The CPA Exam is changing – again.

The Examination Team of the AICPA is responsible for maintaining the validity and relevance of the Uniform CPA Examination® (CPA Exam). The team conducts periodic research to assess the current state of the profession and the evolving requirements for newly licensed CPAs (nlCPAs). In this endeavor, the team’s primary research vehicle is called a “Practice Analysis” (PA), a comprehensive project to document the state of the profession and the current role and requirements for a nlCPA.

Similar comprehensive exercises lead to the computerization of the CPA Exam in 2004 and major CPA Exam updates in 2011 and 2017. The team began a new PA in early 2019 with a goal of introducing an updated exam later in 2020.

An observant student will notice from the above dates that the pace of change to the exams seems to be accelerating, something long time practitioners have observed about the requirements of the accounting profession. 

A major takeaway from this article – as the rate of change accelerates, that acceleration itself is a new challenge.  Adaptability and the ability to constantly learn throughout our careers are becoming increasingly important in our profession. Please keep this in mind as I describe the more technical aspects of the current PA, some helpful terms, and the resulting new exam.

The Examination Blueprints.

The AICPA developed what it calls the Uniform CPA Examination Blueprints to organize the content of the CPA Exam, and assess the minimum knowledge and skills required of nlCPAs. Changes in the workplace, especially the impact of technology, require changes in the exam and this Blueprint.

Bloom’s Taxonomy: Remember & Understand. Apply & Analyze. Evaluate & Create.

Another tool employed by the Examination Team is Bloom’s Taxonomy, a classification of different objectives and skills used by educators across many different disciplines, not just accounting. The objectives and skills are organized into a hierarchy comprising six levels of learning to structure any given course of study.

In this hierarchy, learning at the higher levels (e.g. in the final year of an accounting program) is dependent on attaining prerequisite knowledge and skills at lower level (e.g. entry level courses.)

The AICPA has adopted a skill framework for the CPA Exam based on Bloom’s Taxonomy. The use of a framework like this ensures that core knowledge and essential skills are properly evaluated.

What is changing?

The challenge for this PA is to decide which topics to retain or remove on the exam. For example, exam questions that are no longer within the scope of nlCPA practice should be dropped. Alternatively, it is often observed that the cognitive skill level of a task has become more demanding (i.e. it has moved higher in Blooms Taxonomy). In that case the exam questions must change.

In this PA there is a more comprehensive look at technology, data analytics and automation. In the PA’s first phase, several findings were identified that more broadly demonstrate technology’s impact on nlCPA practices. These findings, leading to new exam questions include:

• Understanding the business. It is not the business knowledge for the sake of business, but rather applying business knowledge in financial reporting, tax preparation, audit, attest, and review services.
•   The need for a digital and data-driven mindset and the use of data analytics, and
•  Increased reliance on Internal Control over Financial Reporting (SOC 1®) reports.

In general, the new exam questions involve moving higher in Blooms Taxonomy, from remembering to applying, from applying to analyzing, and beyond analyzing to evaluating

What to expect.

Catherine Miskiv, CPA, who is an Exam Content Manager from the AICPA  has provided some insight into the type of questions candidates should expect. “Candidates can expect to see more and more content related to technology going forward – from your more basic IT-related terminology, to understanding and analyzing automated processes and controls”

Miskiv says further: “We also encourage all candidates to take the sample test. It will provide you with a good idea of how the exam works and includes Excel for you to use when answering questions: https://www.aicpa.org/becomeacpa/cpaexam/forcandidates/tutorialandsampletest.html.

How to Prepare for Change.

Educators must enhance the curriculum by incorporating higher-order skills into the coursework. Group projects and presentations may be particularly helpful in applying business knowledge.

The biggest burden of these changes will of course fall on the candidates. The exam was already rigorous and for many it will be even more demanding. The exam already required hundreds of hours of study and many candidates may require more.   Yet, there are more resources available to the candidates to help them understand the material. Those candidates who have practical experience will undoubtedly have an advantage.

Conclusion

Without a doubt, these changes will create distress for some candidates. However, as I said at the outset, adaptability and the ability to constantly learn throughout one’s career have never been more important. In keeping with the desired goal to see that the exam remains current, relevant, and reliable, these changes are necessary. Moreover, everyone will benefit if standards remain high and a steady pool of candidates successfully completes the exam.

Stephen McCarthy CPA MBA

Member of the NJCPA

Owner, The Presidents Forum

stevemccarthy@thepresidentsforum.com