The American Institute of CPAs and the Nationwide Affiliation of State Boards of Accountancy are laying the groundwork for a significant overhaul of the CPA examination that can see materials being rearranged and transferring to new sections, whereas emphasizing extra know-how expertise.
The AICPA launched an publicity draft earlier this month previewing the proposed adjustments for the 2024 examination and asking for suggestions (see story). The AICPA and NASBA have been working collectively on a CPA Evolution initiative as a technique to modernize the accounting licensure mannequin and make it extra related for in the present day’s expertise. In addition they hope to draw extra younger folks to the accounting career, which has seen a drop lately in accounting college students and CPA candidates, as companies compete with different industries which might be coping with employees shortages in the course of the so-called “Nice Resignation” sparked by the pandemic.
The proposed adjustments could not come as a giant shock to those that have been intently following the CPA Evolution initiative and the mannequin curriculum already proposed by the AICPA and NASBA. However for many who haven’t been monitoring the developments, they bear watching and accountants ought to weigh in with their feedback.
“I believe they did a great job of signaling the place the publicity drafts have been going to go,” stated Angie Brown, senior director of product administration at Becker, a supplier of instructional programs for the CPA examination. “It confirmed some issues that have been within the mannequin curriculum they launched final June and the conversations that they’ve had as they moved towards this launch date. I wasn’t shocked, however I used to be more than happy by what we’ve seen within the blueprint. There had been some signaling within the mannequin curriculum final yr and even within the survey they did late final summer season of the completely different events and companions concerning the place they have been pondering issues would go between the previous and the brand new exams.”
One of many main adjustments will develop the variety of examination sections from 4 to 6. “They’ve taken under consideration the truth that there’s loads being examined on the present 4 exams, and what they’re exhibiting within the blueprint is that they’re taking the present 4 exams and primarily divvying up the content material between six, with some new additions in tax after which a number of new issues within the ISC Info Techniques and Controls self-discipline examination,” stated Brown. “In some ways, they’re reapportioning and possibly rightsizing the completely different content material being examined throughout the entire assessments, which is nice information for examination candidates if it doesn’t change that a lot between this publicity draft and the ultimate.”
The AICPA and NASBA wished the examination to check extra for know-how expertise, as software program has change into an important a part of being an accountant, with larger demand within the job marketplace for expertise like knowledge analytics. Crucial pondering can also be an vital a part of being a CPA, particularly with regards to auditing and exercising skilled skepticism.
“They undoubtedly are ensuring that know-how is being correctly coated throughout all of those six sections, and each part of the brand new examination does have some degree of know-how parts,” stated Brown. “They’ve talked about the best way know-how and knowledge analytics weave via the career. They definitely tell us for a number of years that’s coming, particularly with the adjustments they made to the audit blueprint. On July 1 of final yr, they issued a brand new audit blueprint that had extra know-how subjects. Then the mannequin curriculum actually unfold knowledge analytics and significant pondering throughout all of the examination sections.”
With the elevated variety of examination sections, some materials is transferring from one of many present required core sections, such the Monetary Accounting and Reporting (FAR) half, to a more recent one like Enterprise Analytics and Reporting (BAR) that’s extra non-compulsory.
“Though there are these new know-how components, there’s not likely a complete lot else that’s new,” stated Becker. “They informed us for a very long time that extra know-how testing was coming, however in any other case they’re taking the present FAR examination and splitting out the subjects to enter the brand new BAR examination, which is the Enterprise Analytics and Reporting examination. FAR has been type of a hurdle for candidates. There’s loads to check, and candidates really feel overwhelmed once they put together for the FAR examination. The truth that they’re rightsizing it and transferring a few of the content material, particularly content material that’s actually solely relevant to those that are going to focus their careers in these areas, will make the FAR examination — which is core accounting and must be handed by each scholar — extra manageable for candidates. I believe that’s actually nice information.”
As accounting companies discover themselves below the microscope for audit failures and examination dishonest, the revamped CPA examination will proceed to incorporate ethics questions. “We haven’t misplaced any ethics protection, so there are nonetheless ethics subjects being coated in audit [AUD] and REG [Taxation and Regulation],” stated Brown. “These are the areas the place we largely deal with ethics subjects, and that’s nonetheless true, so no change there.”
One associated change that could be stunning, although, includes an elevated emphasis on enterprise regulation. “They did improve the load of enterprise regulation, which is completely different from ethics, within the REG examination, which can nonetheless be a core examination, and can nonetheless deal with tax subjects in addition to enterprise regulation,” stated Brown. “They’re proposing that the load they assign to the enterprise regulation portion of the REG examination will go up. Proper now it’s 10 to 20%, and on the brand new examination, they’re proposing 15 to 25%. That wasn’t essentially one thing that we noticed coming, particularly as a result of they signaled a few years in the past with the prior follow evaluation that they could presumably pull enterprise regulation from the CPA examination. Clearly they haven’t accomplished that, and it does look like they’re placing slightly bit extra emphasis on it. It doesn’t actually change the core subjects being coated. It’s simply that there are most likely going to be just a few extra questions on enterprise regulation on the REG examination than possibly previously.”
The brand new examination could make the career extra engaging to youthful individuals who could have been discouraged by earlier examination adjustments. The AICPA traits report from 2021 discovered accounting graduates trended downward within the 2019–20 tutorial yr, with decreases of two.8% and eight.4% on the bachelor’s and grasp’s ranges, respectively. The variety of new CPA examination candidates coming into the CPA pipeline declined in 2020 on account of short-term closings and the varied restrictions at Prometric take a look at facilities, with total COVID considerations carrying ahead into 2021. Whereas new CPA examination candidates decreased lower than 0.5% between 2018 and 2019, there was a 17% lower between 2019 and 2020, although there was a 6% improve between 2020 and 2021.
“We’re all very involved concerning the CPA pipeline,” stated Brown. “If the brand new examination as outlined by CPA Evolution seemed to be more durable, then that might be a troublesome message to share with candidates and wouldn’t attraction to the younger professionals we need to carry into the career. They’re rightsizing a few of the sections and taking content material out of FAR, which each candidate has to take, and transferring that to BAR, and taking a few of the content material that’s at present examined on the REG examination and transferring that extra superior tax content material to the TCP [Tax Compliance and Planning] examination, which is the self-discipline examination that you’d take provided that you actually thought that tax was going to be your skilled purpose. The truth that they’re transferring the tougher subjects to the self-discipline exams and making the core examination extra manageable for candidates may attraction to the candidate inhabitants.”
That would reverse a few of the current traits within the CPA candidate numbers. “We noticed numbers come down after the 2017 examination launch, which was the final actually massive examination change,” stated Brown. “There was a notion at the moment that the examination had change into more durable, as a result of they added higher-order expertise. That appears to have impacted the notion of the issue of the CPA examination. However this shift — making the core exams extra centered on what each newly licensed CPA must know and transferring to the extra exams the subjects that actually aren’t obligatory for everybody, is a superb message. I’m hoping that’s engaging to candidates and that they understand this transfer as a constructive route.”
Whereas a few of the superior tax subjects are transferring from the REG to the TCP part, and a few of the superior accounting and reporting subjects are shifting from FAR to BAR, the audit part of the examination isn’t altering as a lot.
“The AUD examination, which will probably be a core examination when the brand new CPA examination launches, will probably be similar to the audit examination in the present day,” stated Brown. “We’re really not seeing content material transferring from the present audit examination to the extra superior examination inside the audit lineup, which is ISC, the Info Techniques and Controls examination. Curiously, with REG and FAR changing into demonstrably less complicated as a result of content material is transferring to the disciplines, audit stays the identical. Now, that’s not a foul factor as a result of the audit content material has been fairly manageable.”
Nonetheless, some content material is transferring from the Enterprise Surroundings and Ideas (BEC) part to the ISC examination, partially to check for SOC (service-oriented controls) audits.
“The ISC examination, the Info Techniques and Controls, is admittedly going to be nearly wholly a brand new examination,” stated Brown. “There are some subjects within the present BEC examination, issues like enterprise course of and controls, and IT fundamentals that can transfer from the present BEC examination to the ISC examination, however every part else on that examination goes to be new. There’s going to be a brand new emphasis on IT audits, particularly SOC engagements. Right now SOC engagements are examined from the angle of an auditor’s use of SOC studies in a traditional monetary assertion audit as a software for assessing controls. That emphasis on SOC engagements within the present audit will keep the identical, however the brand new ISC examination goes to have a significant portion on the way you carry out a SOC examination engagement. That’s by no means been examined on the CPA examination earlier than, in the identical means that a few of the key IT auditing and know-how content material that comes below ISC has by no means been examined on the CPA examination earlier than. That examination actually is generally new throughout the six core self-discipline constructions below CPA Evolution.”
The revamped examination has not but been finalized, nevertheless it’s anticipated to launch in time for 2024. Its influence on the job marketplace for accountants and the abilities they create to their jobs most likely received’t be obvious for a number of years.
“It will likely be fascinating to see what number of candidates select the ISC self-discipline examination, on condition that the content material on it’s so new and never essentially conventional, should you consider conventional accounting being issues like audit and tax,” stated Brown. “It simply goes to indicate the AICPA’s need to show that accountants actually do perceive know-how, and the rising place of know-how and technology-related audits within the career.”