1 cbte - launch on january 1, 2011 update on uniform cpa exam aplg/fsa 2010 annual seminar february...
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CBTe - Launch on January 1, 2011 Update on Uniform CPA Exam
APLG/FSA 2010 Annual SeminarFebruary 14, 2010
Elaine Rodeck, Ph.D., CPA, CA, MBADirector of Examinations Strategy
Overview of Current CPA Exam
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Section Time (Hours)
Content General Description
AUD 4½90 MCQs
2 Simulations
Knowledge of auditing procedures, generally accepted auditing standards and other standards related to attest engagements.
FAR 490 MCQs
2 Simulations
Knowledge of generally accepted accounting principles for business enterprises, not-for-profit organizations, and governmental entities.
REG 372 MCQs
2 Simulations
Knowledge of federal taxation, ethics, professional and legal responsibilities, and business law.
BEC 2½ 90 MCQs only
Knowledge of general business environment and business concepts that candidates need to know to understand the underlying business reasons for and accounting implications of business transactions
Background – Protection of the Public Interest
Content Design for CPA Exam:• Knowledge and skills required for entry-level CPAs for
protection of public interest
Criteria for determining knowledge/skills included on CPA Exam:
• Relevance to work of entry-level CPAs Importance to work of entry-level CPAs Frequency of use by entry-level CPAs
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Background – Purpose of CSOs/SSOs
Content Specification Outlines (CSOs) and Skill Specification Outlines (SSOs) Statements of knowledge and skills measured by the
CPA Exam Ensures testing is consistent across Exam
administrations “Blueprint” for the type of questions that can be asked Ensures every version reflects the required
distribution of knowledge & skill components Provides candidates with information regarding what
can be tested
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Board of Examiners – Overview
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Practice Analysis - Background
In its oversight role, Board of Examiners must ensure the Exam is consistent with knowledge and skills requirements of entry-level CPAs
2008 Practice Analysis identified changes in important knowledge and skills for entry-level CPAs since the last practice analysis was completed (2000)
Multi-year process that began in 2006 Complete details of Practice Analysis, including
Technical Report & Appendices, are on AICPA website, www.cpa-exam.org
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Practice Analysis – Method
Survey developed using input from the prior survey (2000) and augmented based on contributions from practicing CPA’s
Target sample was individuals who supervise entry- level CPAs
Sample was drawn from CPAs certified between 2-15 years
Invited AICPA members and licensees submitted by State Boards of Accountancy to volunteer to participate.
• 2,023 of 3,079 eligible AICPA members (66%) responded to the survey
• 71 of 75 eligible licensees from State Boards (95%) participated
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Practice Analysis - Survey Process
Survey participants were presented with 45 knowledge, task, and skills statements and asked to indicate:
• Relevance to entry-level CPAs
• For relevant statements, importance and frequency were evaluated
• In total, over 450 statements were included on survey
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Practice Analysis – Development of CSOs
Exam Subcommittees met in September 2007 to develop CSO recommendations - survey results and judgment
Content Committee met in October and November 2007 to:• Review Subcommittee recommendations regarding CSOs and
related weightings, and revise/finalize draft CSOs• Develop draft SSOs based on survey data and research
performed by cognitive scientists with input from CPAs
Content Committee presented CSO recommendations to BOE in January 2008
After modifications, revised CSOs were approved in March and released as Exposure Draft in May 2008
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Exposure Draft
Draft CSOs exposed for comment during May-July 2008
50 responses received from various stakeholders, e.g.:• State Boards & State CPA Societies• Educators, Academic Associations, Review Course Providers• CPA firms, PCAOB, Individuals
Content Committee met in September 2008 and considered every comment
CSOs and weightings were adjusted accordingly
Content Committee revised CSO recommendations to BOE in October 2008.
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Exposure Draft – Inclusion of IFRS on CPA Exam
Of the 50 comments received for the Exposure Draft, 1/3 specifically discussed IFRS; majority of IFRS comments supported inclusion on the Exam
When the BOE released the CSOs/SSOs in December 2008, it was with the understanding that in 2009 the Content Committee would recommend updates related to IFRS
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IFRS on the CPA Exam – Steps to Revised CSOs/SSOs
Content Committee and Exams Team have been monitoring the roll out of IFRS in US and assessing impact of IFRS on entry-level practice
Exams Team performed in-depth research of IFRS and consulted with experts, which resulted in proposed revisions to the CSOs related to inclusion of IFRS
Content Committee met in May 2009 to consider Exam Team’s recommendations re IFRS
Content Committee recommended to BOE at May 2009 meeting that the updated CSOs reflect inclusion of IFRS - BOE approved CSOs
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IFRS on the CPA Exam – Use of IFRS by Entry-Level CPAs
CPAs who work for companies in the US that are owned by foreign IFRS entities (prepare reporting packages)
CPAs who work for companies in the US that own foreign entities reporting in IFRS (convert IFRS financials to US GAAP)
Auditors who audit companies that report in IFRS, or who audit their subsidiaries who report in IFRS
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IFRS on the CPA Exam – Need to be “Bilingual”
IFRS is already entry-level practice and many CPAs are now using IFRS
US GAAP is likely to continue for some time
Implications:• Entry-level CPAs will need to be “bilingual” and able to work
under both US GAAP and IFRS• Content on the Exam will likely include both US GAAP and
IFRS for some time
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New CSOs/SSOs
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New CSOs - AUD
AREASummary of Current
CSOsSummary of New CSOs
I Plan the Engagement(22-28%)
Auditing & Attestation: Engagement Acceptance & Understanding the Assignment (12-16%)
II Internal Control (12-18%)Auditing & Attestation: Understanding the Entity & its Environment (including Internal Control) (16-20%)
III Obtain and Document Information (32-38%)
Auditing & Attestation: Performing Audit Procedures & Evaluating Evidence (16-20%)
IV Review and Evaluate Work Performed (8-12%)
Auditing & Attestation: Evaluating Audit Findings, Communications & Reporting (16-20%)
V Communications & Reporting (12-18%)
Accounting & Review Service Engagements(12-16%)
VI N/AProfessional Responsibilities (including Ethics & Independence) (16-20%)
New CSOs – AUD (cont.)
Key provisions in the AUD CSOs related to IFRS include the following: Candidates are expected to demonstrate knowledge and
awareness: International Auditing & Assurance Board (IAASB) - role in
establishing International Standards on Auditing (ISAs) Differences between ISAs and US Auditing Standards International Ethics Standards Board for Accountants (IESBA) -
role in establishing International Federation of Accountants (IFAC) Code of Ethics for Professional Accountants.
Related independence requirements when auditing a U.S. company that supports an audit report based on auditing standards of another country, or ISAs
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New CSOs - FAR
AREA Summary of Current CSOs Summary of New CSOs
I Concepts & Standards for Financial Statements (17-23%)
Conceptual Framework, Standards, Standard Setting & Presentation of Financial Statements (17-23%)
II Typical Items in Financial Statements (27-33%)
Financial Statement Accounts: Recognition, Measurement, Valuation, Calculation, Presentation & Disclosures (27-33%)
III Specific Types of Transactions (27-33%)
Specific Transactions, Events & Disclosures (27-33%)
IV Governmental Accounting and Reporting (8-12%)
Governmental Accounting and Reporting(8-12%)
V Not-for-Profit Accounting and Reporting (8-12%)
Not-for-Profit Accounting and Reporting(8-12%)
VI N/A N/A
New CSOs – FAR (cont.)
Key provisions in the FAR CSOs related to IFRS include the following:
Candidates are expected to:• Identify and understand the differences between financial
statements prepared on the basis of US GAAP and under IFRS• First-time adoption of IFRS related to financial reporting,
presentation and disclosures in general-purpose financial statements
Various FAR CSO “Groups” and “Topics” were modified from the December 2008 version of the CSOs to the reflect the inclusion of IFRS
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New CSOs - REG
AREA Summary of Current CSOs Summary of New CSOs
I Ethics & Professional and Legal Responsibilities (15-20%)
Ethics, Professional and Legal Responsibilities (15-19%)
II Business Law (20-25%) Business Law (17-21%)
III Federal Tax Procedures and Accounting Issues (8-12%)
Federal Tax Process, Procedures, Accounting and Planning (11-15%)
IV Federal Taxation of Property Transactions (8-12%)
Federal Taxation of Property Transactions (12-16%)
V Federal Taxation of Individuals (12-18%)
Federal Taxation of Individuals (13-19%)
VI Federal Taxation of Entities (22-28%)
Federal Taxation of Entities (18-24%)
New CSOs – REG (cont.)
Due to the substantial uncertainty at this time relative to the US tax ramifications of the potential use of IFRS by US companies, the REG CSOs were not modified to reflect IFRS
REG CSOs may be modified in the future to reflect IFRS
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New CSOs - BEC
AREA Summary of Current CSOs Summary of New CSOs
I Business Structure (17-23%) Corporate Governance (16-20%)
II Economic Concepts (8-12%)Economic Concepts & Analysis(16-20%)
III Financial Management (17-23%) Financial Management (19-23%)
IV Information Technology (22-28%)Information Systems and Communications (15-19%)
V Planning & Measurement (22-28%)
Strategic Planning (10-14%)
VI N/A Operations Management (12-16%)
New CSOs – BEC (cont.)
Key provisions in the BEC CSOs related to IFRS include the following:
Candidates are expected to:
• Demonstrate an understanding of globalization on the business environment
• Explain the underlying economic substance of transactions and their accounting implications
Various BEC CSO “Topics” were modified from the December 2008 version of the CSOs to reflect the inclusion of IFRS
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New SSOs – Skill Specification Outlines
Skills CategoryWeights
AUD, FAR, REGWeights
BEC
Knowledge and Understanding (1) 50% - 60% 80% - 90%
Application of the Body of Knowledge (2) 40% - 50% N/A
Written Communication (3) N/A 10% - 20%
(1) Expertise and skills developed through learning processes, recall and reading comprehension.
(2) Including Analysis, Judgment, Synthesis, Evaluation and Research. Higher level cognitive skills that require individuals to act or transform knowledge in some fashion.
(3) The various skills involved in preparing written communication.
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Recent BOE Decisions
• January 1, 2011 – CBT-e launch date and the date of implementation of new CSOs/SSOs (with IFRS)
• Section Lengths under CBT-e:• AUD to be shortened by 30 minutes (to 4 hrs.)• BEC to be lengthened by 30 minutes (to 3
hrs.)• Total testing time for 4 sections to remain the
same – 14 hours
BOE Decisions: Weighting
AUD BEC FAR REG
MCQs Current 70% 100% 70% 70%
New 60% 85% 60% 60%
Sims Current 20% 0% 20% 20%
New 40% 0% 40% 40%
Writing Current 10% 0% 10% 10%
New 0% 15% 0% 0%
CSO/SSO Targets
Knowledge and Understanding
50-60% 80-90% 50-60% 50-60%
Application 40-50% 0% 40-50% 40-50%
Writing 0% 10-20% 0% 0%
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