When my students ask me, “Just how much does the CPA Exam prepare you to become a CPA?” I always tell them the same thing: “It prepares you some. But nothing can properly prepare you for real life work except actual, real life work.”
Knowing the fundamentals of accounting principles is, of course, necessary to be a CPA, and plays a large role in what the CPA Exam tests candidates on; but that doesn’t always mean it gives candidates everything they need to be successful on their first day, week, month, or even year on the job. Which is why the CPA Exam has undergone many changes over the years. But it would appear that the 2017 CPA Exam changes in particular are attempting to change this perception now more than ever.
The next version of the CPA Exam launching on April 1, 2017 is the biggest overhaul the CPA Exam has seen in a while. With increased Task-Based Simulations (TBSs), additional testing time for BEC and REG, and testing higher order skills, it’s clear that CPAs today have more responsibility than they did 30 years ago.
When I first sat for the exam in the 80s, it was administered via paper and pencil, and I was given a blank blue book and 45-55 minutes to prepare a statement of cash flows from scratch. There was nothing on economics or personal financial planning, and the concept of IT barely existed. This is because when I started as a CPA, we weren’t using that kind of information to help our clients, and performing manual tasks was the norm.
Fast forward to today - the 2017 CPA Exam is a great example of how the CPA Exam and CPAs fuel one another to remain relevant. Higher level skills are now needed earlier for entry level CPAs because routine tasks are now completed by computers. While we know what these changes say about the past of the industry—mainly that the exam must adapt to the passage of time and technology--perhaps what’s more interesting is what it tells us about the future of the CPA Exam and CPA profession.
First, the CPA Exam will continue to become broader as time goes on. If we look at the new blueprints that denote what CPAs need to know and compare them to the Content Specification Outlines of the past, we’ll see that the CPA Exam covers more topics under broader categories than it used to. This is inevitable. The more software and business practices change to enhance client services, the more the exam has to test on relevant practices and eliminate outdated ones.
For example, AUD will be moving from 6 tested areas to 4 to combine similar skills under larger umbrellas while negotiable instruments in Business Law will no longer be on the Regulation (REG) section at all. In addition, the AICPA has decided to no longer test information that candidates can easily find answers to, such as tax return due dates which have historically always been tested; there’s simply no need to put this information to memory. Making such adjustments is the only way to test a large amount of topics in an allotted period of time.
Secondly, greater demand for newly licensed CPAs to perform at higher levels earlier on in their careers will continue to increase as time goes on. The 2017 CPA Exam exemplifies this, implementing higher order skills so that newly licensed CPAs come into the profession with higher level skill sets and more critical thinking abilities. As it currently stands, the CPA Exam tests candidates just on remembering & understanding and application. On the new exam, candidates will also be tested on evaluation and analysis—skills that will require them to break down information into components parts and also judge the value of information to see what is relevant or irrelevant to solving problems.
By increasing the amount of Task-Based Simulation (TBS) questions, which test these skills, and reducing the amount of Multiple-Choice Questions (MCQs) on a majority of the sections, the exam will require candidates to have a better, more thorough understanding of concepts that they can readily apply to real life tasks as CPAs. Over time, it’s possible that the exam will continue this trend, eventually containing more and more TBSs and less and less MCQs. But what I think would be even more beneficial is adding a final capstone section that summarizes all of the concepts on the CPA Exam.
Adding a capstone section could greatly benefit future CPAs for a couple of reasons. As it stands, candidates study and test for AUD, BEC, FAR, and REG separately. The information they learn is compartmentalized. They memorize information for one section, take the exam, and as soon as they pass, all the information they memorized for that section gets left behind as they move onto the next one. This gives all of the concepts little to no direct interaction with one another, which is not the case in the real world.
A capstone exam would be like the comprehensive final they never had in school. By simultaneously testing concepts from AUD, BEC, FAR, and REG together, candidates would get more real world application type problems.
Although the AICPA will probably never add this capstone component, I think it’s important for all candidates to keep in mind that no matter how the exam and profession continue to evolve or change, at the end of the day, you have to know how all of the information you’ve learned from the CPA Exam work in tandem with one another to best serve your firm and clients.
--Roger Philipp, CPA, CGMA