Episode 2

FAR Is by Far the Hardest

Hear from CPA Exam review providers on how creating a study plan is essential before jumping into your review course. Learn why Financial Accounting and Reporting (FAR) typically takes the most time to study and master, and hear from successful candidates on their study strategies. Also, learn how you can recover if you fail a section of the CPA Exam.

*** Note: This podcast mentions four testing windows per year. As of July 1, 2020, the CPA Exam will be available year-round on a continuous testing model. Read more about your testing options here.

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By Mylin Batipps Jr.

Podcast Transcript

Now that you've chosen your CPA exam review course, you may be thinking to yourself, "Alright. I'm ready to dig into this material and be on my way to earning those three letters." But, are you truly ready?

I'm Mylin Batipps Jr., and welcome to the Pennsylvania CPA Foundation's “Work Your Way to CPA,” a podcast series to help aspiring CPAs achieve their dreams. In this episode, we will discuss how you should study for the CPA exam using your review provider, and what you should do before you begin studying. We'll also talk about how to recover from a failing grade, and the importance of a strong support system.

In our last episode we provided guidance on how to select a CPA exam review provider. Now that you have your course in front of you, your ambition is telling you to open the book and get started. Stop right there! CPA exam review providers recommend that you first develop a plan for incorporating CPA exam study into your daily schedule. Liz Kolar from Surgent CPA Review says a study plan should be the number one priority.

[Kolar] One of the most important things a student has to start the process with is commitment to a study plan. So, if you decide in the CPA exam today, you've got to plot out how many hours a week you're going to study, how long you're going to study, and you have to stick with that study plan. You can not deviate. That's where I find people make the biggest mistakes. They start the process, but they have no formal idea of how they're going to get through it.

Mary Patterson from Wiley CPAexcel also believes that one of the most common mistakes students make is not adequately preparing themselves to study for the CPA exam.

[Patterson] You really have to start thinking about your study plan before you're going to start studying. What I mean by that is really map out … you know that there's four parts of the exam … map out when are you going to take each exam. Everyone has a different start date if they get hired with a firm. How is that going to factor in with your study plan? Don't just say this to yourself. I tell them, I say, tell your mom and dad what your study plan is. Tell your boyfriend, your girlfriend, your friends, so your support network will keep you on track with everything, and they're not going to schedule a big family vacation the week that you wanted to do the exam.

As Kolar and other review providers I've talked to have mentioned, determining when you are going to take each section of the CPA exam will help you map out your study plan. [The CPA Exam is offered year-round as part of the continuous testing model adopted in 2020.] Each part of the exam is taken separately. They are, in no particular order, Auditing and Attestation, Business Environment and Concepts (BEC for short), Regulation, and Financial Accounting and Reporting (also known as FAR).

Now, you may be wondering, “Which section of the exam do I take first?” Some say it's entirely up to the individual, but our research suggests students should consider taking Financial Accounting and Reporting first. According to a survey that the PICPA conducted among successful CPA candidates in Pennsylvania, 45 percent indicated Financial Accounting and Reporting was the most challenging section of the exam. Recognizing that, CPA exam review providers such as Roger Philipp from Roger CPA Review recommended prioritizing that section.

[Philipp] It's not necessarily the toughest, but it has the most material in it, and that's why it takes longer. That's why we also suggest you start with that first, because once you pass it, your 18 month window starts, so I want you to spend the time on FAR to get it down, and then jump in to the rest, so that way your 18 months doesn't pass by and you lose the first part.

You've heard correctly. You have 18 months to take the other three sections of the CPA exam after you've passed the first one. If 18 months have passed after the first exam and you haven't finished taking all other sections, then the credits for the first exam will expire, and you'll have to take that section again. Kolar from Surgent CPA explains more about how the 18-month time window affects the order of how parts should be taken.

[Kolar] Let's say someone is an expert in audit, and they take audit and pass it. Then, they get to the end of that 18-month window, and they can't pass FAR. They waited to take FAR until the very end. Well, they're going to lose audit if they don't pass all four within 18 months. So, starting with an easy section, I think, lends a higher probability to losing sections if you can't pass the tougher parts.

Statistics show that of all four sections, financial accounting and reporting consistently produces the lowest pass rates. According to Gleim CPA Review, Financial Accounting and Reporting's pass rates have been the lowest of all sections since 2015, averaging about 45 percent. We've heard that financial accounting and reporting covers the largest amount of material, which is why it takes the longest to prepare for and pass. But, what exactly does that material entail? Philipp sheds some light.

[Philipp] There's so much material in FAR. You know, it's intermediate one, intermediate two, advanced government nonprofit, squeezed into a fun-filled four-hour exam. In our course, it's the thickest book. You've got about a minute and a quarter per multiple choice, so in your mind, you've got to run from leases, bonds, pensions, deferred taxes, contingent liabilities, governmental accounting, non-profit accounting, consolidations, foreign currency. You've got to quickly jump. Because there's so much material – there’s such a wide range of material – it does take a fair amount of time to really focus in on it, because that book is probably twice as thick as the BEC book, yet they're both still four-hour exams. We find our students request more information and help with FAR than any of the other courses, and probably because it's such a fundamental part of accounting.

Having an idea of which section will require the most study time should be factored into the decision of when you're going to sit for each section of the CPA exam. More importantly, it should also be considered when creating your study plan, as Philipp suggests.

[Philipp] I think the main thing is setting up that study schedule. As I said, when you sign up for the course, you put in your date when I'm going to sit for the part, and it will tell you, “OK, if you're booking it three months out, this is how much studying you need to do every day or every other day, or on the weekends. So, we'll set up a study plan Tuesday, Thursday night, and all day Saturday. If you want to pass FAR in a month, then maybe I'm going to have to squeeze 150 hours into a couple of weeks.” So, it all depends on when you're going to take the part, how far out, and which part you're going to take, because as I said, FAR would take longer to prepare for, for example, than BEC.

Once students have determined how much time they'll need to study for each part of the exam, and have scheduled their dates with that taken in to consideration, they can then start to create a study plan that will align with the dates that their parts were scheduled. Thankfully, students planning to take the CPA exam don't have to create their study plans from scratch, since review providers have incorporated study plan development into their software. Becker CPA Review is one of the providers that does this, as Moira Gordon explains.

[Gordon] We do have self-study. That's the format where basically we're helping students create their study plan through the software. They're telling us how many hours a week they can study, what their goals are, when they want to be finished by, and we'll give them an outline of what they should be doing every day, every week, in order to hit their goals, but they're actually studying on their own, whether it's from home or work or school. They're watching the lectures that way.

With many different personalities comes many different daily schedules, and, in turn, different study plans. However, one thing that all students have in common is that they are living during a time in which attention spans are shortening and distractions are growing. Patterson from Wiley CPAexcel recommends moving away from all distractions when studying for the CPA exam, and the biggest one being the cell phone.

[Patterson] Using the cell phone to do flashcards, you have the ability to watch lectures on it and do questions, but when you are really studying for the exam, remove all of your distractions. You can't be on your cell phone scrolling through Instagram or whatever, listening to Spotify, whatever that is. Even though the traditional classroom is gone, I try to tell students, create your classroom, whether that's going to a coffee shop or a library or just a room in your house that has a desk, almost picture that there is a faculty, a professor in that room with you. Hopefully you would not be scrolling through your cell phone for 20 minutes. Really try to make it your classroom, and if you're studying, study. Make the best use of your time when you're studying.

While all CPA exam providers can help develop a study schedule, ultimately it is up to the CPA Exam candidate to tailor the study plan to his or her schedule. For instance, Ryan Messina, who is now a law student at Widener University with dreams of becoming a tax attorney, managed to take the CPA Exam review course and study and pass all four sections of the exam while going to law school and having two part-time jobs.

[Messina] For those that are working full time and taking this exam, I have the most admiration in the world for you, because it's very hard, and I was lucky enough to be young enough and not have kids or anything like that, to have the time to be able to devote to it. But, not to say that you can't do it if you have other responsibilities. There are other things I was doing, too. At one point, I was working. I also worked for a family business doing their book work and office work. So, at one point, I was working two part-time jobs and studying for it, and actually, for the Regulation section, which was my last section, I was in law school for that. So, that was tough.

My real piece of advice would just be to have a goal and try to stick to it as much as possible. When I was in my first year of law school, trying to study for Reg, that it's really hard when you're trying to manage something else on the side that's so big, whether it be a full-time job or if you're working a couple part-time jobs or in a master's program. But, you've got to try to set aside some time during the day, at lunch or in the morning or at night or whatever, because if you don't continually practice this, you're going to start forgetting things and the last thing you want to do is try to cram a week before the test, because it's just not going to happen.

Allison Greenfield, an associate at Forensic Resolutions Inc. in New Jersey, also had a hectic schedule while studying for the CPA exam, but looking back at it now as a CPA, Greenfield said having that hectic schedule allowed her to stay on top of her studying obligations.

[Greenfield] I was working part time while I was doing my master's program and studying, which sounds like a lot looking back, but it really kept my schedule on track, so I knew, “OK, this day I have class, this day I have work … When can I fit in studying?” so I could be consistent week to week.

Alia Hussain, a business assurance associate with Moss Adams in Albuquerque, New Mexico, recalls working full time in audit while studying for the exam, using any down time that she had to study.

[Hussain] I just tried to utilize as much free time, if any, while I was at work to study. During the slower seasons at work, when it was outside of busy season, that was really when I could get most of my studying during the day completed. But outside of that, I really just utilized my evenings, about two to three hours every evening after work, and then weekends were when I would really dedicate time for usually most of the day on Saturday and Sunday. I think I was probably just a little bit lucky. My schedule wasn't as heavy as it would be maybe for other people working in public accounting, so I just took advantage of having some extra time to really hit the topics hard.

Kolar from Surgent CPA says that even if you can just find 15 minutes to study at any time during a busy day, you could gain something.

[Kolar] I want students to know that any study time is good study time, so even if you have just a 15-minute break and you can do one short video and do a few multiple-choice questions, that is a good study session in my mind.

Studying for the CPA exam is very different from studying for a college accounting course. We discussed multiple learning styles in our last episode, and Patterson says that accounting students should allow for some flexibility. Try some of the learning methods to see what works best for them while studying for the CPA exam, as opposed to just sticking with a style that they're accustomed to.

[Patterson] You might start studying and realize, “OK, what used to work for me, whether that's simple highlighting in your textbook, isn't going to work for the CPA exam.” You have to actually run through the problems. When you're doing a question, do you actually understand that question? Did you guess at that question? Are you reading the explanation about it? You know internally if you've mastered that particular topic. Another thing that I tell students, it is a trial and error in the beginning, and that's why Wiley gives you so many different tools to master the information. Just watching a lecture isn't going to work for everyone.

But I tell students—and I use this example all the time—I say, “When you're studying for the exam, for some of you, the first two to three weeks are going to be the most difficult.” The reason for that is, this is sometimes seeing material that has been presented to you differently than it has been in a classroom, and you're really going to give up on yourself in those first two weeks, those first two to three weeks. You're going to say, "What have I been doing for the past three and a half, four years in school? I'm never going to pass this. I keep getting questions incorrect." I say, “You have to push through those two to three weeks. Keep going at it. Keep devoting the same amount of time, and eventually the information is going to start clicking into place. You'll start recognizing the questions and how NASBA or how the AICPA wants you to answer the questions. It all starts to make sense to you.”

According to Gordon from Becker CPA Review, the “aha” moments come to students who know how they study best and can capitalize on that by choosing the program that best fits their learning style.

[Gordon] I really just think people need to know their own strengths, know their own weaknesses, know how they study best, and work from there. Someone who has the summer off before they're going to start at their firm in October, maybe they want to get two or three parts done. So, our fast pass format would be best for them, where they could really knock out two or three parts before they start. Or, students who just need a little help holding themselves accountable, the live class is best for them, where they need to be there every day and actually participate – raising their hands, asking questions, making some friends, forming a study group. I think as long as people know how they study best, that's what they need to do, and not just think of it as one-size-fits-all.

According to Philipp from Roger CPA Review, all students will benefit during their study process if they refrain from trying to memorize the material.

[Philipp] I always emphasize the fact that I don't want you to memorize it. I want it to make sense, because if it makes sense, you'll remember it for life. If you memorize it, you go and take the exam and forget it. It's not an IQ test, but it's a test of discipline. You put the hours in, you follow our process, you don't memorize but understand it, and you, too, will get through the exam and achieve your goal of becoming a CPA.

Sometimes, all it takes is the support of friends, like Gordon mentioned, or even family members, to help boost your confidence while studying. Allison Greenfield recalls her classmates reaching out to each other during her master's program, just to check in and ensure that everyone was faring well with studying for the exam.

[Greenfield] I had my fellow students that I was in class with, some of whom were taking the exam, and we were able to encourage each other and check in with everyone. But, I didn't really sit down and study with someone, because I felt I needed to do that more alone, and if I had questions, I could always ask somebody that I either was working with or in school with to see maybe if they had a different way of viewing the same problem. If they interpreted it one way, and they're like, "Oh, OK. That clicks," they could turn around and explain it to me the way that they clicked.

Ryan Messina has three people in his life who were integral to helping his pass the exam.

[Messina] One was my boss at the time who is a CPA, and I believe he took it a number of years ago, at least 20 years ago. But, you don't know really what it is to take this thing unless you've actually done it. So, he was helpful. It was different. The test was administered differently a number of years ago, but as far as just sticking with it and if I had any clarification questions, he was always very helpful. Then, as I said earlier, I had two other friends that were younger who had just passed the CPA exam, and I believe they had just gotten done their master's in accounting, also. They were very helpful, because that was kind of like a sounding board.

I would always call them after every test thinking that I always failed, and they'd talk me down a little bit, just the psychological aspect of it. They even said that neither of them ever came out of a test feeling confident. So, I had a couple people that had experienced the test and were helpful in mentally getting me over the hump to pass the test, and I really appreciated, and still to this day appreciate, their help.

The American Institute of CPAs’ statistics on the pass rates of the CPA exam indicate that quarter by quarter, around half of those who take the exam fail their part. This can be discouraging, especially because of the amount of time that has been set aside to study and prepare. However, successful candidates who have passed all four sections shared their stories about how they persevered, even after failing a section at least once. Ryan Messina shares how failing the Financial Accounting and Reporting section on the first try increased his determination.

[Messina] That was one of the sections unfortunately that I did not pass my first time around. I got a 74. That was definitely a letdown, but at the same time, it was encouraging, because I thought I did way worse. The second time I took it, I did pass it. But it's very hard, absolutely. I thought that realistically other than BEC—and I’m aware that BEC has gotten even harder than it was—they’re all hard. There is a reason there is around a 50 percent pass rate for all of them. But, I really do believe that if you have the will to beat this, you will pass this test. It's very hard. I'm sure a lot of people do give up. But if it was easy, everyone would do it. So, I would say just keep going at it.

For Allison Greenfield, a failing score that she received allowed her to reassess her study habits to see where she could improve, which ultimately helped her pass all four sections.

[Greenfield] I went in after getting that score at 2:00 a.m. or some odd hour, and I was able to take all of the annoyance and all of those emotions that come with getting a failing score and put it into, “How am I going to use this to study harder and what should I do differently next time so I can make sure I pass and I don't get this feeling again?” I think that really helped, because you were able to take it and focus all of your energy somewhere else. Another thing I've done was I would take an exam and then, right after I took it, maybe take a week or so off and start studying for the next part. I didn't get the score back, but I was already studying for the next exam. I would physically get a score right before I took the next exam. So, I was like, “Alright, you're ready this time. You can do it. Go for it.”

Alia Hussain says it is very common for students to fail the exam at least once. But the more proactive students are about discovering when they went wrong and restudying, the higher the chance that they will be successful on the second go-around.

[Hussain] I've even heard it described as a rite of passage to fail at least one part of the CPA exam. I would tell them, “It really happens to the best of us.” The majority of CPA candidates will fail one section. But my advice is to try to get back on the horse as soon as possible. Take advantage of the fact that all of that information is fresh in your head. Go back and look at the report that they send you. I think most states will send the report telling you where you were comparable to other candidates, but where you maybe need some improvement. I would take a look at that and then go back to your review materials and just try to do it again as soon as possible.

I did a little bit of research after I failed, like, “OK, how do people recover from this?” One great piece of advice that I read was don't spend more than four weeks preparing for taking the exam again. It should really only take anywhere from two to four weeks in order to take that exam again. That's what I did, and I think it helps.

As these successful CPA candidates have mentioned, it's difficult to pass all four sections of the exam on the first try. If you do, you're one of the very few who have done so! But once you get to a point where you've passed all the sections, you'll look back and appreciate the difficult road full of obstacles you have taken to get to that point. With the right amount of positivity, perseverance, patience, and passion, you are well on your way to passing the exam and becoming a CPA.

Stay tuned for our next episode in which we'll discuss how to make the decision between corporate accounting or public accounting for your career path, as well some interviewing tips that will help you succeed in landing the job you have always wanted.


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