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CPA Exam Changes: Your Guide to 2020 – 2024
CPA Exam changes 2020 is one of the most popular searches that CPA candidates make. (And for good reason.) Now, the CPA Exam is changing in 2020 and 2021 (and again in 2024) to ensure newly licensed CPAs continue to possess the knowledge and skills necessary to protect the public interest. I’ll go over these changes and also report on essential non-content related changes, too.
REG & the CARES Act
In the fourth quarter of 2020, the CARES Act will be added to the CPA Exam, primarily within REG, but there may be a little bit of the CARES Act covered within FAR as well.
2024 CPA Exam Changes
It looks like the CPA Exam is getting a major overhaul by 2024.
The AICPA and NASBA recently announced their plans for the “CPA Evolution” initiative. As business practices evolve in our rapidly changing world, accountants must evolve, too. The two organizations gathered input about the skills needed for future CPAs from stakeholders like the State Boards of Accountancy. The intent is to make sure that future CPAs will have the competencies they need to meet tomorrow’s accounting challenges.
CPA Evolution
The CPA Evolution will be a significant effort. NASBA and the AICPA will revise the Uniform CPA Examination Blueprints. They will also work with universities to develop a curriculum that reflects the proposed changes to the CPA Exam. And finally, a new CPA Exam will be launched by January 2024.
Core-Plus-Discipline Model
Under the changes, the path to CPA licensure will follow the new “Core-Plus-Discipline Model.”st Candidates will need to demonstrate knowledge in accounting, auditing, tax, and technology as before. However, in addition to these core areas, CPA candidates will also need to show deeper skills in one of these three areas:
- Business reporting and analysis
- Information systems and controls
- Tax compliance and planning
Changes to the Format
The format of the revised CPA Exam probably won’t be finalized for a while. However, based on preliminary information, it looks like it will still be a 4-part exam. The first three sections will assess your knowledge in the core content, while the fourth will test one “discipline” (listed above) of your choosing. So, for example, if you’re strong in tax, you may want to consider the “tax compliance and planning” discipline.
One CPA License
Even though you’ll be able to choose from three different disciplines in the Core-Plus-Discipline-Model, there will still just be one CPA license. That is, your CPA certificate and title won’t reflect which discipline you chose to specialize in for the exam.
What Does This Mean for You?
Basically, the CPA Evolution initiative means that the CPA Exam will change by January 2024. And since you will need to demonstrate your skills in the core content areas plus a sub-discipline, the CPA Exam could become much more challenging.
Therefore, if you are considering the CPA credential, I highly recommend that you pursue it in the next few years before the exam changes. After all, I can’t imagine that these changes will lead to an easier exam. Rather, probably the opposite is true. Tasks formerly given to entry-level CPAs are often outsourced or completed with the help of paraprofessionals or specialized accounting software. Therefore, even CPAs at the beginning of their career are expected to have more problem-solving skills and the ability to think critically and apply professional judgment.
Thoughts about the 2024 Changes from CPA Candidates and Experts
“The proposed changes by the AICPA and NASBA are new and somewhat still vague at this point. However, like any profession, accounting must continue to evolve and adapt to our changing business and technological advancements. We have no doubt that CPAs will still maintain their critical role in the trustworthiness of our financial reporting and that the new CPA specialty exams will make CPAs even stronger in their subject field of choice. These changes will solidify the CPA’s role in continuing to serve the public interest in the 21st century.”
—Gleim Publications, Inc.
The main force behind AICPA/NASBA’s decision seems to be addressing how fast the world is changing, mainly in technology. They stated processes are now more automated, so entry-level CPA’s must be able to have a deeper understanding of the concepts and apply them rather than calculate (makes sense). This will likely make it more competitive, which “protects the integrity of the credential” and indirectly addresses the rise in pass rates.
It also goes hand-in-hand with college programs putting a higher emphasis on technology, AIS, database management, etc. which had also greatly changed since the exam was originally created. The flexibility of the new initiative makes sense given how fast life is moving. The new choice of discipline will be interesting, I bet some may be more advantageous than others.
–Ashley A., CPA Exam Candidate
CPA Exam in India
The COVID-19 pandemic has hit the globe in unexpected ways. It’s even affected candidates who are trying to take the CPA Exam. Although some Prometric test centers are now operating at full capacity, some remain closed and others can only take a limited number of test-takers. In some areas, travel restrictions are still in place that affects when and if candidates can even get to test centers. Plus, some candidates have fallen ill or need to take time to help loved ones get through this crisis.
In response to the situation, the AICPA is taking efforts to keep all candidates healthy and safe while they take the exam. So, they are starting a pilot program to allow candidates to take the exam at Prometric centers in several Indian cities, including the following: Ahmedabad, Bangalore, Calcutta, Chennai, Hyderabad, Mumbai, New Delhi, and Trivandrum.
Candidates based in India can schedule to take any part of the U.S. CPA Exam in India in September and December 2020. For questions, please visit the AICPA’s announcement page. NASBA has also posted a free webinar to its website to go over the updates. Before scheduling your exam, you should also check the Prometric website to verify that your chosen test center is open.
CPA Exam in South Korea and Japan
Because COVID-19 has been so impactful to candidates that use the Guam testing center, CPA Exam testing has been expanded. To address this, testing opportunities are temporarily offered in the Republic of Korea and Japan. Candidates that are long-term residents or citizens of the following countries are allowed to take the CPA Exam in Korea or Japan from October 1, 2020 – March 31, 2021: China, Hong Kong, Japan, Macau, Mongolia, Republic of Korea, Republic of Singapore, Republic of the Philippines, Taiwan, and the U.S. In addition, the scheduling for Korea and Japan will open on September 24, 2020. For questions, please visit the AICPA’s announcement page.
COVID-19 CPA Exam Updates
Due to the novel coronavirus or COVID-19, Prometric testing centers, where the CPA Exam is taken, temporarily closed. However, many are now open at either full or limited capacity with new social distance guidelines.
Here’s What You Need to Know
- Many Prometric testing centers have reopened. However, depending on COVID-19 conditions and recommendations from local officials, some centers are only allowing a limited number of test-takers to maintain social distancing.
- You can check Prometric’s website for a list of sites and their current status. Here is a list of open test centers, and these are the sites that are closed because of COVID-19 or other reasons.
- Many candidates have had their CPA Exams canceled during the pandemic. It is possible that others will be canceled because many Prometric sites can now only accept a limited number of test-takers.
- If you have a CPA Exam testing date scheduled and Prometric is or will be closed on your exam date, you will not have to pay a rescheduling fee. Further, you’ll receive an email with information on how to complete CPA Exam rescheduling.
- If your CPA Exam was canceled, I have some good news. Starting on August 3, 2020, all cancellation and rescheduling fees will be reinstated. Basically, you won’t be penalized because you were unable to take your exam because of Prometric closures. Due to these special circumstances, you can reschedule your exam once for free.
- Plus, if you were unable to take your CPA Exam because you were ill from COVID-19, you are entitled to a refund of your exam fees. If this situation applies to you, go to the Prometric Contact Us page, fill out the “Contact Us” form, and click “Request a Refund.”
- Whether any expiring credit extensions will be granted greatly depends on your state board of accountancy’s acceptance of NASBA’s recommendation to extend affected candidates’ expiration dates through September 1, 2020. However, you can check the chart below for details!
The Prometric closure status is likely to evolve if COVID-19 hotspots continue to develop around the globe. I’ll update this article with any new information as I have it. Please be safe.
CPA State Board CPA Exam Credit Extension Guide
Since so many candidates have been affected by the COVID pandemic and Prometric closures, the Boards of Accountancy in most jurisdictions are granting credit extensions. When you pass a section of the 4-part CPA Exam, you receive a “credit” for passing that part. The expiration date of your credit will be listed with your score. Basically, once you pass your first section, you have 18 months to pass the rest. Normally, after those 18 months pass and you haven’t passed all 4 sections, your credits will start to expire.
Since so many candidates had credits that were set to expire during the pandemic, NASBA made a recommendation that Boards of Accountancy develop plans to extend candidates’ credits. And most boards have established extensions because candidates have been unable to continue to sit for their exams.
NABSA has published the updated policies for each jurisdiction. Here’s a summary:
Most jurisdictions are automatically granting extensions to December 31, 2020, for credits with expiration dates from April 1, 2020, to December 30, 2020.
Many other jurisdictions also automatically granting extensions for credits set to expire in other timeframes. Massachusetts, for example, is automatically giving extensions until September 30, 2020, for credits set to expire from April 1 to June 30, 2020.
Other state boards, like Idaho, have declared that their staff have the authority to grant extensions for reasons related to the COVID pandemic.
Some states, like Indiana and Vermont, will review extension requests on a case-by-case basis.
If your jurisdiction is automatically granting extensions, you don’t need to do anything. Your NASBA CPA Candidate Account will be updated, but please allow 4 weeks for everything to be processed and for your records to reflect the new credit expiration dates. However, if your state is only reviewing extensions at a candidate’s request, you’ll need to contact your Board of Accountancy.
| STATE or JURISDICTION | Current Board Policy on CPA Exam Credit Extensions |
| AK | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| AL | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| AR | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| AZ | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| CA | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| CO | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| CT | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| DC | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| DE | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| FL | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| GA | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| GU | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| HI | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| IA | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| ID | On April 28, 2020, the Idaho Board made a Proclamation already sent to candidates that Board Staff has the authority to grant credit extensions for exams passed that are expiring due to a COVID related matter, including but not limited to illness, the closure of a testing site or the unavailability of seats in an open site in 90 increments. This Proclamation is in effect through the Governor’s current Orders relating to COVID-19 or any further Order from the Governor. |
| IL | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| IN | Board will review requests for credit extensions on a case-by-case basis. |
| KS | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| KY | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| LA | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| MA | Credit with expiration dates from April 1, 2020 – June 30, 2020 will be extended until September 30, 2020. |
| MD | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| ME | Credit with expiration dates from March 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| MI | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| MN | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| MO | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| MS | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| MT | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| NC | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| ND | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| NE | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| NH | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| NJ | All credit expiring April 1, 2020 through June 30, 2020 will be extended 90-days. |
| NM | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| NV | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| NY | Credit with expiration dates from April 1, 2020 to September 30, 2020 will be extended until December 31, 2020. |
| OH | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| OK | All credit expiring April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| OR | Credit with expiration dates from March 15, 2020 to June 30, 2020 will be extended until September 30, 2020. Anything outside of that timeframe is case-by-case. |
| PA | Due to the COVID-19 emergency disaster declaration signed by the Governor on March 6, 2020, a waiver was granted of the requirement that CPA candidates must complete all parts of the CPA examination with an 18-month period. Candidates whose exam credits expire during the time of the emergency declaration will be granted an extension which lasts for the duration of the emergency plus an additional 180 days from the end of the emergency. This exam credit extension replaces the 90-day extension that was recently granted to CPA candidates by way of letter from the Board. |
| PR | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| RI | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| SC | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| SD | Board will review requests for credit extensions on a case-by-case basis. |
| TN | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| TX | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| UT | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| VA | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| VI | All credit expiring April 1, 2020 through June 20, 2020 will be extended 90-days. |
| VT | Board will review requests for credit extensions on a case-by-case basis. |
| WA | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| WI | Credit with expiration dates from March 16, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| WV | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| WY | All credits expiring April 1, 2020 through June 30, 2020 will be extended by 90 days. All credits expiring July 1, 2020 through August 31, 2020 have been extended by 90 days. |
The Purpose for the CPA Exam Changes 2020
Specifically, newly licensed CPAs will be required to demonstrate increased knowledge and skills related to distinct technology. So, if your journey to becoming a CPA includes taking an exam section during this time, then it is my pleasure to share what I know about the proposed changes to help you PASS.
The mission of the CPA Exam is to provide reasonable assurance to boards of accountancy that candidates passing the exam possess the minimum level of technical knowledge and skills necessary for a newly licensed CPA to protect the public interest in today’s business and financial environment.
To ensure the knowledge, skills, and tasks assessed on the CPA Exam continue to reflect the current practices of newly licensed CPAs, the AICPA’s Board of Examiners (BOE) conducts periodic practice analyses.
In 2019, the BOE conducted its most recent practice analysis:
(1) to explore the impact of technology on the work of newly licensed CPAs, and
(2) to identify areas where the CPA Exam has become too broad and not sufficiently focused on the core knowledge and skills required of newly licensed CPAs.
What the 2019 BOE Practice Analysis Revealed
The practice analysis identified several findings related to technology’s impact on newly licensed CPAs. Additionally, these findings broadly demonstrated a need for newly licensed CPAs to possess increased knowledge and skills related to the following three areas:
- Understanding the business (specifically, understanding business processes, information systems, data flows, and risks and related controls)
- Digital and data-driven mindset including data analytics (this mindset includes understanding the completeness, accuracy, and relevance of data)
- Reliance on System and Organization Controls (SOC 1) reports (as businesses are increasingly outsourcing their business processes and information systems to third parties)
Accordingly, content will be added to the CPA Exam in response to the technology findings above.
The practice analysis also identified several findings related to areas where the CPA Exam was too broad and not sufficiently focused on the core knowledge and skills required of newly licensed CPAs.
Therefore, in response to these findings, the applicable content will either be removed from the CPA Exam or assessed at a more appropriate skill level (i.e., remembering and understanding, application, analysis, evaluation).
Overview of the Changes
Since the CPA Exam is changing both in 2020 and 2021, I’ve broken out the changes by year.
2020 CPA Changes
| AUD |
|
| BEC | Enhanced IT governance material will be included, specifically related to updates for COBIT 2019. |
| FAR | No changes in 2020 |
| REG | The CARES Act caused a number of REG changes in 2020, and here are the most meaningful ones:
|
As you may have heard, the CARES Act will be fair game on October 1, 2020. REG will feel the bulk of the affect, but it the changes impact FAR to some degree as well.
However, all the non-REG changes were implemented on July 1, 2020.
CPA Exam 2021
The planned changes for 2021 affect every section. In contrast, only AUD changed in 2020.
| AUD | There are 22 high-level changes to AUD. As presented in further detail below, these changes include the following:e
|
| BEC | There are 7 high-level changes to BEC. As presented in further detail below, these changes include the following:
|
| FAR | There are 10 high-level changes to FAR. As presented in further detail below, these changes include the following:
|
| REG | There are 7 high-level changes REG. As presented in further detail below, these changes include the following:
|
AUD will face the most changes in 2021. However, FAR receives the most changes after AUD, and BEC changes are not immaterial either. Moreover, there are a material amount of REG changes, but these changes are likely very positive for candidates who struggle with taxation.
What Is Not Changing on the 2020 and 2021 Versions of the CPA Exam?
There will not be significant changes to any of the following:
Aggregate CPA Exam Time
For better or worse, the total time per CPA Exam section remains the same in 2020 and 2021.
| Section | Section Time |
| AUD | 4 hours |
| BEC | 4 hours |
| FAR | 4 hours |
| REG | 4 hours |
Content allocation ranges
The AICPA is not expecting to significantly change the content allocation ranges in 2020 or 2021. Therefore, the current content allocation ranges for each section appear below. If any changes occur to these ranges in 2020 or 2021, such changes will be communicated when the new Blueprints are published.
AUD
| Content area | Allocation | |
| Area I | Ethics, Professional Responsibilities and General Principles | 15-25% |
| Area II | Assessing Risk and Developing a Planned Response | 20–30% |
| Area III | Performing Further Procedures and Obtaining Evidence | 30–40% |
| Area IV | Forming Conclusions and Reporting | 15-25% |
BEC
| Content area | Allocation | |
| Area I | Corporate Governance* | 17–27% |
| Area II | Economic Concepts and Analysis | 17–27% |
| Area III | Financial Management | 11–21% |
| Area IV | Information Technology | 15-25% |
| Area V | Operations Management | 15-25% |
*In 2020, the name of Area I will continue to be “Corporate Governance.” In 2021, however, the name of Area I will change to “Business Process, Risks and Controls.”
FAR
| Content area | Allocation | |
| Area I | Conceptual Framework, Standard-Setting and Financial Reporting | 25–35% |
| Area II | Select Financial Statement Accounts | 30–40% |
| Area III | Select Transactions | 20–30% |
| Area IV | State and Local Governments | 5–15% |
REG
| Content area | Allocation | |
| Area I | Ethics, Professional Responsibilities and Federal Tax Procedures | 10–20% |
| Area II | Business Law | 10-20% |
| Area III | Federal Taxation of Property | 12–22% |
| Area IV | Transactions Federal Taxation of Individuals | 15-25% |
| Area V | Federal Taxation of Entities | 28-38% |
Skill allocation ranges
Similar to the content allocation ranges, the skill allocation ranges for each section of the CPA Exam are not expected to change significantly in 2020 or 2021. Therefore, the current skill allocation ranges for each section are presented below.
However, if any changes occur to these ranges in 2020 or 2021, such changes will be communicated when the new Blueprints are published.
| Section | Remembering and Understanding | Application | Analysis | Evaluation |
| AUD | 30-40% | 30-40% | 15-25% | 5-15% |
| BEC | 15-25% | 50-60% | 20-30% | – |
| FAR | 10-20% | 50-60% | 25-35% | – |
| REG | 25-35% | 35-45% | 25-35% | – |
CPA Exam Score Reporting
It is anticipated that the CPA Exam changes will not result in delayed score reporting. Therefore, you can utilize our CPA Exam score release schedule regardless of when you sit for the exam.
Extent of the 2021 Changes
The extent of the 2021 CPA changes for each section is presented in detail below. So, in total, there are 46 high-level changes to the CPA Exam divided as follows:
| AUD | 22 |
| BEC | 7 |
| FAR | 10 |
| REG | 7 |
| Total | 46 |
The main takeaways include the following:
- All sections either had content removed or reassessed at a lower skill level to better reflect the work of a newly licensed CPA.
- AUD and BEC were the sections most affected by the addition of new content related to technology.
- Specific topics in FAR no longer assess the preparation of journal entries.
- REG no longer assesses estate taxation, alternative minimum tax, or certain topics related to trusts.
AUD Proposed Blueprint Changes
| Change
Number |
Area/Group/Topic | Proposed Changes |
| AREA I — ETHICS, PROFESSIONAL RESPONSIBILITY AND GENERAL PRINCIPLES | ||
| Group B: Ethics, independence and professional conduct. | ||
| 1 | Topic 3: Requirements of the Government Accountability Office and the Department of Labor. | Remove: content assessed at the application skill level (two tasks).
|
| Group C: Terms of engagement. | ||
| 2 | Topic 1: Preconditions for an engagement. | Remove: entire topic (four tasks).
|
| Group E: Communications with management and those charged with governance. | ||
| 3 | Topic 3: All other matters. | Remove: entire topic (three tasks).
|
| 4 | Group F: Communication with component auditors and parties other than management and those charged with governance. | Remove: entire group (two tasks).
|
| 5 | Group G: A firm’s system of quality control, including quality control at the engagement level. | Revise: entire group (two tasks).
|
| AREA II — ASSESSING RISK AND DEVELOPING A PLANNED RESPONSE | ||
| Group A: Planning an engagement. | ||
| 6 | Topic 2: Developing a detailed engagement plan. | Remove: content assessed at the analysis skill level (1 task).
|
| Group B: Understanding an entity and its environment. | ||
| 7 | Topic 1: External factors, including the applicable financial reporting framework. | Expand: scope of Topic 1 to emphasize technology as an external factor. |
| Topic 2: Internal factors, including nature of the entity, ownership and governance structures and risk strategy. | Expand: scope of Topic 2 to include content on the following:
|
|
| Group C: Understanding an entity’s internal control. | ||
| 8 | Topic 1: Control environment and entity-level controls. | Revise: to include IT general controls and associated documentation (moved from Group C, Topic 4 below). |
| Topic 2: Flow of transactions and design of internal controls. | Revise: content on internal control walkthroughs and documenting the flow of transactions will be revised to include significant business processes and how they relate to the financial statements, as well as examples of types of documentation (i.e., flowcharts, process diagrams, etc.).
Add: content relating to obtaining an understanding of the IT systems that are used for financial reporting. Revise: content on identification and documentation of key controls will be revised to include
Revise: content on evaluating internal controls and whether the internal controls are effectively designed and placed in operation will be revised to include reference to manual and application controls. |
|
| Topic 3: Implications of an entity using a service organization. | Add: content regarding SOC 1 (Type 2). | |
| Topic 4: Information Technology (IT) general and application controls. | Remove: Topic is eliminated, and its content will be moved to Topics 1 and 2 above. | |
| Group E: Identifying and assessing the risk of material misstatement, whether due to error or fraud, and planning further procedures responsive to identified risks. | ||
| 9 | Topic 3: Further procedures responsive to identified risks. | Add: content regarding the use of audit data analytic techniques to identify transactions that may have a higher risk of material misstatement. |
| 10 | Group G: Planning for and using the work of others, including group audits, the internal audit function and the work of a specialist. | Remove: content related to the use of the internal audit function (two tasks).
Add: content related to using the work of an IT auditor . |
| Group H: Specific areas of engagement risk. | ||
| 11 | Topic 3: Related parties and related party transactions. | Remove: content assessed at the analysis skill level (1 task).
|
| AREA III — PERFORMING FURTHER PROCEDURES AND OBTAINING EVIDENCE | ||
| 12 | Group A: Understanding sufficient appropriate evidence. | Revise: change Group A title to “Sufficient appropriate evidence.”
Expand: scope of Group A to include content focused on determining the sources of sufficient appropriate evidence and identifying procedures to validate the completeness and accuracy of data. Add: content on the use of professional skepticism and judgment in analyzing corroborating or contradictory evidence and evaluating whether sufficient appropriate evidence has been obtained. |
| 13 | Group B: Sampling techniques. | Revise: change Group B title to “General procedures to obtain sufficient appropriate evidence.”
Add: the concept of using automated tools and audit data analytics in audit sampling. Add: content related to the use of automated tools and techniques related to recalculation. Add: the following content will be added from Group C
|
| 14 | Group C: Performing specific procedures to obtain evidence. | Revise: change Group C title to “Specific procedures to obtain evidence.”
Remove: Topics 3-5 will be moved to Group B above. Remove: Topic 6 (All other procedures) is eliminated. Add: new Topic titled “Audit data analytics.” Added content includes
|
| Group D: Specific matters that require special consideration. | ||
| 15 | Topic 1: Opening balances. | Remove: entire Topic (1 task).
|
| 16 | Topic 2: Investments in securities and derivative instruments. | Remove: derivative content.
(I Pass note: it should follow that the title of Topic 2 should be revised accordingly; however, a proposed title change has not yet been communicated) |
| 17 | Topic 4: Litigation, claims and assessments. | Remove: content assessed at the analysis skill level (1 task).
|
| 18 | Topic 5: An entity’s ability to continue as a going concern. | Remove: content assessed at the application skill level (1 task).
|
| 19 | Group F: Written representations. | Remove: content assessed at the application skill level (1 task).
|
| 20 | Group G: Subsequent events and subsequently discovered facts. | Revise: change Group G title to “Subsequent events.”
Remove: content on subsequently discovered “facts.” |
| IV — FORMING CONCLUSIONS AND REPORTING | ||
| 21 | Group D: Reporting on compliance. | Remove: content assessed at the application skill level (2 tasks).
|
| 22 | Group E: Other reporting considerations. | Remove: Topics 5 (Single Statements), 7 (Letters for underwriters and filings with the SEC), and 8 (Alerts that restrict the use of written communication) will be eliminated. |
BEC Proposed Blueprint Changes
| Change
Number |
Area/Group/Topic | Proposed Changes |
| 23 | AREA I — CORPORATE GOVERNANCE | Rename: “Area I: Corporate Governance” will be renamed as “Area I: Business Process, Risks, and Controls.” |
| Group A: Internal control frameworks. | Revise: to include the Sarbanes-Oxley Act of 2002 as a new Topic (moved from Group C below) | |
| Group C: Other regulatory frameworks and provisions. | Remove: current content on the Sarbanes-Oxley Act of 2002 will be moved to Group A above as a new Topic.
Add: new Group C titled “Business processes and transaction level-risks and controls.” Content added to this new group includes the following
|
|
| 24 | AREA II — ECONOMIC CONCEPTS AND ANALYSIS | |
| Group A: Economic and business cycles – measures and indicators. | Remove: general macroeconomics content. | |
| Group B: Market influences on business. | Remove: general macroeconomics content. | |
| AREA III — FINANCIAL MANAGEMENT | ||
| 25 | Group A: Capital structure. | Remove: content assessed at the analysis level (1 task).
|
| AREA IV — INFORMATION TECHNOLOGY | ||
| Group A: Understanding of information technology (IT). | ||
| 26 | Topic 1: Organization and governance. | Add: content on understanding the need for SOC 1 reports for outsourced IT functions. |
| 27 | Topic 3: Data. | Add: Topic 3 – Data will become its own Group, and expanded to include content on
|
| 28 | Group B: Risk associated with IT. | |
| Topic 2: System development and maintenance. | Revise: Topic 2 will focus on concepts related to controls over software changes, and will be assessed at the remembering and understanding skill level instead of the application skill level. | |
| 29 | Group C: Controls that respond to risks associated with IT. | |
| Topic 4: Continuity and recovery plans. | Revise: Topic 4 will focus on recalling concepts related to business resiliency, and will be assessed at the remembering and understanding skill level instead of the application skill level. | |
FAR Proposed Blueprint Changes
| Change
Number |
Area/Group/Topic | Proposed Changes |
| AREA I — CONCEPTUAL FRAMEWORK, STANDARD-SETTING, AND FINANCIAL REPORTING | ||
| Group B: General-purpose financial statements: for-profit business entities. | ||
| 30 | Topic 8: Discontinued operations. | Remove: Topic 8 will be removed, and discontinued operations will be added to Topic 2 (Income statement/statement of profit or loss) as an example to the multi-step income statement task statement. |
| 31 | Topic 9: Going concern. | Remove: Topic 9 will be removed. |
| 32 | Group E: Financial statements of employee benefit plans. | Remove: content assessed at the application skill level (2 tasks)
|
| AREA II — SELECT FINANCIAL STATEMENT ACCOUNTS | ||
| Group K: Compensation and benefits. | ||
| 33 | Topic 1: Compensated absences. | Remove: Topic 1 will be removed, and content on vacation accruals will now be assessed under Area II, Group G (Payables and accrued liabilities). |
| 34 | Topic 2: Retirement benefits. | Remove: Topic 2 will be removed. |
| AREA III — SELECT TRANSACTIONS | ||
| 35 | Group D: Derivatives and hedge accounting (e.g., swaps, options, forwards). | Remove: content assessed at the application skill level (2 tasks)
|
| 36 | Group L: Differences between IFRS and U.S. GAAP. | Remove: Group L will be removed. |
| AREA IV — STATE AND LOCAL GOVERNMENTS | ||
| Group B: Format and content of the financial section of the comprehensive annual financial report (CAFR). | ||
| 37 | Topic 1: Government-wide financial statements. | Remove: content assessed at the application skill level (2 tasks)
|
| 38 | Topic 2: Governmental funds financial statements.
Topic 3: Proprietary funds financial statements. Topic 4: Fiduciary funds financial statements. |
Revise: Topics 2-4 will be combined to form a new Topic titled “Fund financial statements.”
Remove: content assessed at the application skill level, which required the preparation of specific financial statements. |
| Group C: Deriving government-wide financial statements and reconciliation requirements. | Remove: Group C will be removed. Content will be moved to Group B as a new Topic, and will be assessed at the remembering and understanding skill level instead of the application skill level. | |
| 39 | D. Typical items and specific types of transactions and events: measurement, valuation, calculation and presentation in governmental entity financial statements | |
| Topic 1: Net position and components thereof.
Topic 2: Fund balances and components thereof. Topic 5: Interfund activity, including transfers. |
Revise: content will move to Group B, and will be assessed at the remembering and understanding skill level instead of the application skill level. | |
| Topic 8: Special items. | Remove: Topic 8 will be removed. | |
| Topic 3: Capital assets and infrastructure assets.
Topic 4: General and proprietary long-term liabilities. Topic 6: Nonexchange revenue transactions. Topic 7: Expenditures and expenses. Topic 9: Budgetary accounting and encumbrances. |
Revise: these Topics will no longer assess the preparation of journal entries. | |
REG Proposed Blueprint Changes
| Change
Number |
Area/Group/Topic | Proposed Changes |
| AREA II — BUSINESS LAW | ||
| 40 | Group C: Debtor-creditor relationships. | |
| Topic 1: Rights, duties and liabilities of debtors, creditors and guarantors.
Topic 2: Bankruptcy and insolvency. Topic 3: Secured transactions. |
Remove: content assessed at the application level in Topics 2 and 3.
Revise: the content in Topic 1 and the remembering and understanding skill level content from Topics 2 and 3 will be combined in Group C. There will no longer be separate topics in Group C. |
|
| Group D: Government regulation of business. | ||
| 41 | Topic 1: Federal securities regulation. | Remove: Topic 1 will be removed. |
| AREA III — FEDERAL TAXATION OF PROPERTY TRANSACTIONS | ||
| 42 | Group C: Estate and gift taxation. | Rename: Group C will be renamed “Gift Taxation.”
Revise: There will no longer be separate topics in Group C. Remove: content on estate taxation. |
| AREA IV — FEDERAL TAXATION OF INDIVIDUALS | ||
| 43 | Group H: Alternative minimum tax | Remove: Group H will be removed. |
| AREA V — FEDERAL TAXATION OF ENTITIES | ||
| 44 | Group C: C Corporations. | |
| Topic 2: Net operating losses and capital loss limitations. | Remove: content assessed at the analysis skill level (2 tasks).
|
|
| 45 | Group G: Trusts and estates. | |
| Topic 2: Income and deductions. | Remove: Topic 2 will be removed. | |
| Topic 3: Determination of beneficiary’s share of taxable income. | Remove: Topic 3 will be removed. | |
| 46 | Group H: Tax-exempt organizations. | |
| Topic 2: Obtaining and maintaining tax-exempt status. | Remove: Topic 2 will be removed. | |
| Topic 3: Unrelated business income. | Revise: Topic 3 will be limited to assessing the understanding of unrelated business income for a tax-exempt organization rather than calculating it. | |
Conclusion
In conclusion, while the CPA Exam changes are always a cause for concern, I do not anticipate that the 2020 and 2021 changes will make the exam any more difficult. And I also doubt that we’ll see any material changes in the CPA Exam pass rates as a result of these changes.
In fact, for those CPA candidates who despise REG, you may even find that the 2021 version is less difficult than the previous one. So, in this case, the REG changes to remove testing on AMT are especially positive.
Additionally, updating an exam to test on technology and analytics is becoming more commonplace. What’s more, it’s also becoming the norm to remove irrelevant content from exams that cover principles or areas that accountants aren’t using on a frequent basis.
2024 Difficulty
However, it’s possible that the 2024 CPA Exam changes could make the exam more difficult for many candidates. Unless you had additional college courses or significant practical experience in one of the “disciplines” in the new “Core-Plus-Discipline” Model, you might find the future version of the CPA Exam harder than the current one. Therefore, if you thinking about going after a CPA, I would do it now. After all, we don’t yet know the full impact that the CPA Evolution initiative will have on the exam or the pass rates.
Changes to Accounting Exams Becoming the Norm
For instance, in 2019, the IIA released CIA exam changes that aligned the exam content with more relevant technology information. Similarly, the ICMA published CMA exam changes that allowed the exam to focus more on technology and analytics. Also, the CMA exam dropped topics that weren’t considered relevant for CMAs, like internal auditing. So, what the AICPA is doing to update the CPA Exam is quite expected at this point.
Planning for the Changes
Now, should these changes cause you to plan for your exams any differently? Not really. However, I recommend you personally assess how the proposed changes may affect you and plan accordingly. For example, if the changes will give you an advantage, then wait to take the exam until the changed version becomes available. Conversely, if the changes would put you at a disadvantage, plan to take the exam(s) before the changes take effect.
About the Author Stephanie Ng
I am the author of How to Pass The CPA Exam (published by Wiley), and I also passed all 4 sections of the CPA Exam on my first try. Additionally, I have led webinars, such as for the Institute of Management Accountants, authored featured articles on websites like Going Concern and AccountingWeb, and I'm also the CFO for the charity New Sight. Finally, I have created other accounting certification websites to help mentor non-CPA candidates. I have already mentored thousands of CPA, CMA, CIA, EA, and CFA candidates, and I can help you too!
