Data Analytics has become a hot topic in recent years. And rightfully so as the use of big data extends its reach beyond the field of Information Technology. But what is data analytics and why is it making an appearance on the CPA exam?
In general, data analytics is defined as the process of examining data sets in order to draw conclusions about the information they contain. Accountants already work with data and data analytic outputs to assess business performance within the framework of accounting principles and methods and to identify trends and unusual items requiring further investigation.
To highlight current practice, the CPA exam has taken a step to clarify how data analytics outputs are used in the exam. Newly published Blueprints (available on the AICPA website) give the specifics about what is included in AUD and BEC. Essentially, candidates will use the outputs of data analytics, such as reports and visualizations, to analyze and interpret the results. The scope and nature of the exam are not changing; the July 1, 2019 changes in the Blueprints for AUD and BEC regarding data analytics are already testable since the updates are primarily clarifying and providing additional details to the existing Blueprints.
The AUD Blueprint changes require CPA candidates to demonstrate their ability to use data analytic outputs when “identifying and assessing risks of misstatement due to error or fraud and developing appropriate engagement procedures” as well as when “performing engagement procedures and concluding on the sufficiency and appropriateness of evidence obtained.”
The AUD section of the Exam will see the following objectives in testing related to data analytics*:
- Assess risks using audit data analytic outputs to determine relationships among variables and interpret results to provide a basis for developing planned audit procedures
- Perform analytical procedures using outputs from audit data analytic techniques to determine relationships among variables and interpret results
- Determine the attributes, structure, and sources of data needed to complete audit data analytic procedures
- Use audit data analytic outputs to determine relationships among variables and interpret results to meet objectives of planned procedures
*Note that these changes do not change the nature or scope of content eligible for testing.
For BEC, CPA candidates will be expected to*:
- Recognize the role of big data in supporting business decisions.
- Use business intelligence (including data analytics and statistics) to support business decisions.
*Note that these changes are not intended to significantly change the content eligible for testing.
Other Updates to the 2019 CPA Exam
SSARS 24 Update
Adds a new AR-C section entitled Special Considerations—International Reporting Issues. This section provides requirements and guidance for:
(1) when financial statements have been prepared in a framework generally accepted in another country (not GAAP)
(2) when a review or compilation is to be performed using Standards for Accounting and Review Services (SSARS) in conjunction with another set of review or compilation standards
Adds a definition in AR-C Section 60 for the term fair presentation framework and amends the definition of financial reporting framework. The amendments acknowledge that in order to achieve fair presentation of the financial statements that management may need to:
(1) provide additional disclosures beyond the requirements of the framework
(2) depart from a requirement of the framework (rare)
This is just a bit of insight on what the 2019 CPA Exam changes will entail. At Roger CPA Review, we will of course ensure all our students are fully prepared for the new 2019 CPA Exam revisions, as well as any other standard updates that occur.
It’s important to remember that the CPA Exam’s job is to reflect the expectations of a newly licensed CPA, which is influenced by continuously evolving technology that affects the accounting profession. In other words, candidates should expect the CPA Exam to always be evolving to meet industry expectations.
No matter what the changes are, remember you're set up for success with our new SmartPath Predictive Technology™ - a data-driven platform that provides you with targeted recommendations on where and how to focus your study efforts.