Major CPA Exam Changes Proposed by AICPA

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