By Troy Cannode, CPA

The Uniform CPA Examination (CPA Exam) is often altered to accommodate a changing accounting environment. Sometimes it is as basic as reflecting new accounting pronouncements; other times it is to reflect a changing focus within the profession. This year, the National Association of State Boards of Accountancy (NASBA) board of directors approved changes as to when and how qualified candidates can sit for the exam.

This blog highlights some of the recent updates.

Retaking the CPA Exam

The Uniform Accountancy Act Model Rule 5-7, “Retake and granting of credit requirements,” details when candidates can retake the exam and for what period of time credits for passing sections would be valid. Paragraph (a)(2) had stated that a candidate cannot retake a failed test section(s) in the same testing window. A testing window is equal to a calendar quarter. Candidates were not able to test less than two months out of each testing window. On April 26, 2019, the NASBA board of directors approved changes to this paragraph: candidates will now be allowed to retake failed test sections once the grade for the previous attempt(s) has been released. The expectation is that the continuous testing model will be in place by June 30, 2020.

Content Changes

There also have been several content changes to three of the four sections of the CPA Exam. (There were no revisions to Financial Accounting and Reporting.) The alterations highlighted below were effective July 1, 2019.

Auditing and Attestation – Revisions to this section, per the AICPA summary of revisions, expanded or added detail to content already included within the blueprint and eligible for testing. The focus of the additional detail was audit data analytics. The blueprint now includes audit data analytic verbiage in multiple section introductions. For example, the section introduction for assessing risks and planning further procedures includes the updated language “… understanding and calculating materiality and considering specific engagement risks, as well as incorporating concepts such as audit data analytics.”

In addition to section introductions, new representative tasks were included. The blueprint area on assessing risk and developing a planned response was updated with the following additional representative task: assess risks of material misstatement using audit data analytic outputs (e.g., reports and visualization) to determine relationships among variables and interpret results to provide a basis in developing planned audit procedures. The topic titled Performing Further Procedures and Obtaining Evidence now includes the representative task of determining the attributes, structure, and sources of data needed to complete audit data analytics procedures.

Business Environment Concepts – Approved updates in this section clarify the introduction and reorganize the Information Technology area. While the content remains largely intact, some minor changes have occurred. The descriptions of Areas I and IV have been streamlined to provide additional clarity. In Area I, multiple redundant references of internal control and enterprise risk management frameworks have been altered to single bullet points covering each of the two frameworks. In Area IV, specific topics such as understanding the role of IT and systems (including the use of data in supporting business decisions) replaced references to governance of information technology used in business. COSO-issued application material, thought papers, and guides related to internal control and enterprise risk management framework are now in the reference material.

The update also reorganized many of the representative tasks, both understanding and application, to better align these tasks with the new topics in Area IV: Information Technology. For example, recognizing the risks and controls associated with protecting sensitive and critical information within an organization’s IT environment (previously under the topic of information security/availability) is now listed under the topic of risks associated with IT. This reorganization provides better alignment of tasks to topics.

Regulation – The approved update to this section added an assumption discussion to the introduction. The assumption discussion provides insight on the relevance of the material in each question. The discussion also details how to proceed with questions that could have different tax treatments based on matters of timing. The discussion states that candidates will be given clear indication of the timing so they can apply the appropriate Internal Revenue Code provisions, and without such clear indication of timing candidates will assume the transaction or event took place in the current year. The update also provides minor language revisions to representative tasks in the area of related party transactions and estate and gift taxation.

Overall, the content changes do provide some new wrinkles for candidates, but the change that has a far greater impact is the allowance to retake the exam within the same testing window. This change allows unsuccessful section test-takers to retake that failed section up to six weeks earlier than previously allowed.

Troy Cannode, CPA, is an assistant professor of accounting at Lycoming College in Williamsport. He can be reached at cannode@lycoming.edu.  

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