still going to be allotted 14 hours to complete. The AICPA is going to take time allotments from other sections and apply them to BEC.
• The AICPA would not give specific details about the new CSO implementation, but did say that a major announcement regarding this would be coming in September 2009.
• IFRS will NOT be tested on the CPA Exam in 2010 and will begin being tested “no earlier than 2011 and not later than 2012.” Announcements on the Codification are to follow and will likely be lumped in with the IFRS and other exam changes.

Here is a breakdown of how each section will ultimately be affected once these changes take place:

• AUD – International Auditing Standards will be tested
• FAR – candidates will have to be “bilingual” and be “fluent” in both GAAP and IFRS
• REG – no major changes planned other than some changes to ethics, which will become an AUD topic
• BEC – you WILL see IFRS-related questions on BEC eventually
• When faced with a question regarding either IFRS or GAAP, the exam will tell you which one is being tested on that particular question.
• You WILL see some crossover between exam sections. This is not a fluke. If you get a FAR question on an AUD Exam…consider it normal

Overall, what did I learn? The 2010 CPA Exam will not change much – if at all. The public announcement in September will give a lot more details about the CSO changes.

How does this affect you as a candidate? You can buy your 2010 review courses with confidence and not worry about changes to the Exam in 2010 until the AICPA says otherwise.

Photo courtesy of Flickr user numberstumper under this Creative Commons license.

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William Parrott, Ph.D., an associate professor of accounting at the University of South Florida wrote a great article recently on the old “paper and pencil” version of the CPA Exam vs the new computer-based exam.

The article is titled “Passing the CPA Exam – Is It Easier or Harder Now?“
It compares the two exam formats in the follow areas:

• Length of the CPA Exam
• Knowledge Tested
• Fixed vs. Flexible Scheduling
• Applying to Sit for the CPA Exam
• Studying for the Exam
• Taking the CPA Exam
• Exam Day Differences
• Exam Format Differences
• Exam Grading
• CPA Exam Pass Rates and Release of Exam Results
• Cost, ?Conditioning? the Exam, Exam Location
• CPA Review Options

If you have a boss who likes to tell “war stories” about the old exam format and remark that new candidates have it so “easy”, slip a copy of this under his/her door. Maybe at the end of the day we can all just agree that old school or new, the Uniform CPA Examination is one of the toughest professional examinations around.

Photo courtesy of Flickr user Esthr under this Creative Commons license.

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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.

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Remember: starting in the July/August 2008 window, there is a new format for completing the research tab of the simulations.

Be sure to practice doing it at least once so that you’re reasonably proficient with the new format prior to entering the testing room. Failing to do so could cost you precious minutes as your exam clock winds down.

Link: Tutorial from the AICPA

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The AICPA recently released a document titled “Exposure Draft: Proposed Content and Skill Specifications for the Uniform CPA Examination“. The PDF is a long (45 pages) read and it’s crammed with information. Some sections will be changed substantially, while others (FARE) won’t be affected as much.

Keep in mind that these are only proposed alterations. With that said, if they went to such great lengths to put this together and publish it, I can’t imagine that they won’t implement these changes within the next year and half. My guess is that they’ll be affective for 2009 in order to be nice to the CPA Review companies who have their 2008 materials in circulation.

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Auditing and Attestation (AUD) Changes

-Ethics and Independence that were previously tested in Regulation will now be tested in AUD. Tax-related ethics and responsibilities will remain with REG.

-Internal Control for IT previously tested in BEC will be included in AUD.

Auditing and Attestation Content Weights:

Old: Plan the Engagement (22-28%)
New: Auditing Engagements (51-57%)

Old:Internal Control (12-18%)
New: Assurance & Attestation Engagements (8-12%)

Old: Obtain & Document Information (32-38%)
New: Accounting & Review Services Engagements (16-20%)

Old: Review & Evaluate Work Performed (8-12%)
New: Professional Responsibilities (now including Ethics & Independence) (16-20%)

Old: Communications & Reporting (12-18%)
New: N/A

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.

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Financial Accounting and Reporting (FARE) Changes

-SEC and other regulatory reporting requirements added
-Other comprehensive bases of accounting (OCBOA) have been
expanded to include financial statements of employee benefit plans/trusts
-A sprinkling of International Financial Reporting Standards (IFRS)

Financial Accounting and Reporting Content Weights

Old: Concepts & Standards for Financial Statements (17-23%)
New: Conceptual Framework, Standard Setting & Regulatory Reporting Requirements for Financial Statements (13-17%)

Old: Typical Items in Financial Statements (27-33%)
New: Financial Statement Accounts (26-34%)

Old: Specific Types of Transactions (27-33%)
New: Unique Transactions, Events & Disclosures (31-39%)

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

My Thoughts: FARE is hard

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Regulation (REG) Changes

-Ethics and Independence are shifting to AUD (see above)
-Business Structures previously tested under BEC will now be included in the Regulation section of the Exam
-Tax-exempt entities and estates will be more heavily tested

Regulation Content Weights

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 removed, Business Structures added)

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

Old: Federal Taxation of Property Transactions (8-12%)
New: Federal Taxation of Property Transactions (9-13%)

Old: Federal Taxation ? Individuals (12-18%)
New: Federal Taxation ? Individuals (16-22%)

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

My Thoughts: The content shift out of REG to AUD and from BEC to REG makes perfect sense. It reduces the overlap/redundancy of the information. This is a good move by the AICPA.

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Business Environment and Concepts (BEC) Changes

-Internal control topics tested will be tested from the perspective of management instead of that of an auditor.

-10 to 20% of BEC will be focused on written communication, documentation, and supervision

Business Environment and Concepts Content Weight
Old: Business Structure (17-23%)
New: Corporate Governance (8-12%)

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

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

Old: Information Technology (22-28%)
New: Information Systems & Communication (13-17%)

Old: Planning & Measurement (22-28%)
New: Strategy & Planning (17-23%)

Old: N/A
New: Operations Management (17-23%)

My Thoughts: The proposed changes make sense regarding IT and Business Structures. The new writing sections could be a real wild card. They could ask you to write about anything ranging from audit to tax to supervision.

Making written communication upwards of 20% of your exam score will certainly be a weakness for candidates who are aren’t strong in writing or have English as a second language.

Again, these are proposed changes.

Source: AICPA

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