THE AMERICAN Institute of Certified Public Accountants (AICPA) in collaboration with the National Association of State Boards of Accountancy (NASBA) have announced changes in both the format and content of the Certified Public Accountants (CPA) Examinations, the primary professional designation for accountants in the United States. The main structural change is that the examinations will now be held online and will be available four times per year. The content has also been modified to reflect modern skill requirements of an entry-level accountant. The change comes into effect in 2004 and the last set of examinations under the current paper-based system, were held in the first week of November 2003.
The major reason for the change is to ensure that the examinations keep pace with the changes within the accounting and business environment. There is going to be increased emphasis on information technology and general business knowledge with a broadened scope in the audit area. Specif-ically, the revised test will offer the following benefits:
Enable testing of higher-level cognitive skills.
Permit integration of real-world entry-level requirements.
Provide flexibility and convenience to candidates.
Offer greater consistency in evaluation.
Help save time in administration, grading and reporting.
Provide added exam security.
A summary of the structure and content of both the old as well as the new examination is as follows:
THE OLD STRUCTURE
The CPA examinations were held in each state throughout the U.S. twice per year, on the first Wednesday and Thursday of every May and November. The sequence and duration of the examinations were:
WEDNESDAY
9:00 a.m. - 12:00 p.m. - Business Law and Professional Responsibilities (BLPR)
1:30 p.m. 6:00 p.m.: Auditing (AUDIT)
THURSDAY
8:30 a.m. 12:00 p.m.: Accounting & Reporting (ARE)
1:30 p.m. 6:00 p.m.: Financial Accounting & Reporting (FARE)
All of the exams consisted of a mixture of multiple choice, short answer, essay type and computational (written-response) problems except for ARE which does not have any short answer, essay type nor computational problems.
A candidate had to fly to the United States to sit the examinations. However, because each state had specific eligibility requirements, not all states were available to non-U.S. citizens/residents.
THE NEW STRUCTURE
LOGISTICS
As previously mentioned, the major structural changes are that the examinations will now be offered online and can be taken up to four times per year.
It is anticipated that the four sections of the examination will be offered up to six days a week, during three out of every four months throughout the year. However, the major disappointment to me is that foreigners (non-U.S. candidates) will still be required to go to the U.S. to do the examinations at what is called a 'prometric testing centre'.
The director of CPA Examinations, Gregory Johnson, informed me that this will be the case for at least 5-10 years. However, the closest test centre in the US to Jamaica is Miami. But it must be borne in mind that a candidate can only sit the examinations in Florida if they are residents.
NUMBER OF SITTINGS
Previously, most states required all candidates to take all four sections at their first sitting. Under the new structure, students may be allowed to take each section individually, and in any order, or all at one time. However, the final decisions about granting of credit will be made by each State Board of Accountancy.
TIME LIMITS
With respect to time limits during which the students will be allowed to take the examination, the AICPA Board of Examiners (BOE) has recommended that candidates must pass all sections within a rolling 18-month period. However, the respective State Boards of Accountancy will establish the final policies on time limits.
NAME AND LENGTH OF SECTIONS
The new name of each examination section as well as its length is as follows:
Business Environment & Concepts - 2.5 hours
Auditing and Attestation 4.5 hours
Regulation 3 hours
Financial Accounting and Reporting 4 hours
TYPE OF QUESTIONS
Another key change to the examination is the inclusion of case studies called 'simulations'. Each exam may have one or two simulations, each being approximately 20-40 minutes in length. The simulations will comprise about 20 per cent of the exam, while the traditional multiple-choice questions are expected to make up the other 80 per cent.
A simulation can be defined as an "assessment of knowledge and skills in context approximating that found on the job through the use of realistic scenarios and tasks, and access to normally available and familiar resources". Simply put, simulations are relational case studies that will test candidates' accounting knowledge and skills using real life work-related situations. All simulations are intended to assess knowledge and skills that are appropriate to expect of an entry-level accountant. Most of the simulations will contain some research activity, usually involving an electronic search or access to authoritative literature and the Internal Revenue Code and Income Tax Regul-ations. For Auditing and Attestation, research may also include identifying and accessing work papers or other published materials such as annual reports and stock reports.
Many of the question types used in the simulations will be unfamiliar but are based on familiar computer interface controls (e.g., dragging and dropping, copying and pasting). CPA candidates are assumed to possess basic computer skills including the use of the mouse and keyboard. In addition, they are expected to know how to use common spreadsheet and word processing functions, including writing formulae for spreadsheets. They must also have the ability to use a financial calculator or a spreadsheet to perform standard financial calculations.
USEFUL RESOURCES
For more about the content and change in the examinations as well as other useful information visit www.cpa-exam.org. Other helpful Web sites, particularly, for someone wishing to study for the examinations locally, are listed below:
www.rohanchambers.com click on links
www.cpatutorials.com
www.beckerconviser.com click on locations/schedules
www.aicpa.org
www.nasba.org
It is worth noting that the Institute of Chartered Accountants of Jamaica (ICAJ) recognises the CPA examinations as an acceptable qualification for membership as long as the usual work-experience requirements are met.
Rohan Chambers, Chartered Accountant, is currently a lecturer and Programme Director of Accounting in the School of Business Administration, University of Technology, Jamaica. Email: rchambers@cybervale.com
