Guide to Passing the 2019 CPA Exam

Guide to Passing the 2019 CPA Exam

Join Roger Philipp, CPA, CGMA as he walks you through everything you need to know to pass the 2019 CPA Exam.

Hello and welcome, welcome. I'm Roger Philipp, of Roger CPA Review. And today, I want to talk about the Guide to Passing the new and improved 2019 CPA Exam. Now a little bit about Roger CPA Review, and you'll see here about our mission, our new patent-pending SmartPath Predictive Technology™, which is amazing, and basically what we're passionate about. As far as our mission, our mission is to change the way that students learn. And we want to make sure that not only we're changing the way, but we're maximizing the efficiency, so you can accomplish your goal, which is to study for, prepare, and pass the CPA Exam in a timely fashion, and enjoy the entire process. That's why we're together. Now, why is it an exciting time to become a CPA? First of all, ca-ching, ca-ching, the average CPA makes about a million dollars more over their lifetime than a non-CPA, so that alone should motivate you to "Hey, I gotta get some Benjamins." Long-term job security. So, it's one of the things that you start in public or private or governmental. And a lot of times we move around, we jump around quite often. It looks great on your resume, and I always tell students, "You're graduating, you got your first job, it's great. Probably 98% of you will end up retiring from a different company." So chances are, you're gonna be interviewing and so on, so you wanna have an impressive resume. Having a CPA really makes your resume impressive. Basically you're seen as a trusted advisor, a business consultant. I have advisors, business consultants, that are all CPAs, very, very valuable.You're on the forefront of technological advances. As you can see, things are always changing, the Exam's always changing, there's always updates to the Exam. But there's always updates to the profession as well. Also, you'll enjoy a great work-life balance. Because it's important to have that balance, where you can work hard and make good money, but also enjoy time with your family, friends, traveling, and so on. So what I wanna talk about is hey, what is the road map to get from point A to CPA. And it's known as, basically, the four Es, which we'll talk about. Which is Education, the Exam, Ethics, and your Experience as well, that your needed in order to become a CPA, and then finally, how to process that paperwork to become a CPA. Now as far as this process, first of all, fulfilling the educational requirements. What that means is, what is it I need in order to sit for the Exam? Now it's important to understand, there's a difference between what it takes to sit, and what it takes to get certified. Because a lot of times there's confusion, where people think, "Oh, I have to have this and that before I sit." And in some states you do, and some states you don't. For example, the national requirements generally are, a Bachelor's degree, 150 semester units in most states, but not in all states. For example, in California, as long as you have a degree with 120 units, you could qualify to sit for the exam, and then you can't get certified until you've got the 150 units. So every state's a little bit different. If you look at our website, rogerCPAreview.com, you'll see a listing of the different states, and what the requirements are, as well. Generally, you need to have about 24 semester units in accounting, which is about 36 quarter-units in accounting, and that is in order to sit for the exam. But as I just mentioned, go ahead and look at our website, so you can see what the requirements are in all the different 55 states and jurisdictions, Guam, Puerto Rico, Virgin Islands, and so on. So again, some states allow you to sit before you meet those requirements. Each state is a little bit different. But again, I want you to realize that in many states, there's what you need to sit, and what you need to get certified, and those are usually quite different. Then we say, okay, what about the exam itself? What do you expect on the CPA exam? And with the CPA exam, it's gone through a variety of changes over the year. When I sat for it, way back when, it was 19 1/2 hours, it was two and a half days, twice a year, six days a year. It was a long, arduous process. Now, you can take one part at a time. Study for a part and take a part and study and so on. As far as the exam itself, it was 19 1/2, it's now 16 hours. Used to be 14, then they increased it in 2017, to 16 hours. Each part is four, four, four, four. The four parts consist of auditing, and auditing is planning, internal control, substantive testing, IT, audit reports, SSARS, Statements on Standards for Accounting and Review Services, and so on. That is your four hour experience. So you're out there doing an audit, obtaining sufficient, appropriate audit evidence, and at the end of the audit, you have to give an opinion. In our opinion the statements referred to above presents fairly in all material respects the financial opinions of xcode's of 1231 x1 the results of its operations in conformity with US GAAP. Or the applicable financial reporting framework. So, this audit report is an important part of auditing. That again, is a four hour exam. FAR, financial accounting reporting. That's kind of like intermediate one, intermediate two, advanced government non-profit squeezed into a fun-filled, four hour adventure. But FAR is leases, pensions, bonds, deferred taxes, contingent liabilities, governmental accounting, non-profit accounting, and all of that. That is a four hour adventure. Regulation is also four hours. Regulation is tax, law, and ethics. Now, with tax, that's your individual tax, let's say maybe 15%. So that's your 1040 and all the schedules, A, B, C, D, E, and so on. All of that is part of the tax exam. You've got corporate tax, your 1120, 1120S corps, 1065 partnership, 6252 installment sales. So all of that is tax, which is about 60 to 80% of that exam. That's the most heavily part of regulation. We've got business law, which is 10 to 20%. And business law is something that, when I took the exam, many, many moons ago, it used to be a 3 1/2 hour exam on its own. Then, they combined it and put it into reg, and it's about 10 to 20% of reg, but it still has almost all the same content material that was on my exam back in the day. We've also got ethics and professional responsibilities. That's also on the regulation exam. Finally, we've got BEC, Business Environment and Concepts. That is micro, macro economics, financial management, operations management, IT, all of that is part of BEC. Another fun-filled area. Remember cost managerial from college, remember that? It's back, right? So we'll talk about variance analysis, and four plus three is seven, spending efficiency, volume variance analysis. I love using memory aids or mnemonics, because they make your studying much more efficient, effective, and it helps you to remember stuff. Not only for the exam, but also, for your entire life, as well. So that's called the BEC exam, which again is four, so that makes all four of them. And as a CPA, four plus four plus four, that's 16 hour exam. Once you pass a part, you keep that part for about 18 months. What does it take to pass the exam? 75 and above, woo-hoo, you're a CPA. 74 and below, I came this close to being a CPA. Thanks for coming out, we have a nice consolation prize. So, what I want you to realize is, it's not an IQ test. You do not have to be a genius to be a CPA. It's a test of discipline. If you study, you will pass. That's what our job is, is to motivate you for the 300 plus hours it will take in order to get through all four parts of that exam, being, again, audit, FAR, reg, and BEC. So realize again, if you got a 75 in college, that feels like a C, right? That's what C in CPA stands for, average, right? So you don't have to be a genius, but you need a little bit of a whole bunch of information. The exam is like a lake an inch deep and a mile wide. But your brain, in a minute and a quarter, has to jump from leases, pensions, bonds, so you've gotta jump from topic to topic, concept to concept. That's what it takes to properly prepare and get through the exam. Now, what are the different types of questions on the CPA exam? You're gonna have multiple choice. And with the multiple choice, you generally have four different choices. You've got task-based simulations. And a task-based simulation includes things called a DRS, which is a document review simulation, and also research questions. This DRS, which I'll show you an example of in a minute, this is a question they created. They started testing this in about 2017. Because what they did, is they changed the exam, because they to say, "Okay, what is it "that a second year CPA would see in the real world?" But also, "What do we need to do, "so what do they need to be able to do out there?" They added more critical thinking, and your ability to analyze information. So in order to do that, they created kind of a more detail-type question, which is a document review simulation. Which is just, you're gonna review documents, exhibits, in order to answer a question, which we'll talk about in a minute. Research, which is on FAR, reg, and audit. There's no research in BEC, which is tax and law, but there's essays, or written communication. So in research, which again, I'll show you in a moment, research, most of us are fine with that, you do a Google search, you can find the information. But you'll work through that with our software, as well. And then the written communication, those are essays on BEC. You get three essays, of which generally, two of them are graded. Now, what do these look like? Multiple choice question, so you log in, you open it up, boom, there it is. You'll see, at the top, a countdown clock. And it's kinda stressful, cuz most of us aren't used to a countdown clock in life, right? Hey, you've got four hours. Three 59, three 58, three, and your heart starts racing, like, "Oh my gosh, I should have started studying sooner." But that's what we have to do in class, is work on your timing, cuz we wanna make sure you have adequate time, to get through the multiple choice and all the problems, and research or written communications, as well. So, with the multiple choice, you'll see you've got several choices there, you click it in, when you mark it, you can also open up there's an on-screen calculator you can use. Although at most Prometrics testing centers, where you take your exam, quite often they'll offer you a calculator. And many students go, "Sure, I'll take it." But you have an on-screen calculator, as well. So the multiple choice questions, as I said, you have a countdown clock, you've got generally four different choices, and you'll have a variety of questions, anywhere from 62 to 78 questions, which I'll show you how they're broken up. Or, I'm sorry, 76 questions. With task-based simulations, this is where you're working through a problem, and it gives you a variety of choices. Does control risk go up, go down, and so on. And so they'll give you a finite number of choices right there, that you click on, in order to answer it. And you'll see these kinds of questions in all four parts. The DRS is a document review simulation. This is the newer type of question. So what this question does, this is the one I talked about, where they wanna test you more on your ability to analyze information, and critically think. So here, what they do, is they give you a scenario. But they give you a bunch of exhibits, resources. A bunch of different tabs, where you can click on them and they'll open up support documents. I equate this to, someone comes to you and says, "Hey, Rog, could you do my tax return, please?" And you say, "Sure". And they give you a shoebox full of receipts. And you're job is to go through and figure out, or discern, which of these receipts are applicable to doing their taxes, and which of these are not gonna be tax deductible. You know, can I write off uniform? Cleaning my suit for this video? No, I don't think so, cuz it's not really a uniform, I could wear it anywhere, and so on. So we have to look at that. That's where you have to go through and discern what's useful, what's not. So they might give you exhibits like invoices or depreciation schedules, or a working trial balance, or a letter from the president or CEO, or letters from your attorneys. So you're gonna look at these and discern, or figure out, which ones are applicable to solving the problem. So as we look at this problem again, you got the countdown clock, and you'll see how many, you'll have eight problems in audit, FAR, and reg. And four in BEC, but I'll show you that in a minute. So as you work through this problem, you'll see there that there's certain things that are kind of highlighted, and they have a little mark there, where you have to go through and answer those questions. So it say, "We found that revenues, in the second quarter "of the year nine increased to 1331 or 7.9% to 18,254." So when you click on that, it'll then open up and say okay, hey, here are the support documents to support this information. So you might have to use your calculator to figure out if those percentages are correct. So that's what you're doing, as far as working through this DRS, or a document review simulation. We generally say, figure about 20 minutes for each of these types of problems. For the earlier TBS problem, maybe more like 15 minutes, in order to stay on target, in order to complete the exam in a timely fashion. Now the research, research exists for audit, FAR, and reg, not BEC. But as I said earlier, most of our students are very comfortable doing research these days. We do Google searches all the time. Also on the exam, they changed it to get rid of things that you could easily search. For example, I used to have to teach you all the tax return due dates, is it 3/15 or 4/15? Or if it's a non-profit, you've got more time. Like a Goodwill, where I buy my clothes, that's 5/15. So, it all depends. Those are things they said, you can look these up so easily nowadays, we don't need to test you on that. So they try to test you on stuff that you can look up, the research stuff. And this is again, in audit, FAR, and reg. Every exam in audit, FAR, and reg will have at least one of these. Figure you need about 10 minutes on this, maybe 15 max. I've had some students have two of these. Generally, if there's two, one is probably pre-tested. But as I said, you'll have eight task based in audit, FAR, and reg, of which one, at least, will be a research question. With written communication, that's on the BEC exam, business environment and concepts. And for this, they're gonna give you a scenario. You read it, and basically, you're gonna respond in a three paragraph type report. A beginning, a middle, and an end. Is it clear, concise, complete, use of standard English, appropriateness for the reader, and grammar, spelling, punctuation, and all that. So what they're looking for, is is it organized properly? So they're talking about unified paragraphs, transitions, connectives, all those, no bullet points. They don't want like a bullet point list, because it is machine graded. So the machine looks for key words. That's how it grades you. So it's looking, so that's why, whatever words are asked in the question, you want to regurgitate, give them back in your solution, so the computer is looking for those key words. If your score is close, you get a 74, 75, 76, then they're hand graded a second time, so they can decide, let's push you up to a 75 or six, or let's push you down to a 74. But if you're way high, way low, then the machine grading would count. Expression, it talks about grammar, punctuation, word usage, capitalization, all of these are important things that they're using, the machine is, in order to grade your essays. As I said earlier, in BEC, you'll have three of these. Of the three, two are graded, one is generally pretested. Just so you're realizing that, that there's three of em, of which one's pretested. And as a general rule, about 16% of the exam is pretested. So, multiple choice questions, they have pretested questions in there. Task based simulations, at least one of em. Written communications, at least one of em. So, hopefully it's the one you had trouble with, as opposed to the two you really knew. But there again, there's always some pretested questions on the exam. What is the weighting, the score weighting on the exam? Audit, FAR, and reg is 50/50. 50% of your score comes from multiple choice, 50% comes from your tasked based simulations. Now as I said, in audit, FAR, and reg, you're gonna have anywhere from 62 to 76 multiple choice, and those are the first two testlets. And them the next three testlets are gonna be your task based simulations. So that's 50% of your score is on multiple choice, 50% is on task based simulations. With BEC, 50% multiple choice, 15% written communication, so that's your three essays, of which two are graded. But, task based simulations are 35%. Up until 17, 2017, 85% multiple choice, and it was no task based problems. They brought four problems in. So you'll have four task based simulations in BEC. Back in my day, when I took the exam, back in 19 blah, we had problems in all the exams, even in cost accounting. Now, they had taken em out, now they brought em back in. So you'll have up to four different problems. Could be budgeting, or variances, or economics, financial management, any of those areas. That's in the BEC exam. So that's the way that it's set up. That is kinda what we call your score weighting. As far as the exam, the way that it's structured. First of all, what's really cool, they introduced last year, a break, you get a break, woo! ♪ Give em a break, give me a break ♪ Anyway, so you get a 15 minute break. When I took the exam, did they give me a break? I don't think so, they just said, "Sit down there, "take the exam, no calculators, paper, pencil." Whoosh, and they whip us. And when I took the exam, I took it in LA. At USC, at the convention center. There were about six thousand people sitting in this room. Me and six thousand of my closest friends. And we would sit in this long room with these long tables. And you'd have these 95 year old proctors walk by, drop the exam in front of you. And your heart would race, boom, boom. That's how it was. Now, you book it like a doctor's appointment. I think I'll take it on Friday, in this city, and I want this part. So you can go and book it six days a week at Prometrics, and you can take it one part at a time, which is great. With the exam, they now, as I said, give you a break. So they try to figure the break should be about halfway through, time-wise. Not score-wise, but time-wise. Because, when you look at this slide, you'll see there are five testlets. Testlet one, multiple choice. Testlet two, multiple choice. That's 50% of your score. Testlet three, task based simulations. Four and five, more task based simulations. So you'll see here that audit, FAR, and reg have eight tasked based simulations. You'll also notice that in the multiple choice, you'll get anywhere from 66 in FAR up to 76 in reg. So you'll have 38, 38, multiple choice in each of those. So you can see it's a little different. Where as BEC has 31, 31. Then it switches to your two task based simulations. That's when you should have your break. Two more, and then at the end, your written communications or your essays. So when you look at this, what I want you to see is how it's set up. So notice they're all a little bit different. They're all still four hours each. But what they've tried to do is to set it up where they figure that this should be adequate time for you to prepare and get through this part of the exam. So when we start with testlet number one, in audit, for example, 35 multiple choice, then it'll say, "Do you want to take a break?" No, no, no, cuz if you took a break, the clock keeps running. And unless you feel really lucky, hey, I'll give my head, you don't want to do that. Then, testlet two, another 36 questions. It'll say, "Do you want a break?", no. Then, testlet three, are your two task based simulations. And those two task based simulations figure, about 15 minutes each. Then it says, "Do you want a break?", yes. Because this one doesn't count against you. You can get up, go to the restroom, leave the room. Allow enough time to check back in. You gotta get back in line, check back in, fingerprint, and get into your seat. If you're not seated within 15 minutes, boom. The clock will start ticking. Tick tock, tick tock, there's an old song, tick tock, I forgot who did that. But anyway, do you remember that song? So, you get a break for 15 minutes. Then the clock starts, you've got testlet four, with three TBS, testlet five, with three TBS. These are generally some of the longer TBS. So, if it's a long, like a DRS, a document review, where you've got that exhibit tab, figure about 20 minutes per question. If it's a basic TBS, maybe 15 minutes. So as you're going through it, again, your key is to watch the clock carefully. Because I don't want you to get to TBS four, and boom, run out of time, cuz you're not gonna pass. So realize again, even though halfway through, about two hours, should be your break. But, testlet one, testlet two, that's 50% of your score, then you jump into testlet three, then you should have your break. So again, this is an important slide to kinda understand, as far as the timing. So what we will do together, is we'll work on exam time strategies. And by the exam time strategies, what I mean there is that I want you to know, okay, what should my countdown clock look like? Because remember, at the exam, you can't wear a watch, everything has to go in your locker. Incidentally, if you're wearing a jacket to your chair, you're gonna have to wear that jacket the entire time. So you can't take it off and hang it on your chair. So I tell students, wear a t-shirt, with maybe a light shirt over it. So if you're warm, you can open the shirt. If not, you can close it. You might be sitting right under the air conditioning. Make sure you like your seat. If not, go and ask them maybe to move you somewhere else, so you're not by a walkway, or by a door, or under an air-conditioning vent. You've studied so much, you put so much prep time in, I want your experience at the Prometrics testing center to be good. So as you look at this, you'll see, for example, okay, testlet one in audit should take about 45 minutes for 36 questions, when you do the math, that's like a minute and a quarter a question. Testlet two, about 45, testlet three has two problems, figure up to 15 minutes each, boom. There's your two hours, that's where your break should come in. Then, testlet four and five, those are sometimes longer TBS. Figure maybe 20 minutes each, sometimes 25. Sometimes as little as 15. But again, watching that countdown clock carefully. Now you can see, we've kinda broken it out for all four of the parts. But if you zoom in on just audit, what should it look like? Multiple choice questions, about 75 to 84 seconds per question. Wow, that's not a lot of time, I got a minute and a quarter to read it, understand it, read the four choices, narrow it down to two, read it again, figure out, you know what, I think it's A, boom, let me mark A and go on to the next. Or let me mark the first box, for example. TBS general ones, as I said, about 15 to 20 minutes. The more complex ones, more like 20 to 25. Research, figure about 10 minutes a question. And for BEC, figure about 15 minutes per written communication. BEC is the thinnest book, and probably is the one that you'll have the least problem with time on. FAR is the thickest book, as I showed you. This book has a lot of material. There's a lot of stuff, a variety of stuff for them to test you on. That one, you really gotta watch the clock carefully. So that's an important part of preparing for the exam. As far as when can you sit for this exam, as I said earlier, when I was your age, it was twice a year, May and November. So May, you had three days, November you had three days. We had to sit for all four parts at the same time. We had to pass at least two parts to keep anything. And the parts you didn't pass, if you didn't get at least a 50% or more, you got nothing. So if you got a 99, 99, 99, 49, you had to start all over. Now, you study for a part, and take a part. As long as you pass that, that's great. You keep that part for the next 18 months. Now, as far as the testing windows, basically, we take the year, break it down into the four quarters. Quarter one, January, February, and March. You can take the exam January 1st through March 10th, then they close the window. That way they can update the exam, and check the exam, and make sure there's no issues, or replace some new material, and so on. So the blackout is March 11th through 31st. The next window opens April 1st through June 10th, and that's how it goes. So you can now take the exam nine and a half months a year, six days a week. Wow, that's much better than six days for the whole year, when I took the exam. So that's the way that it's set up, and again, it says candidates have 18 months to complete all four exam. So you pass a part, you get your results, the clock starts ticking, you've got 18 months to get the last three. If your 18 months goes by, in my day, you lost everything. Now, you just lose the first part. So as long as you can get it done in that 18 month window, you're fine, you pass, you qualify to be a CPA. So that's with the testing. Now as far as score release, one of the interesting things, they release the scores generally four times in a window, generally. So if you took it January 1st through January 20th, they take those exams, grade em for about 10 days, release it. January 20th through February whatever, 20 days. They take those, release em 10 days later, same thing. And then the fourth is for people, if they have to go over the window, or whatever. If there's hurricanes, tornadoes, they have to close the exam center, they'll give you a few extra days into the Blackout period. But the blackout period really is, like for example, when the new PCOB audit report came out, they launched it July 1st. So that way they had a few weeks to take the old out, put the new in, and so on. Same thing for the TCJA Tax Cut Job Acts for 2019. In 2018 they tested the old. 2019, so in between December 11th and the 31st, they take it out, put in the new stuff. That's why in your exam, you have the new material being tested. Now, people always ask, "Hey Rog. "What order should I take the exam in?" Generally, FAR takes the longest to prepare for. We suggest, start with FAR, then either audit or reg, then the other one, and then maybe BEC at the end. Now, I also like to tell students, "Look. "Let's say you just had a great teacher in auditing, "and it's fresh in your head, and I just graduated, "and I'm ready to study for it." Because, the exam is a highly academic exam. I mean, in the real world, nobody comes up to you and says, "Hey Rog, the second internal control structure element. "Is it control environment, risk assessment, control procedures?" Pff, right, nobody does that. But that's how your brain has to think for 16 hours. So, I suggest taking it as close to graduation, before you start working so much. Because once you start working, you kinda forget how to answer A, B, C, D type questions. So, if you just had a great audit teacher and it's fresh in your head, start with audit. If you're not sure, I always tell people, watch the first hour of each lecture video, see which one you're interested in, start with that. But I wanna remind you, there's gonna be stuff that you haven't seen in years, or may have never seen. That's fine, our job's to teach it to you. So, let's assume you're gonna follow this order, do FAR first. Then, if you wanna do reg, which is taxes next, or auditing, that's fine, do the other one. And then finally, BEC, cuz it's the thinnest book. The reason we choose this order, is because I wanna make sure, you know FAR takes so long to prepare for. And once you pass, your 18 months starts. But I don't want you to start with BEC, pass it, and then all of a sudden, you're running out of time, and then you lose it. So I'd rather have you start with the hard one first, which is FAR, and then get to the others. But again, you can go in any order you choose. The key that I want, is I want you to get a leg up. I want you to realize, woo, I passed this part. I can do this exam. So that's why, again, I want you to start with the proper part. Now, what's new, this year in 2019? Well, no major changes to the question type, or the structure, or the scoring. But significant changes, as I mentioned earlier, in reg and FAR. We'll start with FAR, with far, leases. Leases had a big change, because they said, "Let's get more in conformity with IFRS, the International Financial Reporting Standards." So what it did, is we used to have a capital lease, and an operating lease, instead of capital, it's now a finance lease. So the criteria changed slightly, T, T, BPM, and so on, on how to classify it as a financing versus operating. The biggest change is now operating leases have to be in your financial statements, unless they're less than a year. The reason is, we used to have this called off-balance sheet financing, off-balance sheet risk. It said, no, we don't want that anymore. We want full disclosure, we want it in your books. So, balance sheet recognition, financial statement disclosures, they expanded tremendously the disclosure requirements. What are the lease qualifications, they've added a couple of things there. Lease payments, for the calculations, for both operating and a finance lease, say a lease-backed transaction. So, there's a lot with leases that changed January 1st, 2019 moving forward. That's why, again, it's important to be studying those. Regulation, that has the TCJA, the Tax Cut Job Act. And this changed early last year in 2018. But the AICPA said, "Dude, we can't test it this soon, "so we're gonna make a clean cut and start January 1st." Which gave everybody time to update, repair, refilm, and so on. Some of the changes, it increased the section 179 deduction, and also bonus depreciation. Basically, it increased up to a million dollars. Starts phasing out at two and a half mill. So if you're a small company, like Roger CPA Review, instead of capitalizing and depreciating things, I can immediately expense certain things, which means it's an expense, reduces income, I pay less taxes, I have more money, I can reinvest in my company. Increased the standard deduction, but eliminated the personal exemptions. So the standard deduction, for myself, my wife, went up to 12 thousand for one, and 24 thousand for two. So instead of having to do an itemized Schedule A, the government said, why don't we change it, so that way it's easier, people can do their taxes on a postcard size, we'll see if that ever happens. But the point is, instead of itemizing, we're gonna give you 24 grand. That's more than most people would have anyway, so that way, fewer people will itemize, more people will just take that basic standard deduction, and then forget about my kids, my dependents, and so on. New limitations on property, state, and local taxes, and also mortgage interest. So for example, state taxes, property taxes, ten thousand dollar max, wow. It used to not be limited. So that meant that, you live in a city like San Francisco, you're property tax could be 30 grand a year, you can only write off 10. And that includes that, and state taxes. So that's why some people that used to itemize, because of that, may now just take the standard deduction. Mortgage interest, used to be a million, plus a hundred thousand of equity interest, a million one. They changed it to 750. Now you're grandfathered in, if you already got a mortgage of more, but for any new mortgages, moving forward, 750. They also came up with a new deduction, which is a 20% deduction for pass-through entities, Schedule E, S corps, and so on, called a QBI qualified business income deduction. That is a new great deduction. Gives you a certain percentage of 20% of wages, and so on, that you can take. And we'll talk about that in tax, as well. So these are just some of these basic changes that have occurred for the 2019 exam, and moving on. Getting back to this road, completing the ethics exam. Most states require an ethics exam, and I always joke, it's an exam where they send you the book, all the answers are in the book, or actually now it's online, that's how old I am. So you search the book, you'll find the answers. It's the one exam a lot of people cheat on, right? They'll go to work and go, "Psst, which ethics exam did you get?" Hey, how ethical, right? But the point is, it's an ethics exam, where you're sitting down, you're taking these questions. You've generally gotta get a 90% or above, in order to pass. There's maybe 40 questions, some states have more. But 40 questions, you've gotta get almost all of em right. Right, you can only miss three questions. So the point is, and it's all like, independence, and your sister's husband's wife is the board of directors, can you own stock and do the audit? So that's the kind of thing. So it deals a lot with independence questions. It's the kind of thing, again, it's a take-home exam. It's not difficult to pass, you just have to put the time in. That is called the ethics exam. We also have work experience. Now, every state's a little bit different, and it's determined by the state board. But generally, you need about one year of experience. So for example, when I took the exam moons, many, many moons ago, in order to sit and take the exam, you only needed a degree, 24 units of business, 24 in accounting, 36 quarter, 36 quarter. Then, but you had to work for two years. So I had to work at least two years, in order to get my CPA certificate, and you're generally working under the supervision of a licensed, active CPA. What they did is they changed it, and said, okay, by law now, instead of four, basically you need 150 units, or 225 quarter. So you need that extra year of school, but we'll cut the experience by one year, so you only need to work about a year. So for example, a lot of states say two thousand hours. So two thousand hours, if you look at a 40 hour week, that's two thousand 80 hours, so it's kinda like working a year. So a lot of states say a year, you gotta work at least 12 months. If you've worked at more than one job, that's fine. It's the cumulative total of at least a year. If you did work before you became a CPA, before you passed the exam, all of it, before, during, or after, all of that would count. So it's important to kinda keep track. How do you do it? Most states have this thing called a Form E of experience. And, before you give notice to quit, have them fill it out, to show what work you did, and so on and so forth, and they will submit that for you to the state. So, verified by a licensed CPA, as I said earlier, if you've worked under the supervision of a licensed, active CPA, that's what matters. So for example, California, you need 80 hours every two years, once you become a CPA, to keep your certificate active. So as long as that person has an active CPA certificate, they can sign off on that Form E for work experience. As far as submitting the paperwork, when all is done, you fill it out, submit it, and then boom, you're a CPA. You get this beautiful certificate, that it took me 20 years to finally frame. It was sitting in the box it came in for years. Finally I said, ah, let's put it up so it looks cool. But that's basically, the steps from A to CPA. What is it, it is education, understanding what you need, in order to qualify to sit. Taking and preparing for the exam. Passing the ethics exam. Getting your work experience. And then finally, submitting the paperwork to becoming a CPA. Now as I mentioned earlier, we have this wonderful thing called SmartPath. And it uses predictive technology. And it's something we launched in January of last year, 2018. And we noticed, because of it, our pass rates increased dramatically. Pass rates went from 88%, which was already great, up to 92, 93% in some cases. And the way it works is, we've gone through and taken the last five, six years of our past students. And we keep track of everything you do, how many questions you do, what percent you get right, how many attempts, and all that. We went through and we said okay, how can we make your studying more effective, more efficient? Because I don't, some courses say we've got 15 thousand questions. I don't want you to be 15 thousand questions. I want you to do what you need to do in each category, to make sure you understand it, so you can move on. Let's say I start with bonds. So it'll keep track of, let's say, we've got 280 questions and problems in bonds. You don't need to do all 280 if you're doing really well. So we'll keep track of, how many questions you've done, what percent you got right, and how many questions are in that section. And if you're meeting these certain criteria, you're targets are met, we go, "Dude, even though you only did 86% of these questions, "you're ready for bonds, let's go onto the next category." So what's nice about it, is it saves you time, makes you more efficient. And our pass rates have gone up, makes it more effective. So you'll see here that it tracks your progress towards the targeted goals. It maximizes your study time by giving you the right questions that you need. So that way, it gives you the questions you need in those areas, so that way you're not going too far into it. It's proven, as I said. It's done amazingly well with our students. And their pass rates have gone up as well. So as you go through, you'll see here, where you look at it and it says, oh, targets are met, go onto the next section. Oh, and this one, you know what, I haven't done enough questions, do more questions. In this case, I've done a lot of questions, but I'm not getting a high enough percentage, you gotta do more. So, it looks at all of those things. How many questions you've done, but also what percent correct you've done. And it's basing it on you, individually. So it's individually tracking you and says, "You're done, now go to the next section." What's great also, about our software, is it has robust diagnostics. And that will tell you what you've done, how long you spent, how much time you spent on each question, what percent correct you're getting. When I took the exam, it was paper, pencil, we didn't have any of this, we still pass. In today's day and age, I wanna know how much time I'm spending, and what I'm doing. So that's great, we will give you that information as needed. You'll have everything you need in order to qualify and pass the CPA exam. Please, feel free to start today with a free trial. Just go to our website, rogercpareview.com/cpa-courses/free-trial. And you can go through there and you can practice it. I always encourage people, shop around, try the different courses to see what it is they're offering you. I guarantee, ours is exciting, energetic, dynamic, entertaining. But most importantly, it'll give you what you need to pass the exam. You are smart, you've done well in school, you've done well in life. No matter what course you take, you're gonna pass. But I want you to enjoy it. When you get off of work, and you go home at 7:00, and you go uh, I've gotta study deferred taxes, I want you to be excited about the lectures. I want you to follow me, learn my memory aids, learn my mnemonics, we'll go through problems together. That's what's gonna motivate you. Cuz half the battle of passing the exam is staying motivated for the time it's gonna take to get you through that exam. Whether it's three months, six months, a year, or longer. We wanna get it done in 18 months, but we'll give you what you need to do, in order to pass the exam. Also, feel free to connect with us on social media. We are all over the place. Sign up for our blog post as well, because then we'll give you updates, about new changes on the exam, new changes in the environment, and also in the profession as well. So again, connect with us, thank you again for your time, and have a fabulous career in accounting.

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