The CPA Exam: What You Need to Know
If you aspire to become a certified public accountant (CPA), it is important to familiarize yourself with the details of the CPA exam. This comprehensive examination assesses your knowledge and skills in various areas of accounting and business. To help you understand the exam better, let’s review the key information.
Key Takeaways:
- The CPA exam consists of four sections: Financial Accounting and Reporting (FAR), Auditing and Attestation (AUD), Regulation (REG), and Business Environment and Concepts (BEC).
- Each section must be completed within four hours, and candidates must pass all four sections within 18 months.
- The exam is computer-based and includes three written communication tasks, 276 multiple-choice questions, and 28 task-based simulations.
- The grading scale ranges from zero to 99, and the minimum passing score is 75.
CPA Exam Structure:
The CPA exam is structured as follows:
| Exam Section | Number of Questions/ Tasks |
|---|---|
| Auditing and Attestation | 72 multiple-choice questions, 8 task-based simulations |
| Financial Accounting and Reporting | 66 multiple-choice questions, 8 task-based simulations |
| Regulation | 76 multiple-choice questions, 8 task-based simulations |
| Business Environment and Concepts | 62 multiple-choice questions, 4 task-based simulations, 3 written communication tasks |
- Each section must be completed within four hours, with a total exam time of 16 hours.
- Candidates can choose the order in which they take the sections.
- All four sections must be passed within 18 months, with the beginning of the 18-month time frame varying by jurisdiction.
Test Scoring:
- The American Institute of Certified Public Accountants (AICPA) develops and scores the CPA exam.
- Each section is graded on a scale of zero to 99.
- The minimum passing score for each section is 75.
- The scoring criteria vary for different sections:
- AUD, FAR, and REG: Total score is a weighted combination of scaled scores from multiple-choice questions and task-based simulations. Multiple-choice questions count for 50% of the total score, while task-based simulations count for the other 50%.
- BEC: Total score is a weighted combination of scaled scores from multiple-choice questions, task-based simulations, and written communication tasks. Multiple-choice questions count for 50% of the total score, task-based simulations count for 35%, and written communication tasks count for 15%.
- The multiple-choice questions in each section are adaptive, meaning the difficulty level of subsequent questions depends on the candidate’s performance.
Section Breakdown and Topics:
- Financial Accounting and Reporting (FAR):
- Tests knowledge of financial reporting frameworks used by businesses, non-profit organizations, and government entities.
- Includes 66 multiple-choice questions and 8 task-based simulations.
- Covers standards for financial statements, preparation of financial statements, accounting for government agencies and non-profits, and the process of setting accounting standards.
- Auditing and Attestation (AUD):
- Focuses on planning and reviewing engagements, internal controls, obtaining and documenting information, and communication preparation.
- Consists of 72 multiple-choice questions and 8 task-based simulations.
- Covers international accounting standards, auditing standards, preparing reports on audited financial statements, and ethics and independence requirements.
- Regulation (REG):
- Covers ethics and professional responsibility, business law, tax procedures and accounting, and federal taxation for individuals, entities, and property transactions.
- Contains 76 multiple-choice questions and 8 task-based simulations.
- Addresses legal responsibilities of CPAs, business transactions and their accounting implications, federal and state laws, and the audit and appeals process.
- Business Environment and Concepts (BEC):
- Focuses on business structures, economic concepts, financial management, and information technology.
- Includes 62 multiple-choice questions, 4 task-based simulations, and 3 written communication tasks.
- Covers corporate governance, financial risk management, strategic planning, global business concepts, information systems, and technology risks.
Sarbanes-Oxley Act of 2002:
- The CPA exam assesses candidates’ knowledge of the Sarbanes-Oxley Act of 2002 (SOX).
- SOX is legislation that enhances corporate governance and financial disclosures to protect investors and the public from fraudulent activities.
- Test-takers are expected to understand the requirements and implications of SOX in relation to financial reporting, corporate responsibility, and financial disclosures.
The Bottom Line:
Becoming a CPA requires dedication and preparation. The CPA exam consists of four sections covering various aspects of accounting and business. By understanding the exam structure, scoring, and topics, you can better plan your study and increase your chances of success. Consider enrolling in a reputable CPA prep course to enhance your preparation and maximize your potential for achieving this respected professional designation.
Comprehensive List of Resources for Further Reading
Websites and Online Resources:
- American Institute of Certified Public Accountants (AICPA) – The official website of the AICPA provides valuable information about the CPA exam, including exam structure, content, and scoring. It also offers resources for exam preparation, study materials, and sample questions. Visit AICPA
- NASBA (National Association of State Boards of Accountancy) – The NASBA website offers information about the CPA exam, including eligibility requirements, exam application process, and score release dates. It also provides resources for candidates, such as exam blueprints and candidate bulletins. Visit NASBA
Books:
- Wiley CPA Exam Review – This comprehensive book series by Wiley provides in-depth coverage of all four sections of the CPA exam. It includes practice questions, simulations, and explanations to help candidates master the exam topics. Learn more about Wiley CPA Exam Review
- Gleim CPA Review – The Gleim CPA Review books offer a structured approach to studying for the CPA exam. They include detailed content summaries, practice questions, and task-based simulations. The books are available for each section of the exam. Learn more about Gleim CPA Review
Academic Journals and Research Papers:
- Journal of Accountancy – Published by the AICPA, the Journal of Accountancy covers a wide range of accounting topics, including updates on the CPA exam, exam strategies, and insights from industry experts. It provides valuable resources for staying informed about the profession. Access Journal of Accountancy
- Accounting Horizons – This scholarly journal focuses on advancing accounting research and knowledge. It publishes articles related to various aspects of accounting education, including exam-related research, assessment methods, and examination policy issues. Access Accounting Horizons
Reports and Studies:
- “CPA Exam Passing Rates” – This report published by the AICPA provides historical data on CPA exam passing rates, broken down by exam section and time frame. It offers insights into the difficulty levels of each section and can help candidates set realistic expectations. Read the CPA Exam Passing Rates report
- “The Impact of the Sarbanes-Oxley Act on Financial Statements” – This research paper examines the effects of the Sarbanes-Oxley Act on financial reporting and disclosures. It provides a comprehensive analysis of the Act’s provisions and their implications for accountants and auditors. Read “The Impact of the Sarbanes-Oxley Act on Financial Statements”
Professional Organizations and Associations:
- State Boards of Accountancy – Each state has its own Board of Accountancy that regulates the CPA licensure process. Visit your state’s Board of Accountancy website for specific information about exam requirements, licensing procedures, and resources for candidates. (Example: California Board of Accountancy)
- Association of International Certified Professional Accountants – This global accounting association represents the AICPA and the Chartered Institute of Management Accountants (CIMA). It offers resources and support for CPAs worldwide, including access to research, publications, and networking opportunities. Visit the Association of International Certified Professional Accountants