CPA Exam Pattern and Format

Of late, we have been hearing about the US CPA program a lot, primarily, as these exams are now being conducted in India. Although a lot of basic information is available with the aspirants regarding the

• Number of Sections
• Exam frequency
• Eligibility criteria etc. just to name a few, not really sure how many are actually aware of the exam pattern, testing criteria, knowledge and skills tested, score weightage etc.

In this article, we are going to deep dive into all the aspects relating to the US CPA exams. Let’s start with the four CPA exam subjects commonly referred to as CPA exam sections:

• Financial Accounting and Reporting (FAR)
• Auditing and Attestation (AUD)
• Business Environment and Concepts (BEC)
• Regulation (REG)

Before these sections are discussed in detail, it is better to understand the other aspects like

 Exam Pattern / Structure

Each of the above exam sections comprises of five smaller sections which are called test lets. Each of the tests has different item types in order to test the knowledge and skills of the candidates. There are three different types of exam items that will appear within the specific test lets in each section

1. Multiple choice questions (MCQs): These will be presented in the first two testlets of each exam section
2. Task Based Simulations (TBS): These are in the form of case studies. There would be 3 TBS testlets in AUD, FAR and REG exam sections and 2 TBS testlets in the BEC section
3. Written Communications Tasks: These appear only in the BEC section and would be in the form of a memo/ letter.

Following is the design of the exam by section, section-time and question type

• As these exams are for 4 hours each, it is very important that we accustom ourselves to sit continuously under examination conditions, for this it is advisable to take mock tests before appearing for the main exam
• Time management is of utmost importance as spending too much time on mcqs might not prove a fruitful strategy to clear the exam.

Next is the table that presents the weightage of the multiple-choice questions, task-based Simulations and written communications for each exam

• Both mcqs and task based simulations carry equal weightage, however as TBS are in the form of case studies, they are bound to consume more time than mcqs. It is advisable to complete the mcqs at the earliest and move on to the TBS.
• The research simulations can be used to look for responses for other simulations as well provided the time is available.
• It is better to keep some time for a quick revision

Exam Duration 

Maximum four and a half hours are available to complete the exam. Look into the below image you will get the clear idea about the exam duration. Based on this, plan yourself like how to segregate the time during CPA exam.

Introduction to the CPA exam sections / Exam Subjects

Financial Accounting & Reporting (FAR) 

FAR imparts the knowledge and skills required by the Financial Accounting and reporting frameworks used by business entities both public and non-public, not for profit entities and state and local government entities.

The frameworks that are mainly tested on the FAR exam section include

• Financial Accounting Standards Board (FASB)
• Governmental Accounting Standards Board (GASB)
• International Accounting Standards Board (IASB)
• American Institute of Certified Public Accountants (AICPA)
• U.S. Securities and Exchange Commission (U.S. SEC)

When answering questions in the FAR exam section, one should assume

• All the information provided in each of the questions is material.
• Each question applies to a for-profit business entity under US GAAP unless e question specifically mentions not for profit
• Questions specific to IFRS include the phrase such as “according to IFRS” or “under IFRS”
• Questions specific to the state and local government include the phrase such as “ state government”, “local government”, “city” or “municipal

Auditing (AUD) 

AUD is one of the four sections of the CPA exam. It tests candidates on their knowledge and skills related to performing audits of financial statements in accordance with professional standards. The exam covers topics such as audit risk, internal control, audit procedures, and audit reports. The exam is designed to test candidates on their knowledge and skills in the following areas:

1. Audit Risk and Materiality: This includes understanding the concept of audit risk and how to assess and respond to it, as well as understanding the concept of materiality and how it affects the audit process.
2. Internal Control: This includes understanding the types of internal control systems that may be in place at an entity, how to assess the effectiveness of these systems, and how to design and perform audit procedures to test their effectiveness.
3. Audit Procedures: This includes understanding the various types of audit procedures that may be used during an audit, such as substantive procedures and tests of controls, and how to design and perform these procedures to obtain sufficient appropriate evidence to support the audit opinion.
4. Audit Reports: This includes understanding the types of audit reports that may be issued, the requirements for each type of report, and how to draft and prepare audit reports that are clear, concise, and accurate.

The AUD exam is structured as a computer-based test consisting of multiple-choice questions, task-based simulations, and written communication tasks. The exam is four hours long and consists of a total of 72 questions.

Overall, the AUD exam is designed to assess an individual’s knowledge and skills in the area of auditing and to ensure that they are able to perform audits in accordance with professional standards. It is an important step in becoming a certified public accountant in the United States.

Business Environment and Concepts(BEC)

BEC imparts the knowledge and skills that help perform

• Financial reporting
• Audit, attestation, accounting and review services
• Tax preparation
• Other professional responsibilities

With the knowledge and use of internal control frameworks, enterprise risk management framework, regulatory frameworks and laws such as Sarbanes Oxley Act 2002 along with the knowledge and skills in many other areas.

Regulation (REG)

REG imparts the knowledge and skills that help perform

• U.S. federal taxation
• U.S. business law
• U.S. ethics and professional responsibilities related to tax practice

This should help the aspirants in planning and preparing for the US CPA exams in a much better manner. Happy Learning!!!