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Juan A. Punzalan
Intermediate Accounting Professor Kathy Johnson February 13, 2012
Accounting Theory (3. This examination is developed and maintained by the American Institute of Certified Public Accountants (AICPA) and is used by all 50 states including the District of Columbia. possibly the most difficult task is passing the CPA examinations. Although Accounting Practice Parts I and II are given in separate sittings. the testing has undergone numerous changes. Accounting and Finance courses always have been mentally challenging and physically draining to me during my college days about 30 years ago. Thursday. Setbacks happen and despite a lifetime of challenges and hardships. Following are the significant milestones in its history: 1. I hope to become a Certified Public Accountant (CPA) someday.5 hours).5 hours). the two scores are combined for grading purposes.000 candidates sit for the exam each year. The CPA Exam was first administered in 1917. the Northern Mariana Islands. One hurdle. the U. In the 1990s. and Accounting Practice Part I and Part II (4. Guam. Approximately 100. It consists of four subject areas (sections) tested in five sittings: Auditing (3. Business Law (3.5 hours each).Punzalan 2 Like the rest of my classmates. What is the History of the Uniform CPA Examination? In its almost century-long history. The exam is administered twice per year: on the first consecutive Wednesday. administered more than two and one-half days. the Uniform CPA Examination was nearly 20 hours in duration. and Friday in May . Virgin Islands. and Puerto Rico.S.5 hours). What is the Uniform Certified Public Accountant Examination? The Uniform CPA Examination is the examination given by the National Association of State Boards of Accountancy (NASBA) to people who desire to become CPAs in the United States. This paper focuses on the California CPA Board requirements. my mind and body are now focused on that goal to become a CPA.
. In May 1996. 5. and after each administration the questions and the keyed responses (correct answers) are published and available for purchase. primarily between Accounting Theory and Accounting Practice (Parts I and II). In addition. 3. two-day exam. the exam was restructured into a four-section. For the first time. innovative machine-scored test questions are incorporated to assess better the skills needed by CPAs to protect the public. Computer-Based Testing-evolution (or CBT-e) is the title attached to a set of projects related to the release of the new Uniform CPA Exam. the computer-based CPA exam was launched and the paper-and-pencil exam was discontinued. In March 2007.Punzalan 3 and November of each year. proprietary electronic calculators are provided to CPA candidates for the two new accounting sections. In April 2004. completely new versions of the CPA Exam are prepared every six months. The CBT format replaced the traditional method for delivering the CPA Exam. Test takers are allowed to use only paper and pencil (no electronic calculators or computers of any kind). the computer-based CPA exam achieved its one millionth exam administration. 2. 6. The subject matter was reorganized and redundant material was eliminated. Almost all exam material is kept secure so that many high-quality questions could be reused. In July 2009. the AICPA Board of Examiners (BOE) initiated this multi-year project designed to improve the CPA Examination. 4. In 1994.
credit is lost for any section passed more than 18 months earlier and must be retaken. 2. The exam was developed by AICPA and delivered by Prometric at its 300+ U. obtaining." During each three-month window the candidates may take one or more sections but may only take each section once. Currently. 3. and preparing communications. specific types of transactions and events. and reporting for governmental agencies. Regulation (3. and evaluating information. reviewing engagements. typical items in financial statements. Financial Accounting and Reporting (4. internal controls. In January 2011. The CPA Exam will be delivered to specific Prometric centers in five other nations: Japan. and accounting and reporting for nongovernmental and not-forprofit organizations.0 hours): (FAR) – This section covers knowledge of concepts and standards for financial statements. Kuwait. testing centers. Auditing and Attestation (4.1 Credit earned for passing a section is valid for 18 months. the testing year is divided into four "windows.0 hours): (AUD) – This section covers knowledge of planning the engagement.0 hours): (REG) – This section covers knowledge of ethics and professional responsibility. Bahrain. accounting. If a CPA candidate fails to pass all four sections within an 18-month period. documenting information. and the United Arab Emirates. business law. CBT-e (Computer-Based Testing-evolution) debuted as a higher functioning computer-based platform. . Federal tax procedures and accounting issues.S. What is included in the CPA Examination? The content of CPA exams includes sections that have been reorganized as follows:2 1.Punzalan 4 7. Lebanon.
multiple-choice test-lets account for 60% and simulations (case studies) 40% of the score. In Business Environment and Concepts (BEC). Every effort is made to avoid asking about subject matter that may have different correct answers in different jurisdictions.0 hours): (BEC) – This section covers knowledge of business structures. The other 40% consists of simulations. Federal taxation – individuals. communication. and measurement. In Auditing and Attestation (AUD). completing written communication exercises. and planning. Business Environment and Concepts (3. financial management. judgment. and Regulation (REG). The Uniform CPA Exam tests primarily understanding and the ability to apply authoritative literature such as auditing and accounting standards. Financial Accounting. and Reporting (FAR). 4. The skills that simulations are intended to measure are: analysis. . These are universally adopted by all US jurisdictions or federal agencies. Accounting knowledge is tested in simulations through a variety of tasks. and the Internal Revenue Code. economic concepts.3 Which Testing Methods does the NASBA use? Multiple-choice questions represent 60% of the total score for three of the four exam sections with the exception of Business Environment and Concepts (BEC). and working with spreadsheets and forms. some of which require searching databases. the Uniform Commercial Code. and Federal taxation – entities.Punzalan 5 Federal taxation of property transactions. multiple-choice questions account for 85% of the score and three written communication task simulations account for 15% of the score that changed in 2011. information technology. and research.
The US jurisdictions without a "150-hour rule" are California. anyone with a bachelor’s degree (from a qualifying institution) in Accounting may sit for the exam. Scores are reported on a numeric scale of zero to 99 with 75 as the passing score. Each Board of Accountancy maintains its own process and schedule of releasing the scores to candidates. In some states. New Hampshire. The scores are subsequently forwarded to Boards of Accountancy for their approval and release. New York. How can a person be eligible to sit for the Uniform CPA Exam? To sit for the Uniform CPA Exam. Virgin Islands and the Commonwealth of the Northern Mariana Islands. such as Minnesota. The scale does not represent "percent correct.Punzalan 6 How do you know if you passed the board? The score represents the candidate's performance on the identified examination section. Pennsylvania. An important distinction should be made between requirements to sit for the exam. Per NASBA's website. Requirements of state boards vary. State Boards of Accountancy. the U. a person must be declared eligible to do so by one of the 55 U. .S." A score of 75 indicates examination performance that hypothetically reflects a level of knowledge and skill required for the protection of the public. completed tests are sent to the AICPA for scoring.S. the "150-hour rule" only applies to certification. The Examination Section ID only is used for identification. When the candidate’s performance has been scored NASBA receives the scores for processing. The requirement for five-year full-time equivalent study is known as the "150-hour rule" and has been adopted by the majority of state boards. and requirements for certification. but usually consist of a United States bachelor’s degree with a concentration in accounting (not necessarily an accounting degree) plus an extra year's study (which can be either at undergraduate or graduate level). certification requires 150 credit hours. However. Vermont.
Apply to one of the 55 state boards to determine eligibility. The exam responses of the candidate are sent back to AICPA. NASBA places candidate on the National Candidate Database and issues a Notice to Schedule (NTS). a few states issue NTS with a validity of 3. however. 5. 9. .Punzalan 7 What are the steps to sit for Uniform CPA Examination? For first time applicants. identified only by a section ID number that NASBA has provided to the candidate. 2. On the day of the examination. The validity of the NTS is normally six months. 4. 3. Candidates contact Prometric to arrange to sit the examination section within the validity of the NTS. or 18 months. NASBA matches up the score (from the section ID) to the candidate details on the National Candidate Database 9. State Board forwards the scores to candidates. Some state boards delegate this to NASBA. NASBA forwards the score to the candidate's State Board (some state boards allow NASBA to report the scores direct to the candidate) 10. AICPA scores the examination and sends the result to NASBA 8. after conducting its own review. they need to: 1. 7. 12. the Prometric test center receives electronic data from the American Institute of Certified Public Accountants to allow the exam to be set. 6. State Board notifies NASBA of eligible candidate.
Another option is to continue to follow the Generally Accepted Accounting Principles (GAAP). Some major differences between IFRS and GAAP are: 1. 2011. the exam structure. and the scoring. and Reporting (FAR). Total (18) multiple choice questions from the Business Environment and Concepts (BEC) and REG sections. especially in its practice of revenue recognition. According to J. First-Out. Some IT-based testing content The following content will be added to the current CPA Exam: 1. Content based on the International Financial Reporting Standards (IFRS) The content of the exam that revolves around IFRS is very important to note because of the ongoing debates regarding whether or not the United States should adopt the international standards. 3. The written communication in the Auditing and Attestation (AUD). GAAP permits First-In.S. David Spiceland. 2011? Significant changes will be made to the Uniform Certified Public Accounting Exam as of January 1. The following content will be removed from the current CPA Exam:4 1. these changes will affect the content of the exam. Project-management-based content 3. Financial Accounting.Punzalan 8 What are the changes to the CPA Exam as of January 1.S. In regard to inventory. or FIFO (a method in which the Cost of Goods Sold is recorded at the price of the inventory purchased first) . U. and Regulation (REG) sections of the exam. IFRS provides fewer reported details than U. the time allocations applied to each section of the exam. GAAP. 2. and weighting processes. The written communication in the BEC section of the exam 2.
In my opinion. or LIFO (a method in which the Cost of Goods Sold is recorded at the price of the most recently purchased inventory). passport photos.7 In addition to these changes. I have to pass the American Institute of CPAs professional ethics exam with a score of 90%. First-Out.S. the rewards of becoming a CPA are well worth the hard work. Conclusion Obtaining a CPA license is not easy. I must provide the required information to the State Board of Accountancy that includes my college transcripts. . 3. and Reporting. and exam fees. In order to sit for the CPA exam. and Regulation sections of the exam will be replaced with shorter “Task-Based Simulations” (TBS). This causes write-downs to occur more frequently in IFRS. Financial Accounting. 2. Task-Based Simulations normally contain six or seven tasks. whereas IFRS employs a single-step write-down.Punzalan 9 and also Last-In. long simulations in the Auditing and Attestation. In regard to impairment write-downs. but it represents a significant investment in my future. letters of recommendations. one of which is usually is research problem.6 GAAP permits a two-step write-down. Also in California. which reduce overstated book values to fair value. Having completed my baccalaureate degree in chemistry in the Philippines. Classification of debt also varies between the international and U. complete application forms (including Criminal Conviction Disclosure Form). standards. to qualify I need a minimum of 24 hours of accounting courses and at least 18 hours of related classes such as business law and management.5 IFRS does not permit LIFO. Then hopefully I pass the four sections of the CPA examination.
ais-cpa. AICPA. 4. http://www. California-CPA-Certification. 5. . Changes for 2011.com/study/inventory/inventory-121.org/exams/cpaexam/georgia/#fees. 3.cba. http://www. http://accountinginfo. Inventory Systems.htm.calcpa.aspx.org/BecomeaCPA/CPAExam/Pages/CPAExam.org/t/56066/42776450/12556/0/. 7. Retrieved at website. pp.com/finance/changes-tothe-cpa-exam-in-january-2011. 2. American Inst.html.gov http://list. 11-12.ORG@ http://www.nasba.Punzalan 10 Notes 1. 6. Uniform CPA Examination: Examination Content Specifications. Answers to your California CPA licensing questions at http://www.ca.financialnewsline. Become_A_CPA. http://www. NASBA.com/dates.aicpa. of Certified Public Accountants.
and Mark Nelson.org/exams/cpaexam/georgia/#fees Spiceland.gov.nasba.ais-cpa. http://www. and at http://list. American Inst. of Certified Public Accountants. David. http://www. p. 2010 .the-CPA-exam-in-January-2011.aspx California-CPA-Certification. .ORG@ http://www.com/finance/changes-to-thecpa-exam-in-january-2011 NASBA.html Changes-to..cba. James Sepe. New York: McGraw-Hill. 6th ed.calcpa.Punzalan 11 Bibliography AICPA. Uniform CPA Examination: Examination Content Specifications.com/dates. 11-12 Answers to your California CPA licensing questions at http://www. J. Intermediate Accounting.financialnewsline.ca.org/BecomeaCPA/CPAExam/Pages/CPAExam.org/t/56066/42776450/12556/0/ Become_A_CPA. http://www.aicpa.
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