For those interested in the world of accounting and finance, a career as a certified public accountant (CPA) is an attractive one. Professionals who hold this credential (as well as a bachelor’s and/or a master’s degree) have more job opportunities, greater income earning potential and professional respect and distinction. Currently, the Bureau of Labor Statistics (BLS) reports that for the years 2018-2028, the job outlook for accountants is growing at 6% (which is average for the industry) and the median pay is $70,500/year. The career choice of CPA is a sound investment in what should be a stable and rewarding professional trajectory.
Uniform CPA Exam
Becoming a CPA is not easy. Those who desire CPA work must sit for and pass the national Uniform CPA Exam. To be a qualified applicant, nearly every state in the US requires a bachelor’s degree (though that degree does not have to be in accounting). Each applicant is also required to complete 150 hours of college credit hours; the average college bachelor’s degree is only 120 credit hours. Depending on the state of licensure, applicants may also need a specific amount of work experience and/or internship.
Test Details
The uniform CPA exam is a four-part test. Each test section, which is taken separately, takes about four hours to complete. The four test sections are Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR) and Regulation (REG). All sections of the CPA exam must be successfully passed (a score of 75 or greater) within 18 months. Should an applicant not complete all four exams in this time period, the oldest exam will “expire” and the applicant will have to sit for and pass it again.
Though most CPA exam applicants have a bachelor’s degree in accounting, the amount of time spent studying to become a CPA is typically still extensive. Prior successful exam applicants report that expected study hours should be anywhere between 300-400 hours or 80-100 hours/section.
Types of Exam Questions
Most exam sections will make use of two different forms of test questions. Exam takers will come across multiple choice questions (MCG) and task-based simulations (condensed case studies) (TBS). In the BEC exam, written communication tasks will also be used (self-written responses related to a given scenario).
Each question (throughout all four test sections) is meant to assess one of four applicant skills as they relate to accounting practices. These skill levels (in order of increasing difficulty) include: remembering and understanding, application, analysis, and evaluation.
Test Sections
Because the test sections are taken separately, applicants do have the privilege of focusing their study time and efforts on one section of knowledge at a time. While most of these topics were likely studied during a bachelor’s degree program, this section specific study time will be much more in-depth related to the nuances of each different collection of knowledge.
Each exam section is broken down into five different testlets (a group of questions about the same topic). Testlet composition for each section is discussed in further detail below.
Auditing and Attestation: In the AUD section, applicants will focus on four different areas, each weighted differently. These sections include ethics, professional responsibilities, and general principles (15-25%), assessing risk and developing a planned response (20-30%), performing further procedures and obtaining evidence (30-40%) and forming a conclusion and reporting (15-25%).
Specifically, test takers can likely expect questions related to the skills of internal controls, planning an engagement, obtaining/documenting information, reviewing and evaluating engagement information, and preparation of communications. The AUD section is comprised of two 36-question MCQ testlets and three TBS testlets.
Business Environment and Concepts: The BEC section is comprised of five different sections, also weighted differently. These sections include corporate governance (17-27%), economic concepts and analysis (17-27%), financial management (11-21%), information technology (15-25%) and operations management (15-25%).
Specific skills tested in the BEC section may include: nuances of business structure, individual and organizational financial management, the appropriate use of information technologies, and planning and measurement strategies. There are two 31-question MCQ testlets, two TBS testlets, and one written communication testlet.
Financial Accounting and Reporting: Four sections will be tested on the FAR exam. These include conceptual framework, standard-setting and financial reporting (25-35%), select financial statement accounts (30-40%), select transactions (20-30%), and state and local governments (5-15%).
Test taker skills tested during the FAR section may include the typical items included in a financial statement, concepts and standards for building a financial statement, specifics related to certain business transactions and events, and accounting and reporting related to both government entities and non-for-profit and non-governmental entities. The five testlets of the FAR test section include two 31-question MCQ testlets and three TBS testlets.
Regulation: The REG test section has five different testing areas. These include ethics, professional responsibilities and federal tax procedures (10-20%), business law (10-20%), federal taxation of property transactions (12-22%), federal taxation of individuals (15-25%) and federal taxation of entities (28-38%).
Specific questions in the REG section may relate to a CPA’s business ethics and professional responsibility to clients, government, and self, nuances of business law, and issues of taxation related to individuals, organizations, and transfers of property and government transaction. There are five testlets in the REG exam. They include two 38-question MCQ testlets and three TBS testlets.
The American Institute of CPAs (AICPA) offers exam blueprints for each test section. The blueprints for each section can be found through the following hyperlinks: AUD, BEC, FAR, REG. Sample tests and tutorials may also be found here.
Where Should I Start?
Choosing which test section to focus on first can be tough. You will find prior CPA candidates who recommend starting with the material you know best and you will find prior candidates who recommend starting with the material that is your toughest. There are pros and cons for getting each section of the exam out of the way; it will be up to you to decide what makes the most sense for you. Remember to keep the 18-month expiration in your mind as you work through your decision. If you think there is any reason you may not complete all the tests in that required time period, you may want to give extra thought to the test you take first, as you may end up having to repeat it (and pass it twice)!
Laura Mansfield
Master of Healthcare Administration (MHA) | Sacred Heart University
Associate’s Degree of Nursing (ADN) | North Seattle Community College
Bachelor of Business Administration (B.B.A.), Marketing, Sales | University of Washington (Seattle)
January 2020
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