The CPA Exam sections are the most significant and most important obstacle between you and the CPA certification. The exam is developed by the American Institute of Certified Public Accountants (AICPA) with input from the National Association of State Boards of Accountancy (NASBA) and the state boards themselves.
And let’s get this out of the way: the CPA Exam isn’t easy. In fact, the average CPA Exam pass rate is around 50%. So, you need to give yourself every possible advantage come test day. In this post, I tell you everything you need to know about the exam, including what’s on it, how it’s graded, and how to successfully pass the CPA Exam on your first try.
* Note: The CPA Exam is being altered in 2024. You’ll find some information about the 2024 CPA Exam questions and format at the end of this post. But to keep you informed, we have a post about the 2024 CPA Exam changes.
The CPA Exam includes 4 sections. They are:
The AUD CPA section focuses on the knowledge and skills you must have to perform auditing and attestation services. So, you’ll be asked questions related to internal controls, compliance, audit risk, and more.
The high-level topics in the AUD section are:
|AUD Section Content Area||Allocation|
|Ethics, Professional Responsibilities, and General Principles||15–25%|
|Assessing Risk and Developing a Planned Response||20–30%|
|Performing Further Procedures and Obtaining Evidence||30–40%|
|Forming Conclusions and Reporting||15–25%|
The BEC section is diverse. In it, you must demonstrate your understanding of various business topics like process management, risk management frameworks, and economic cycles.
The high-level topics in the BEC section are:
|BEC Section Content Area||Allocation|
|Economic Concepts and Analysis||17–27%|
The FAR section is the largest section of the CPA Exam. It covers several general accounting and reporting topics. So, the FAR section is expansive and comprehensive. And because of this, candidates often say the FAR is the most difficult section of the CPA Exam. You’ll be tested on everything from general-purpose financial statements to governmental accounting.
The high-level topics in the FAR section are:
|FAR Section Content Area||Allocation|
|Conceptual Framework, Standard-Setting, and Financial Reporting||25–35%|
|Select Financial Statement Accounts||30–40%|
|State and Local Governments||5–15%|
So, the REG section of the exam doesn’t include any accounting topics. Instead, this section focuses on business law, ethics, and federal taxation.
The high-level topics in the REG section are:
|REG Section Content Area||Allocation|
|Ethics, Professional Responsibilities and Federal Tax Procedures||10–20%|
|Federal Taxation of Property Transactions||12–22%|
|Federal Taxation of Individuals||15–25%|
|Federal Taxation of Entities||28–38%|
Note that the CPA Exam changed in April 2020 and again in 2021. And it will undergo significant modifications in 2024, too. Therefore, to help my readers, I’ve created a CPA Exam changes guide that maps out all the changes.
Each CPA Exam section is broken down into 5 sub-sections called “testlets.” Specifically, the testlets include multiple-choice questions (MCQs) and task-based simulations (TBSs). However, the BEC section also includes written communication tasks.
Overall, the allocation of MCQs, TBSs, and written communication tasks in each section looks like this:
|CPA Exam Section||# of MCQs||# of TBSs||# of Written Communication Tasks||Time to Complete|
Each CPA Exam section includes 2 MCQ testlets. Now, the first MCQ testlet is always designed to be of “medium” difficulty. However, if you pass a certain threshold for scoring, your second MCQ testlet then progresses to “difficult.” Importantly, if you don’t pass that threshold, you will again be given a testlet of medium difficulty. For reference sake, this system is referred to as a “multi-stage” approach.
Understandably, this system may throw you for a loop. Because it almost seems as if you’re penalized for earning a higher score on the first MCQ testlet. However, your exam will be scored accordingly. And, if you’re thinking about “throwing” the first testlet to ensure you get an easier second round, I’d reconsider. The more difficult exam questions are weighted more heavily than the others. So, you actually put yourself in a better position by answering more of the difficult questions correctly.
Also, each CPA Exam includes pretest questions. The AICPA includes these questions to determine their viability for future exams. However, you won’t be able to differentiate between pretest and standard questions. Further, your answers to the pretest questions won’t influence your final score.
You’ll also be asked to respond to real-life work scenarios through task-based simulations or mini-case studies. As such, you’ll have to prepare to answer TBSs for the AUD, BEC, FAR, and REG sections.
The goal of the TBSs is to assess how well you can apply your knowledge in practical situations. The format of the TBSs varies, but rather than select an answer as you would in the MCQs, you’ll have to supply an answer. Also, you can expect each TBS section to include 1 research question. For this, you’ll have to research a topic and use citations in your response. Often, I hear candidates say the TBSs are more challenging than the MCQs.
You’ll only find written communication tasks in the BEC section of the exam. Specifically, this section contains 3 tasks. You’ll need to read through the scenario provided and write your response in the appropriate format (e.g., business memo). However, depending on where your strengths lay, you may find this section to be rather tricky or rather easy. If you fall into the former category, you’ll be able to practice the writing portion in nearly any CPA Exam review course.
In the past, you used to be somewhat limited in when you could take the CPA Exam. The exam was only offered 4 times a year during set CPA Exam testing windows. The windows were:
However, the CPA Exam is now available year-round, thanks to continuous testing. Therefore, the testing windows no longer impede your overall ability to complete the CPA Exam on time. Specifically, you must pass all four sections of the CPA Exam in a 30-month rolling period. (However, the 2024 CPA Exam changes will include some testing blackout dates.)
Some aspects of this 30-month rolling period are tricky. The clock starts on the date you sit for and pass your first exam part. So, if you sit for the AUD section on February 1, 2023, and pass, you then have 30 months to complete the other 3 sections.
But if you let the 30 months expire and still have an exam section (or 2) to take, you will lose credit for any previous sections you have taken and passed. Therefore, you will have to retake those sections (and pay the exam fees again). As you can see, scheduling truly becomes critical when it comes to the CPA Exam.
Fortunately, you can take the CPA Exam in any order that suits you. Meaning that you don’t have to sit for FAR first, although this is my recommendation.
Further, you have flexibility in how many exam sections you can take in a single testing window. For example, you could sit for AUD and FAR in the first window of the year and REG and BEC in the very next window. Technically, you could take all 4 sections during one testing window. However, I would highly discourage this plan. You can easily burn out with your studying. Further, you may not be giving yourself enough time to adequately prepare for any exam section.
Also, you can’t double-dip in a testing window. So, if you fail any CPA Exam section, you’ll have to wait until the next available testing window to retake it.
Your time to take and pass the CPA Exam is limited. Commonly, CPA candidates want to know what order to take the 4 exam sections in to ensure they can pass in the 18-month rolling period. Truthfully, it depends on you. In other words, do you want to get the more difficult section out of the way? Or, do you want to start with the section that feels a little easier?
Among the 4 CPA Exam sections, FAR is often believed to be the most challenging. This belief is upheld by the fact that the pass rate for FAR is the lowest of them all. Conversely, BEC has the highest pass rate.
That being said, I recommend you think about your existing competency and comfort with the content in each exam part. Then, spend some time developing a CPA study schedule to determine how different scenarios might play out.
To pass the CPA Exam, you must earn a minimum score of 75 on each section. But what does that “75” mean?
Each exam section is scored on a scale that ranges from 0 to 99. Again, you need a 75 on that scale to pass. But the 75 is not a percentage or a raw score. Instead, your score represents a weighted combination of scaled scores from the MCQs and TBSs in each section. Then, for the BEC section, your score is based on the weighted combination of the scaled scores from the MCQs, TBSs, and written communication tasks.
Now, what do I mean by “scaled” score? In simple terms, a scaled score accounts for different versions of the CPA Exam. Some questions are more difficult than others. Therefore, they are weighted accordingly. Remember when we talked about the MCQs and how you either get a “medium” or “difficult” testlet the second time around? Well, that’s exactly what I’m referencing here.
Here’s how the CPA Exam scoring breaks down by section and question type:
The CPA Exam sections are changing soon, so you should be aware of this if you plan to take any of them in 2024. I’ll attempt to simplify it for you.
The four CPA sections I mentioned above—AUD (Auditing and Attestation), BEC (Business Environment and Concepts), FAR (Financial Accounting and Reporting), and (REG) Regulation—will make up the CPA Exam until the end of 2023. Additionally, all CPA Exam candidates must pass each of the four areas.
But starting in 2024, the new CPA Exam will be a little more flexible thanks to the addition of the “Discipline” section exam. Despite having four sections, the exam in 2024 will only have three Core portions and one candidate-selected Discipline section. This is how it will operate:
Because of this, the CPA Exam’s overall structure won’t change—you’ll still need to respond to MCQs and TBSs, for example—but you’ll have the option to select a discipline section highlighting your unique professional interests and talents. Plus, the new CPA Exam won’t include the dreaded Written Communications!
You can pick from Business Analysis and Reporting (BAR), Information Systems and Controls (ISC), and Tax Compliance and Planning (TCP) for the new Discipline sections.
Here is the breakdown of MCQs and TBSs in the new CPA Exam:
Finally, the redesigned CPA Exam’s material will differ slightly from the syllabus for the 2023 CPA Exam. In essence, the changes are meant to better assess candidates’ mastery of the skills required for new CPAs.
The AICPA is responsible for the actual CPA Exam. They create, maintain, and score the exam. However, they don’t have anything to do with your actual exam day. Instead, they turn those responsibilities over to Prometric and their international network of testing centers.
As you may know, you have to apply to take the CPA Exam. And you do that by meeting the CPA requirements set by your state board of accountancy. Typically, these requirements relate to your education, residency, and experience.
However, once you apply for and are accepted into the CPA program, you’ll receive a Notice to Schedule (NTS). This is your ticket to schedule your exam date(s) with Prometric. Also, your NTS is valid for 6 months in most states. Again, with the CPA Exam, you really must pay attention to timing.
As I mentioned, the CPA Exam pass rate hovers around 50%. The time you spend studying for the exam is instrumental to your success. To help candidates, the AICPA releases new CPA Exam Blueprints either once or twice a year, depending on the year. These Blueprints are designed to aid in your exam preparation. However, the AICPA (and this site) recommend you use the Blueprints in conjunction with an exam review course.
As you may have guessed, you have your pick of CPA Exam review course providers. However, to narrow down the field, I provide a detailed overview of many of these courses along with a list of the pros and cons of each. Use the list to help you find the best course for you. Then, be sure to check out my CPA review course discounts to save on your preferred course.
The CPA license is the most prestigious and respected title in the world of accounting. So, don’t let the exam prevent you from pursuing the license and making a real difference in your career. I can help you prepare for the CPA Exam and pass on your first try. If you’re new to the CPA world, I suggest you check out my free e-course. And in any case, take some time to look around this site and review the many resources for CPA candidates.
Of course, feel free to reach out to me with any questions about the CPA Exam or process.