Today, we'll continue with our CPA Exam Focus series by discussing Regulation, or REG.

For many, Regulation is second only to FAR in difficulty. However, only 42% of candidates passed the REG part of the CPA Exam in 2007, which is fewer than any of the other four parts. Knowing this, you'll want to study a little harder and concentrate a little more effort to avoid becoming part of the 58% who don't pass REG.

Similar to the FAR part of the CPA Exam, time management is an essential skill. You only have 3 hours to complete the REG exam, which may cause you to feel pressured. This is partly because there's much less content than there was in FAR or AUD. Resist the temptation to concentrate on how little time is left, and instead concentrate on getting as much done as you can within the time frame presented.

Let's break it down.

Like FAR and AUD, the REG part of the CPA Exam is divided into the following sections.

  • Multiple Choice: 70%

  • Simulations: 20%

  • Written Communications: 10%

The main body of the CPA Exam content is multiple choice questions. To get through this part, you'll need to really know the information. HINT: In many cases, it pays to read the end of a question first. Many questions appear at the very end of a paragraph filled with details. By reading the actual question first, you can then go back and scan the paragraph for the relevant answer. By reading the entire paragraph, you run the risk of spending too much time getting lost in the details. The multiple choice questions are broken into 3 separate "testlets," consisting of 24 questions each (unlike FAR or AUD, which have 30). You'll want to limit yourself to 30 minutes per testlet. That means you'll want to spend about 75 seconds per question. By the end of the three multiple choice testlets, you'll have 90 minutes left.

This leaves the two simulations. If you're staying on track, you'll have 45 minutes to complete each simulation, or a total of an hour and a half. These simulations will test your abilities in various ways, including written communication. Don't spend too much time writing your responses. Just make sure that you're using Standard English conventions in grammar, spelling and punctuation while also staying on topic. HINT: There's a spell check feature in the exam software. Make sure you use it! Your written responses should have a clear subject, formatted around a beginning, middle and end. It sounds harder than it actually is. Remember that the written communication aspect only accounts for 10% of your total exam score, so do your best without slowing yourself down or worrying too much.

The Multiple Choice and Simulations/Written Communications will test students' command of skills determined by the AICPA Board of Examiners, or BOE, to be vital in the daily functions of an entry level CPA. These can be categorized into five unique skill sets, with different values, or weights, placed on each according to the exam part being taken.

  • Communication: Your ability to express information in written or oral form. (0% - 14%)

  • Research: Your ability to find and utilize data from available resources. (9% - 19%)

  • Analysis: Your skill at organizing, processing and interpreting information for later use in decision making. (9% - 19%)

  • Judgment: Your ability to correctly evaluate existing options and form an appropriate decision. (8% -18%)

  • Understanding: Recognition and comprehension of subject matter. (45% - 55%)

Again, notice that the communication portion has a fairly low weight in comparison to the other skill sets. But, you'll really need to demonstrate your understanding of the topic!

As you're studying for REG, it helps to keep the actual content of the REG Exam in mind. Just as was done with the five primary skill sets, each of the sub-topics in Regulation is assigned its own value. You can separate REG into two sub topics, which have sub sections of their own.

Tax (Total weight 55% - 60%)

  • Federal tax procedures and accounting issues (8%12%): This includes accounting periods, and methods such as percentage of completion, completed contract, installment sales, cash and accrual.

  • Federal taxation of property transactions (8%12%): Including types and basis of assets, depreciation and amortization, sales and exchanges, income and deductions

  • Federal taxationindividuals (12%18%): Including gross income, alternative minimum tax, estate and gift taxation

  • Federal taxationentities (22%28%): Includes S Corporations, C Corporations, Partnerships and Trusts

Law and Professional Responsibility (Total weight 40% - 45%)

  • Ethics and professional and legal responsibilities (15%20%): Includes code of professional conduct, License and disciplinary systems, Privileged communications and confidentiality

  • Business law (20%25%): Including agency, debtor-creditor relationships and uniform commercial code.

So, there you have it. As you can tell, the Regulation part of the CPA Exam can be tricky. However, by breaking it down into smaller bite-sized sections, you'll limit your stress and maximize your performance.

Need even more great CPA Exam Review information? Try one of our free classes, and see for yourself why Roger CPA Review students achieve pass rates of 86%!