Don’t Let CPA BEC Easy Reputation Mislead You

Business Environment and Concepts (BEC) may be widely regarded as the easiest of the four Uniform CPA Exam sections, but don’t let that reputation fake you out.

Rethink your strategy if you’re planning to blow off BEC. Here’s a fun fact: in recent years the pass rate on BEC has hovered around 48 percent. That rate did improve to more than 50 percent in 2012 and in 2015 climbed to 57 percent.

However, BEC questions are still notoriously ambiguous. Some would call BEC downright tricky. The section is a collection of unrelated concepts vital in accountancy: business law, economics, financial management and IT info.

Economics and finance classes are an excellent foundation for this section. CPA Exam candidates who didn’t concentrate on these areas may want to invest in a CPA exam review course.

Remember Written Exam Could Delay Your Score Report

BEC is the CPA Exam section that calls upon candidates to demonstrate writing skills by producing a memo or a letter to a client. Brushing up on English grammar, spelling and punctuation will help. Concentrate on writing that is relevant, concise and organized. Throwing in accounting vocabulary and a sprinkle of accounting jargon will help boost your score.

The remainder of CPA BEC is three testlets of 24 multiple choice questions each. This exam section does not require a task-based simulation.

Keep in mind that grading the written part of BEC requires work by actual humans, and that could delay your score report. Who needs the extra anxiety at the end of your test schedule? Consider bumping BEC up to second or third place in your timetable of tests.

Starting way ahead of your test date, taking each topic one at a time and studying consistently is the best strategy for tackling BEC. Don’t underestimate BEC and put off review until the last minute.

Strategies That Could Boost Your BEC Score

Here are some tips on the CPA BEC sections:

Corporate Governance, while not especially difficult, poses some of BEC’s trickiest questions asking about the rights, duties, and responsibilities of the company and its employees. Pay attention to the role of Board of Directors and the Audit Committee as well as other stakeholders.

The Economic Concepts and Analysis format offers great opportunity for wrong answers. Focus on practice testing with this one, and get accustomed to the format. Even without a strong academic background in economics, candidates may find success in applying common sense to these questions. The subject is basic microeconomics and macroeconomics such as Inflation, deflation, interest rates, exchange rates, and the impact of foreign currencies on businesses.

Financial Management calls on your understanding of how the financial modeling calculation works. Memorize the basic formula. In addition to financial modeling such as EVA, DCF, NPV, and IRR, this section tests your knowledge of financing options such as various debt vs. equity cost of capital and derivatives. It also tests related concepts such as fixed vs. variable loan rates and loan covenants.

Information Systems and Communications doesn’t pose tricky questions because the IT section focuses on facts and terminology. Run through info about the role of the business information system in management reporting and transaction processing. This section looks at basic IT principles such as maintaining the integrity and security of the IT operating system, file organization, disaster recovery and business continuity.

Strategic Planning and Operational Management is better known as Cost Accounting. This section includes market and risk analysis, strategy development, and planning techniques. CPA candidates who did not study cost accounting in college may find they need extra help for a section they could find very difficult. Concentrate on the rest of the BEC section if you can’t figure it out.

For detailed information on BEC and the three other CPA Exam sections, visit the American Institute of CPAs web page on the CPA Exam Content Specification Outline.