Prepared for the 2008 NASBA Annual Meeting

October 2008Presented by

Joseph T. Cote, CPA

Committee on NationalExamination Preparedness

• Recommended in 2006 by Special Examination Issues Task Force (Chair – Sam Cotterell)

• Began its work in 2007• Charge – Initiate a process to

increase the influence of state boards of accountancy and NASBA in the CPA Examination process

Committee on NationalExamination Preparedness

Advisors & Staff:Bob Pearson

(CLEC)Psychometricians:

Bob Brennan Alan Cohen Jim Wollack

Staff: David Costello Joe Cote Ken Bishop

Members:Chair, Wes Johnson

(MD)Sheila Birch (OH)Dan Dustin (NY)Gary Heesacker (WA)Kathy Smith (NE)

Areas of FocusCBT Services Agreement – Should we wait until

2014 or can important enhancements be made sooner? Should we extend the current agreement beyond 2014 as the AICPA has requested?

Cost Control – What steps might be taken to control costs now and into the future?

Influence Over the Examination – How might/should state boards and NASBA increase their influence?

Dealing with Contingencies – Should a contingency examination be developed that could be launched if the present operation were no longer available?

Cost ControlSample Total Candidate Fees for Four Sections

Year AICPA Prometric

NASBA Board* Total

2003 (PBT)

144.00 0 0 200.00 344.00

2004 180.00 250.00 40.00 140.00 610.00

2005 180.00 327.00 40.00 140.00 687.00

2006 260.00 339.54 60.00 140.00 799.54

2007 320.00 349.90 72.00 150.00 891.90

2008 380.00 357.70 72.00 150.00 959.70

Increase from 2004

200.00111%

107.7043%

32.0080%

10.007%

349.7057%

* Each board sets its own administrative fees. Under PBT, board fees covered the costs of hiring proctors and renting facilities. These fees are representative samples.

Conference on theState of the Examination

Held on May 19, 2008 at the Grand Hyatt DFW

Invitation-only for representatives of boards of accountancy

48 boards of accountancy were represented by 130 attendees

Agenda for May 19, 2008 Conference

1. Progress & Potential

2. Issues Related to the CBT Services Agreement:

Provisions of the Agreement Cost Control Control of the Examination Contingency Examination

3. International Delivery of the CPA Examination

Feedback from Conference Participants, State Boards & Regional Meetings Discussion

Consider an extension of the CBT Services Agreement, but only if NASBA can negotiate for changes such as: More influence over the policies related to and the content

of the Examination, and Better controls over the rising cost of the Examination.

NASBA should not develop its own contingency examination, but provisions for contingencies should be created.

The plans for international delivery of the CPA Examination should provide that candidate applications continue to be processed by state boards or their agents.

Recommendations Coming Out of the July 2008

NASBA Board of Directors MeetingNASBA should meet with the AICPA to discuss an

extension of the CBT Services Agreement. The following are principles that should be addressed in a future agreement.Provide for State Board/NASBA effective control

of the CPA Examination (through increased governance and contract prerogatives and rights)

Provide for development of a contingency exam under secure conditions

Shift the structure of the agreement such that State Boards/NASBA are in a role more like a purchaser party

Principles of a Future CBT Services Agreement (Continued)

Restructure and clarify the calculation, determination and timing of fee increases to assure greater input from State Boards/NASBA

Clarify and strengthen the test-prep business prohibitions as well as the consequences for breaches

Deal with contingency concerns by restructuring the escrow agreements or developing alternatives to make the process legally certain and efficient

Further strengthen the provisions protecting Candidate Data including biometric data

Plans for the FutureA negotiating team of people is being established with representatives appointed by NASBA and the AICPA to discuss a possible extension of the CBT Services Agreement beyond 2014.

This team will be meeting over the next few months.

Questions?