Are you or your staff preparing to take the CPA exam? All aspects of the CPA exam changed on Jan. 1 -- content, format and process. These are the most significant changes since the launch of the online exam in 2003.

Content changes
The CPA exam is still organized in four parts -- auditing and attestation; business environment and concepts; financial accounting and reporting; and regulation (consisting of taxation and business law). However, specific topics and their relative weightings within each section changed.

Auditing & Attestation (AUD)
The AUD exam focuses on the candidate's understanding of generally accepted auditing standards (GAAS) and auditing procedures and the ability to apply those standards and procedures in performing auditing and attestation engagements. These skills are tested within the context of five comprehensive engagement tasks:

• Evaluating and determining client acceptance, planning the audit engagement and reaching appropriate agreement with the client
• Assessment of the client's internal control environment
• Obtaining and documenting information to support audit conclusions
• Reviewing and evaluating the documentation to determine if engagement objectives were met
• Preparing communications to satisfy the agreed-upon objectives

In addition, the AUD exam now tests the candidate's knowledge of professional responsibilities, including independence and ethics.

Business Environment & Concepts (BEC)
The BEC section tests the candidate's knowledge of the general concepts underlying the business reasons for accounting implications of various transactions, and the skills needed to apply that knowledge in performing other functions normally performed by CPAs. Several changes were made to topics covered in the BEC exam. First, concepts related to corporate governance is added to the material on the various legal structures under which businesses can be organized. Second, the portion assigned to economics has effectively doubled. Third, the management accounting topics previously labeled "planning and measurement" are organized into two specific areas: strategic planning and operations management. Content covered in this section includes:

• Corporate governance and knowledge of business structure
• Economic concepts essential to obtaining an understanding of an entity's operations, business and industry
• Financial management
• Information systems and communications
• Strategic management
• Operations management

Financial Accounting & Reporting (FAR)
The FAR exam is considered the heart of the knowledge base for a CPA. This section has the most significant content changes related to International Standards -- including International Financial Reporting Standards (IFRS) -- now eligible to be tested. International standards questions will be gradually integrated over the next few years. Questions on U.S. standards will continue to be the major focus of the examination.

These skills are tested within the context of the following comprehensive subject areas:

• Concepts and standards for the presentation of financial statements
• Typical items: recognition, measurement, valuation, and presentation in financial statements in conformity with GAAP
• Specific types of transactions and events: recognition, measurement, valuation, and presentation in financial statements in conformity with GAAP
• Accounting and reporting for governmental entities
• Accounting and reporting for non-governmental not-for profit organizations

Regulation (REG)
The REG section tests candidates' knowledge of federal taxation, ethics, professional and legal responsibilities, business law and the skills needed to apply that knowledge. This exam section has experienced the least change in terms of content, but has seen some shifts in weighting of subjects. This section on business law was reduced to allow more coverage of the taxation of property transactions.

These skills are tested within the context of six comprehensive areas:

• Ethics and professional and legal responsibilities.
• Business law
• Federal tax procedures and accounting issues
• Federal taxation of property transactions
• Federal taxation -- individuals
• Federal taxation -- entities (corporations, partnerships and trusts)

Format
Several changes were also made to the exam format. Essay questions were removed from the AUD, FAR and REG sections. In addition, the simulations (i.e., case studies) in these sections are reduced from two long-form case studies to six to seven shorter task-based simulations. Previously, essay questions were not used on the BEC section; under the new format, three written communications tasks have been incorporated to replace some of the multiple choice questions. In conjunction with these changes, the time allocation of the AUD and BEC sections have been modified.

These changes have also modified the structure of the various sections

Process
Process changes have also been made:

• A new online calculator on the CPA Examination.
• A new release of authoritative literature -- with FASB Accounting Standards Codification™ -- is now available to prepare candidates for the CPA Examination.
• The report providing candidates with information about the strengths and weaknesses of their examination performance is revised. A description of the new candidate performance report will be widely distributed and posted on the AICPA website.

Additional information about these CPA exam changes is provided on the AICPA website. View the new tutorial and sample tests.

What hasn't changed?
Despite these significant changes to the exam, one issue hasn't changed -- the importance of passing the exam and becoming certified.

Holders of the CPA credential have demonstrated their understanding of accounting and auditing concepts and techniques and the ability to apply that knowledge to a variety of circumstances in a rigorous test environment. This is part of the reason why CPAs are generally held in high esteem by the public and their colleagues in other professions.

How can we help keep our professional status? Encourage entry-level accountants to spend the time and effort necessary to achieve certification.

The first step to becoming certified is passing the CPA examination. Therefore, it is incumbent on managers and supervisors to motivate their employees to reach for the professional certification and to provide the time and support they need to prepare to take the examination. In the distant past when the exam was offered twice a year, it was easier for managers to keep track of their commitments and provide time off for group or individual study among their employees. Now that the exam can be taken one part at a time during eight months of the year, it is easy to forget that candidates still need motivation and support to get ready for the examination.

Candidates are willing to work with management to minimize any conflicts or disruptions caused by their preparation for the exam. It's important for managers to demonstrate their commitment to professionalism by meeting them halfway.

Thomas N. Howard, CPA, is president and CEO of CPA Review Twin Cities LLC. He is a member of the MNCPA and has more than 30 years of management consulting experience. Howard is also an adjunct instructor of accounting at the University of St. Thomas and the University of Minnesota Carlson School of Management. He can be reached at thoward@cpareview-tc.com