If You’re an Aspiring CPA, You May Want to Schedule Some Tests Before the New Year
Every year, the American Institute of Certified Public Accounts (AICPA) approves various updates and changes to the Certified Public Accountant (CPA) Exams, adding new topics, removing older topics, and even altering pre-existing sections. On May 31, 2018, the AICPA Board of Examiners (BOE) approved changes to the Uniform CPA Examination Blueprints. The blueprint revisions will affect different sections as we will outline them in this timeline.
Understanding CPA Exam Blueprints
The AICPA develops the CPA exam from the “specs” outlined in a document known as Blueprints. The CPA Examination Blueprints are restructured and availed once or twice in every 12 months, and the revision used to develop the 2019 exam was released in May this year.
There is a Blueprint for every exam section, which outlines the tasks (for example, develop a comprehensive engagement plan) and skills (for example, analysis) for every content topic (for example, Planning and Engagement). The scoring weight is also assigned to every content section.
Changes Coming in 2019
Here is a summary of specific changes for every exam section that were released by the AICPA.
1. Changes to Auditing and Attestation (AUD)
The revised Blueprints add additional detail on the area of professional skepticism to emphasize the AICPA’s focus on the area of external auditing. The board added this to the introduction part of AUD CPA Exam Blueprints.
The Representative Tasks added to the Blueprints include:
• Comprehending the concepts of professional judgment and professional skepticism.
• Comprehending personal bias and barriers to functioning with professional skepticism, including judgment-making shortcuts, incentives, and threats.
• Investigating evidence that either corroborates or contradicts management expectations, explanations, and other hypotheses during a non-audit or audit engagement.
• Analyzing responses obtained during informal or structured interviews with management and others, such as those in non-financial positions, and ask effective and relevant follow-up questions to comprehend their motivations and perspectives in a non-audit or audit engagement.
• Modifying planned processes based on new information, like new evidence, environmental cues, inconsistent explanations, to achieve audit purposes in an audit of a nonissuer or issuer.
These changes will not affect how professional skepticism is tested but simply clarify the manner of its testability on the examination.
2. Changes to Regulation (REG)
Regulation will undergo some important revision because of the latest Tax Cuts and Jobs Act (TCJA). A good number of the new areas introduced by the act relate to corporations and are very fresh that most learners will start from level one when learning them.
There are alterations to terminology in Topics, Representative Tasks, and Groups to remove concepts and terms made outdated by the act. For example, the Alternative Minimum Tax has been removed from some tasks while the personal exemptions have been removed in totality. The board has also included Representative Tasks to Existing Topics and Groups to cover the latest concepts from the Act.
The following Representative Tasks have been added:
• Computing the qualifying business income deduction for federal income tax purposes.
• Identifying situations where the anti-abuse tax and base erosion would apply.
• Identifying factors that qualify income as Foreign Derived N-Intangible Income.
• Defining the composition of Global Intangible Low-Taxed Income.
• Recalling relationships fulfilling the definition of dependent in order to determine taxpayers filing status.
There are some Representative Tasks that have been removed such as:
• Computation of alternative minimum taxable income and minimum tax for a C corporation.
• Recalling relationships qualifying for personal exemptions as reported on federal Form 1040 – U.S Individual Income Tax Return.
• Identifying the number of personnel reported in Form 1040.
Other items that were revised in REG include:
• Area III, Group B, Task 3.
• Area IV, Group F.
• Area V, Group C, Topic 1.
• Area V, Group C, Task 3.
• Area V, Group C, Task 7.
• Area V, Group E, Task 18.
3. Changes to Financial Reporting and Accounting (FAR)
The latest Blueprints have expanded the coverage for ASU 2016-14. For instance, there is a new Representative Task for the not-for-profit accounting.
The FAR changes also require the CPA candidate to adjust the notes in the financial statement to correct errors and omissions.
4. Changes to Business Environment and Concepts (BEC)
The BEC has not been affected by the new changes. The last changes occurred in 2018Q3 that reflected the changed COSO ERM framework and testing window.
Sit for REG in 2018
There are a lot of changes coming to Regulations in 2019. Candidates who have started their CPA prep for REG should sit for this section before these changes happen, otherwise, they will need to re-learn new content.
The complete changes can be found on the National Association of State Boards of Accountancy (NASBA) and the AICPA website