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CPA Exam Changes: Your Guide to 2022 – 2024
CPA Exam changes 2022 is one of the most popular searches that CPA candidates make. (And for good reason.) After all, the CPA Exam changed in 2021 (and will change 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, including the new CPA Exam changes from July 1, 2022. And then, I’ll also report on essential non-content changes (like exam testing sites), too.
Why the Need for CPA Exam Changes?
The AICPA announces minor changes to the CPA Exam from time to time. For example, in the fourth quarter of 2020, the CARES Act was added to the CPA Exam, primarily within REG. So, when major tax policies are introduced or other significant changes appear in the careers of newly licensed CPAs, the CPA Exam will reflect those adjustments.
But in 2021, the exam underwent even more noteworthy modifications. Plus, the CPA Exam had some minor revisions in July 2022. And the exam is being updated in 2024, too. So, let’s review those updates.
July 2022 CPA Exam Updates
The CPA Exam content is occasionally modified mid-year when rules or standards evolved, and that’s what happened in 2022. Specifically, here’s a list of updates made to the CPA Exam on July 1, 2022:
- AUD: The most significant adjustments to AUD include the format of the auditor’s reports used for examination and review engagements per the SSAE standards. Other updates address the emerging technologies used by auditors and evolving concepts of professional skepticism.
- BEC: No changes
- FAR: The July 2022 FAR changes reflect minor industry updates, including renaming the CAFR (Comprehensive Annual Financial Report) to the ACFR (Annual Comprehensive Financial Report). Other alterations are related to standards for hedge accounting.
- REG: Edits to the REG sections include revised thresholds and deductions that can change each year due to inflation. Another minor revision is related to NOLs (Net Operating Losses) and current IRS guidance.
CPA Exam International Testing: 2022 Changes
NASBA, AICPA, and Prometric recently announced changes to polices regarding international testing. Depending on your jurisdiction, most candidates are able to take the CPA Exam at any international location where the exam is offered as of June 2, 2022.
In the past, candidates’ options were limited based on citizenship and residency. For example, before June 2022, candidates living in Japan could take the CPA Exam in the U.S. or Japan. However, they couldn’t test in other countries like India or Brazil. This policy update gives you much more flexibility to take the CPA Exam!
Note: This new policy only applies to “international Prometric testing locations” and does include testing centers in the United States, Canada, Puerto Rico, Guam, and the Virgin Islands. Therefore, the international testing centers are located in the following countries:
- Bahrain
- Brazil
- Egypt
- England
- Germany
- India
- Ireland
- Israel
- Japan
- Jordan
- Kuwait
- Lebanon
- Nepal
- Republic of Korea
- Saudi Arabia
- Scotland
- United Arab Emirates
2024 CPA Exam Changes
It looks like the CPA Exam is getting a major overhaul by 2024 as well.
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 launch by January 2024.
Core-Plus-Discipline Model
Under the changes, the path to CPA licensure will follow the new “Core-Plus-Discipline Model.” 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.
CPA Evolution Transition Policy
NASBA and the AICPA recently announced a new transition policy regarding the CPA Evolution initiative that will be implemented in January 2024. As NASBA notes:
The purpose of the CPA Exam transition policy is to allow you to continue your CPA Exam journey from where you are when we transition to the 2024 CPA Exam.
First of all, if you pass all four sections (AUD, BEC, FAR, and REG) before December 31, 2023, the CPA Evolution will not impact you.
However, if you will be in the middle of your journey, the transition policy will definitely affect you. For instance, if you pass one, two, or three sections before the end of 2023 and plan to pass the fourth in 2024, take notes about how the CPA Evolution will affect you. Basically, the transition policy maps out your path in case you don’t pass all sections prior to January 2024. And keep in mind that this is a hard cutoff—no exceptions will be given. You don’t have to worry if you plan ahead, though. Once the close turns over to 2024, you won’t lose your credits, as long as you’re still inside your 18-month rolling window and you follow the path outlined by NASBA and the AICPA.
Source: NASBA
Mapping your CPA journey: 2024 and beyond
As you can see from the chart above, the transition policy maps out your path if you plan to pass some of your CPA Exam sections after January 1, 2024. The good news is that you DON’T need to re-take your passed exam sections after 2024, as long as you’re still within your 18-month time frame.
Basically, you just need to remember that the “old” exam sections (AUD, BEC, FAR, and REG) loosely translate to “new” sections. Furthermore, some old sections (AUD, FAR, and REG) align with the new “core” requirement of the Core + Discipline model, while BEC is more related to the “discipline” requirement.
To put it another way, here’s how your 2023 CPA credits will be applied to the new Core + Discipline model:
- AUD credits will be applied to your core requirement of Auditing and Attestation
- FAR credits will count for the core Financial Accounting and Reporting requirement
- REG credits will transition toward the new requirement for Taxation and Regulation
- Unlike the other sections, your BEC credits will not count toward your “core” requirement but your “discipline” requirement instead. Furthermore, you can chose which of the three disciplines to apply your BEC credits. Your choices include: Business Analysis and Reporting (BAR), Information Systems and Controls (ISC), and Tax Compliance and Planning (TCP).
Additionally, keep in mind that NASBA clearly states that despite the transition, “the 18-month rule remains in effect for all exam sections.”
Questions about the CPA Evolution or Transition Policy?
I know that the 2024 CPA Exam changes can be a bit intimidating if you will be in the middle of your CPA journey during the transition. If you have questions, you can always drop me a line. Or, contact NASBA at Feedback@EvolutionofCPA.org.
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 and Nepal
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 most Prometric test centers around the world are now operating at full capacity, the centers can still close or operate at limited capacity due to local restrictions.
Of course, remember that with the new international testing rules, you don’t have to test in India or Nepal if that’s where you live. Instead, you can take the CPA Exam at any international testing location.
Plus, you can find a helpful chart about the international administration of the CPA Exam on NABSA’s website. Before scheduling your exam, you should also check the Prometric website to verify that your chosen test center is open.
CPA Exam in the Republic of Korea and Japan
In recent years, CPA Exam testing was expanded to the Republic of Korea and Japan. (In the past, many candidates from these countries used the Guam testing center.) But now, changes in policies allow most candidates (depending on your jurisdiction) to take the exam at any international test location. As a result, you have lots of options if you live in Japan or the Republic of Korea.
COVID-19 CPA Exam Updates
During the peak of the COVID-19 pandemic, 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 and vaccination 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.
- Furthermore, many Prometric sites have restrictions regarding showing proof of a COVID-19 vaccination or a recent negative test. So again, be sure to check this list of Prometric updates well before your exam date.
- 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.
- 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.”
- In 2020, many state boards of accountancy granted extensions to expiring credits due to the pandemic. (A chart of these 2020 extensions appears below.) However, we don’t yet know if extensions will be granted in the future.
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 granted credit extensions in 2020 and 2021. 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 established extensions because candidates were unable to continue to sit for their exams.
Here’s a summary of 2020 and 2021 extension policies
Since the future of the pandemic is unknown, I’ve included a summary of the 2020 and 2021 credit extension policies. I hope this helps you understand how NASBA, the AICPA, and Boards of Accountancy work together to make sure that all candidates have fair and safe access to the CPA Exam.
Most jurisdictions automatically granted extensions to December 31, 2020, for credits with expiration dates from April 1, 2020, to December 30, 2020.
Many other jurisdictions also automatically granted extensions for credits set to expire in other timeframes. Massachusetts, for example, automatically gave extensions until September 30, 2020, for credits set to expire from April 1 to June 30, 2020.
Other state boards, like Idaho, declared that their staff had the authority to grant extensions for reasons related to the COVID pandemic.
Some states have reviewed extension requests on a case-by-case basis.
| STATE or JURISDICTION | Former Board Policy on CPA Exam Credit Extensions |
| AK | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until June 30, 2021. |
| AL, AR, AZ, CO, DC, DE, GA, GU, IA, KS, KY, LA, MA, MT, ND, NM, NV, OH, OK, RI, SC, TX, UT, VA, WA, and WV | Credit with expiration dates from April 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| CA, FL, IN | Credit with expiration dates from April 1, 2020 to June 30, 2021 will be extended until June 30, 2021 |
| CT | Credit with expiration dates from April 1, 2020 to September 30, 2021 will be extended until December 31, 2021 |
| HI, IL, MD, MI | Credit with expiration dates from April 1, 2020 to June 29, 2021 will be extended until Jun3 30, 2021 |
| 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. |
| MO, NH, SD, VT | Board will review requests for credit extensions on a case-by-case basis. |
| ME | Credit with expiration dates from March 1, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| MN, NE, PR, TN | Credit with expiration dates from December 31, 2020 to September 29, 2021 will be extended until September 30, 2021. |
| MS | The Board has authorized Board staff to approve exam grade expiration extensions for candidates impacted by test site closures during the COVID pandemic and with grades expiring through September 2021. Such extensions will be for no more than 90 dates. Candidates should submit their request for grade extensions to administrator@msbpa.ms.gov. |
| NC | Credit with expiration dates from December 31, 2020 to March 30, 2021 will be extended until March 31, 2021. |
| NJ | Credit with expiration dates from March 9, 2020 to December 30, 2020 will be extended until December 31, 2020 |
| NY | Credit with expiration dates from June 30, 2020 through March 31, 2021 will be extended until June 30, 2021. |
| 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 a letter from the Board. |
| VI | All credit expiring April 1, 2020 through June 20, 2020 will be extended 90-days. |
| WI | Credit with expiration dates from March 16, 2020 to December 30, 2020 will be extended until December 31, 2020. |
| WY | All candidates who sat and passed prior to July 14th with unexpired credit will have those credits extended by 6 months from their original date. |
What about future extensions?
As for now, no additional extensions are planned. Of course, if more extensions are granted at a later date, I’ll keep you updated.
In the future, if your jurisdiction automatically grants 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.
The Purpose for the CPA Exam Changes 2021
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 business processes, including information systems, data flows, and risks and related controls
- Digital and data-driven mindset, including data analytics and understanding the completeness, accuracy, and relevance of data
- Reliance on System and Organization Controls (SOC 1) reports since 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 changed in 2021, I’ve broken out the changes below.
CPA Exam 2021
The changes for 2021 affected every section. In contrast, only AUD changed in 2020.
| AUD | There are 20 high-level changes to AUD. As presented in further detail below, these changes include the following:
|
| BEC | There are 7 high-level changes to BEC. As presented in further detail below, these changes include the following:
|
| FAR | There are 6 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, the BEC and FAR changes are not immaterial either. Moreover, there are significant REG changes. But, these changes are likely very positive for candidates who struggle with taxation.
What Is Not Changing on the 2022 Version 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 2022.
| Section | Section Time |
| AUD | 4 hours |
| BEC | 4 hours |
| FAR | 4 hours |
| REG | 4 hours |
Content allocation ranges
The updated 2022 content allocation ranges for each section appear below.
AUD
| Content area | Allocation | |
| Area I | Ethics, Professional Responsibilities and General Principles | 15-25% |
| Area II | Assessing Risk and Developing a Planned Response | 25–35% |
| Area III | Performing Further Procedures and Obtaining Evidence | 30–40% |
| Area IV | Forming Conclusions and Reporting | 10-20% |
BEC
| Content area | Allocation | |
| Area I | Enterprise Risk Management, Internal Controls and Business Processes* | 20–30% |
| Area II | Economics | 15-25% |
| Area III | Financial Management | 10–20% |
| Area IV | Information Technology | 15-25% |
| Area V | Operations Management | 15-25% |
*In 2021, the name of Area I changed from “Corporate Governance” to “Enterprise Risk Management, Internal Controls and Business Processes.”
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 only changed slightly in 2021. Therefore, the current 2022 skill allocation ranges for each section are presented below.
| Section | Remembering and Understanding | Application | Analysis | Evaluation |
| AUD | 25-35% | 30-40% | 20-30% | 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 40 high-level changes to the CPA Exam divided as follows:
| AUD | 20 |
| BEC | 7 |
| FAR | 6 |
| REG | 7 |
| Total | 40 |
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 was 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.
The changes that were implemented on July 1, 2021, are outlined below. You’ll note that some of the change numbers are missing. Why? Well, 46 changes were initially proposed but only 40 made the final version of the Blueprints.
AUD Blueprint Changes for July 1, 2021
| Change
Number |
Area/Group/Topic | Blueprint Changes – July 1, 2021 |
| AREA I — ETHICS, PROFESSIONAL RESPONSIBILITY AND GENERAL PRINCIPLES | ||
| Group C: Terms of engagement. | ||
| 2 | Topic 1: Preconditions for an engagement. | Remove: application skill level task statements for the testing of preconditions for an engagement. |
| Group E: Communications with management and those charged with governance. | ||
| 3 | Topic 3: All other matters. | Remove: the entire topic related to other matters (three tasks).
· Identify matters, other than those related to the planned scope and timing or deficiencies, and material weaknesses in internal control that should be communicated to management and those charged with governance for an audit or non-audit engagement. · Identify matters that should be communicated to component auditors in a group audit engagement. · Identify matters that should be communicated to parties other than management and those charged with governance (e.g., communications required by law or regulation) for an audit or non-audit engagement. |
| 4 | Group F: Communication with component auditors and parties other than management and those charged with governance. | Remove: entire group (two tasks).
· Identify matters that should be communicated to component auditors in a group audit engagement. · Identify matters that should be communicated to parties other than management and those charged with governance (e.g., communications required by law or regulation) for an audit or non-audit engagement. |
| 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).
· Develop or modify a detailed engagement plan for an audit or non-audit engagement based on planning inputs and constraints. |
| 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:
· Understanding and documenting significant business processes, IT system infrastructure, and data flows (e.g., revenue, production, expenditures, payroll, etc.). · Identifying significant business processes and related IT systems, and how data generated from those business processes flows through the systems. |
|
| 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 · Manual controls, IT general controls, application controls, and how they relate to specific business processes and their impact on the financial statements · The effect of these controls on the completeness and reliability of data (moved from Group C, Topic 4 below) 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).
· Identify the factors to consider in determining the extent to which an engagement team can use the work of the internal audit function in an audit or non-audit engagement. · Determine the nature and scope of the work of the internal audit function that can be used in an audit or non-audit engagement. 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).
· Analyze the potential impact of related party relationships and transactions on the risk of material misstatement for an audit or non-audit engagement, including consideration of significant unusual transactions and transactions with executive officers. |
| 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 · Inquiry of management (Group C, Topic 3) · Observation and inspection (Group C, Topic 4) · Recalculation and reperformance (Group C, Topic 5) |
| 14 | Group C: Performing specific procedures to obtain evidence. | Revise: change Group C title to “Specific procedures to obtain sufficient appropriate 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 · Working with data sets and encompassing tasks · Analyzing the results of an audit data analytic procedure and understanding the significance of notable or unusual items. |
| Group D: Specific matters that require special consideration. | ||
| 15 | Topic 1: Opening balances. | Remove: entire Topic (1 task).
· Test whether prior-period closing balances have been correctly brought forward to the current period or restated in the audit of an issuer or nonissuer, including investigation of differences. |
| 16 | Topic 2: Investments in securities and derivative instruments. | Revise Topic by eliminating derivative content and focus on the testing of inputs and assumptions relating to the fair value of investments |
| 17 | Topic 4: Litigation, claims and assessments. | Remove: content assessed at the analysis skill level (1 task).
· Analyze management’s estimate of the liability associated with litigation, claims and assessments in an audit of an issuer or nonissuer. |
| 18 | Topic 5: An entity’s ability to continue as a going concern. | Remove: content assessed at the application skill level (1 task).
· Perform procedures related to the assessment of management’s evaluation and conclusion regarding an entity’s ability to continue as a going concern in an audit of an issuer or nonissuer. |
| 19 | Group F: Written representations. | Remove: content assessed at the application skill level (1 task).
· Assist in the preparation of required written representations that should be obtained from management or those charged with governance in an audit or non-audit engagement. |
| 20 | Group G: Subsequent events and subsequently discovered facts. | Revise: change Group G title to “Subsequent events.”
Revise: shift the testing of subsequently discovered facts from the application skill level to remembering and understanding |
| IV — FORMING CONCLUSIONS AND REPORTING | ||
| 21 | Group D: Reporting on compliance. | Remove: content assessed at the application skill level (2 tasks).
· Prepare a draft compliance report for an attestation engagement to report on an entity’s compliance with the requirements of specified laws, regulations, rules, contracts or grants starting with a report example (e.g., an illustrative report from professional standards). · Prepare a draft compliance report when reporting on compliance with aspects of contractual agreements or regulatory requirements in connection with an audit of an entity’s financial statements starting with a report example (e.g., an illustrative report from professional standards). |
| 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 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 · Describing business processes and flows of transactions including enabling technology · Identifying opportunities to improve efficiency · Identifying and designing transaction-level controls · Use of SOC 1 reports from service providers · Identifying risks and control gaps · Using data and business intelligence · Current process and transaction-level risks and controls content moved from the following areas · o Area I, Groups A and B o Area IV, Group A (Topics 2 and 3), Group B (Topic 3), Group C (Topic 1) |
|
| 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).
· Compare and contrast the strategies for financing new business initiatives and operations within the context of an optimal capital structure, using statistical analysis where appropriate. |
| 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
· Data management · Data governance · Data relationships · Extracting and loading data · Transforming and working with data and data relationships |
| 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 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. |
| 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)
· Prepare journal entries for hedging transactions. · Prepare journal entries for derivative financial instruments (swaps, options, and forwards). |
| 36 | Group L: Differences between IFRS and U.S. GAAP. | Remove: Group L will be removed. |
REG 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).
· Analyze the impact of the charitable contribution and/or dividends received deductions on the net operating loss calculation of a C corporation. · Analyze the impact of net operating and/or capital losses during tax planning for a C corporation. |
|
| 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 about CPA Exam Changes
In conclusion, while the CPA Exam changes are always a cause for concern, I do not anticipate that the 2021 changes have made the exam any more difficult in 2022. 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 2022 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.
Changes to accounting exams are 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.
2024 CPA Exam 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.
Planning for CPA Exam 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!
