Update: here is the page for latest CPA exam changes.
Please find below a summary of the new CPA exam format, which has been implemented since Jan 1, 2011.
CPAexcel has a good summary in video format which you may find helpful. For details, you can refer to my writeup below.
I’ve summarized the key points and added a few background information for your convenience.
1. CPA Exam Changes On Content
(i) International Financial Reporting Standard (IFRS)
First of all, let’s talk about the changes in content. The biggest impact on CPA exam in terms of subject matter will be the introduction of International Financial Reporting Standard (IFRS), which is the standard, interpretation and framework adopted by the International Accounting Standard Board (IASB).
Why Is This Necessary?
This is probably the first question that comes to your mind. Well, since the Worldcom / Enron crisis and the resulting demise of Arthur Anderson, the accounting world has been re-evaluating the pros and cons of US GAAP and since then many countries have begun to support an “alternative” and more “international” form of accounting standard.
Nowadays, IFRS are used in many parts of the world, including major economic blocs such as the European Union, Australia, Hong Kong, Singapore as well as the emerging countries such as Malaysia, Russia, South Africa, Turkey… the list is expanding as we speak.
Therefore, as the accounting professional becomes more globalized, it is critical for CPA in the US to have a basic understanding of IFRS such as the similarity and difference between US GAAP and IFRS.
Where is IRFS covered in the CPA Exam?
A more practical question is: where is IFRS tested? Well, given the importance of the topic, it is going to appear in FAR, AUD and BEC. That right — everywhere except REG.
In other words, you can’t escape from IFRS unless you complete the 4 exam sections within 2010.
(ii) International Standard Of Auditing Standard
Along the same line, there will be an introduction of ISAS in the AUD CPA Exam. Candidates are expected to know the basic similarities and differences with the US Auditing Standard.
(iii) Other Changes
“Globalization” Of CPA Exam Questions
In general candidates should expect the CPA exam questions to become more international; e.g. in the Spring 2010 CPA exam alert, the editor suggested that BEC candidates should expect new questions such as the “impact of globalization on the business environment.”
More Emphasis On Ethics
During the interview with CPA exam alert editor, Douglas Warren (the BOE chair) has indicated an expansion of ethics in the testing. Note that he is a forensic accountant by profession.
No IFRS Addition To REG… For Now?
Since IFRS is new to the entire industry in the US, the tax implications of US companies adopting these international standards is still not certain. Therefore, IFRS related questions will not appear on REG but will most likely be included in the future.
This is more for the CPA exam review course providers, but if you are interested in a detailed look at the new CPA exam topics, please click the link.
2. CPA Exam Changes On Format
(i) FAR, AUD and REG CPA Exams
As you may have heard, there is going to be a substantial change in simulations. Let’s talk a lot at the format for FAR, AUD and REG:
As you may know, the current format for these 3 sections is (i) multiple choice questions in the form of 3 testlets, and (ii) two big simulations each with a written communication tab, research tab and some miscellanous simulation questions.
In 2011, the format for FAR, AUD and REG is going to be:
- 3 testlets of multiple choice questions — 90 for AUD and FAR; 72 for REG. In other words, exactly the same as the current version.
- The simulations will be changed into one big simulation section with 6-8 6-7 smaller tabs, each with an independent simulation that you can answer in 8-10 minutes. More details will be given out in early fall.
- The research tab is going to be in different format (no details yet).
- There will be NO written communications tab.
All in all, the multiple choice is going to represent 50-60% of the score, while simulations will represent 40-50%. It sounds like the examiners are going to increase the proportion of simultions in the new CPA exam format.
(ii) BEC CPA Exam
Currently, there is only multiple choice question for BEC. Effective 2011, the format is going to be:
- 3 testlets of multiple choice questions, but each testlet will have 24 questions instead of the current 30.
- No simulations (yeah!)
- But there will be 3 written communications problems on separate subjects where points are given based on the writing skill, content and key terms.
Overall you can expect multiple choice to represent 80-90% 85% of the score and the written communications a 10-20% 15% of the exam.
(iii) Research Tab
- A new “research task” format will be introduced and you can go to cpa-exam.org for details.
3. CPA Exam Changes On Duration
While the total length of the 4 CPA exam sections will stay the same (14 hours), there is going to be some reshuffling:
- AUD is getting shorter: from 4.5 hours to 4.0 hours
- BEC is getting longer: from 2.5 hours to 3.0 hours
- FAR and REG stay the same: 4.0 hours and 3.0 hours respectively.
Please note that the CPA exam fees will be adjusted accordingly.
4. Other Changes
The passing score is subject to change but the examiners will need to look at the data for the first few months to make a decision.
The following miscellaneous items will be changed and a tutorial/sample/details will be available on the official CPA exam website.
- The online calculator used in the exam
- A new “spreadsheet”
- Performance report (the diagnostic report candidates receive if they fail the CPA exam)
How Can I Prepare For The New CPA Exam Changes?
- If you are a brand new CPA exam candidates, there is nothing to worry about because the new materials have been incorporated in all major CPA review courses. You can get a feel of the pros and cons of each course from the link.
- For retakers, if you need help in the new sections (notably IFRS), Yaeger CPA Review has a module for IFRS and this is specifically made for non-Yaeger students.
Even thought the new exam format is in place, there are still a lot of uncertainties on this subject. Please stay tuned for my update! Again, the best way for me to get in touch with you to become a member of my CPA exam e-Course (which by the way is completely free).
2011 CPA Exam Update By Roger Philipp
I have to say Roger has done a great job in updating everyone on the latest 2011 exam changes. Please click here to check out my book review on Wiley CPA Review 2011 Update.