It has been more than five years since the American Institute of CPAs and the National Association of State Boards of Accountancy implemented the Revised Uniform CPA Exam in April 2004.

The revised exam is not only computer based, but the structure and content have also changed. The exam consists of four sections: auditing and attestation (AUD), financial accounting and reporting (FAR), regulation (REG), and business environment and concepts (BEC). Each section is offered during four testing windows each year. Candidates may only take each section once during a testing window; however, they may choose to take each section individually or all four sections during a testing window.

Although there has been no formal assessment of the revised exam in comparison to the paper-based test since its implementation, there have been informal discussions about whether the revised exam is easier, as well as whether candidates passing the exam under the revised format and structure are more or less qualified than those who passed under the paper-based format.

The dichotomy of discussion varies from the “revised CPA Exam is a more realistic test of the critical skills necessary for today’s CPA,” versus “the profession has been misled on the merits of the revised exam.” Although this matter is commonly discussed internally between CPAs, the profession as a whole has not had an open and candid dialogue.

Thus, the purpose of this article is to address the various pros and cons of the revised exam, based on two different viewpoints, as a basis for an open and candid discussion of the implications for the profession. It is hoped that this article will be a catalyst for the profession to openly debate and assess the Revised Uniform CPA Exam.

The AICPA periodically reviews the subject matter tested on the CPA Exam. After a 2001 accounting practice analysis, it was determined that the nature of public accounting practice had evolved with the introduction of new technology, improvement in methods, and other changes in the business, legal and practice environments. These changes in the environment resulted in evolving changes in the knowledge and skills that CPAs need to protect the public interest.

Consequently, the AICPA Board of Examiners’ Content Oversight Task Force decided to completely restructure the Uniform CPA Exam to reflect the current and emerging trends of the CPA practice.

The AICPA’s major restructuring of the CPA exam included modifying the content and skills coverage portion of the exam; transition from a paper-based test to a computer-based test; the ability of first-time candidates to sit for one portion of the exam at a time rather than being required to sit for all four portions at once; the ability of candidates to take each portion of the exam during eight months of the year; and the requirement to successfully pass all four portions of the exam within 18 months rather than three years.

During the first few years of testing the revised CPA exam, the total number of candidates taking the exam decreased; however, during the fourth and fifth year, there was an increase in the total number of candidates taking the exam. In addition, under the previous exam format, the candidate pass rate of all four sections was slightly more than 30 percent, whereas the candidate pass rate for all four exam sections under the revised format has increased to more than 40 percent in 2008.

The main goal of the AICPA is to ensure the exam accurately reflects the knowledge and skill sets of the emerging profession. Thus, a continuous review of the exam prompted the AICPA to make some changes in content and skill specifications to be effective in 2010. Among the upcoming changes are a move from basic simulations to task-based simulations in all sections except BEC, and consolidation of the written communication sections from AUD/FAR/REG into the BEC section.

The Good and the Bad
In comparing the revised exam to the old exam, there are several differences. First, the delivery system changed from a pencil and paper format to a computerized format. Secondly, the timing of the exam changed from twice a year in November and May to “four testing windows” during the months of January-February, April-May, July-August, and October-November.

The third and most notable change that impacts the capability of a candidate is a revision in the content to increase the emphasis on information technology, general business knowledge, and a broadened scope in the audit and attestation area. The revised exam also increases the skills testing in areas such as the use of technology, writing and research skills.

In addition to multiple choice type questions, simulations are included, which consist of case-type scenarios that require candidates to solve problems similar to those that may be encountered in an entry-level CPA position. Candidates must perform various tasks such as completing a spreadsheet or accessing information from a database. These skills, which are very relevant in the workplace today, could not be tested in a pencil and paper format.

Thus, the revised exam requires a broader knowledge base to include economics, finance and information technology, and a level of proficiency in writing, research and the use of technology. This suggests that the revised exam is more difficult and candidates passing the revised exam are, therefore, much better prepared.

The fourth change to be noted that seems to be the crust of most of the debate is that candidates may complete one section at a time, rather than sitting for all parts as required under the old paper-based format. It is a contention of some that this makes the exam easier since the passing rate on parts are up from the low 30th percentile to the mid-40th percentile.

The ability to focus on one section at a time may make the exam easier to pass; however, it does not mean that the exam is easier. As noted above, the knowledge content of the revised exam is much broader and requires more skill sets. Moreover, the ability to study for more than one section at a time is not an indication of the quality of a candidate or their ability to perform successfully in practice.

The “Con” Viewpoint
While not as elite as Yale’s secret fraternal society, the “Skull and Bones,” the CPA profession is one of elitism. With a national pass rate of less than 40 percent, there is a perceived “value” and “privilege” for those who pass the exam. Whether or not the candidate pursues a career in audit, tax or another accounting-related field, the exam is designed to assess a candidate’s grasp of all realms of the profession.

There are those who would argue that the old paper-based exam format only required the knowledge necessary to pass two sections at a time, but the requirement of a minimum score of 50 for the other two portions ensured that candidates studied those sections as well.

Under the old exam format, the CPA society could be viewed as a brutal initiation ritual that required passing a barrage of questions over a 16-hour marathon exam. Surviving two grueling days surrounded by thousands of strangers was so physically and mentally taxing that most CPAs today would probably not want to do it again. Those who share this opinion believe the comprehensive nature of the exam fostered the elite nature of the profession and commanded respect in the marketplace. While the news media and Hollywood may ridicule CPAs, the reality of the business world is that CPA services are worth a premium.

While many CPAs believe the revised computer-based exam is more difficult, and thus reflects a better-prepared candidate for the profession, there are others with a different viewpoint. In response to comments regarding the revised exam format at a statewide CPE event, inquiries were made of CPAs within industry, public accounting as well as members of academia. To get a better understanding of the feedback, an informal discussion was held with some members of the profession representing partners and managers at the Big Four, mid-tier firms, and members of academia, as well as the business community.

A common theme they expressed was the failure of the AICPA to consider a potential perception regarding the quality of candidates passing under the revised format. Rather than a debate over computer versus paper-based format, it appears there is a disdain for “sectional studying” of the exam.

Under the old format, first-time candidates were required to sit for all four sections, earn a passing score on at least two of the four sections, while garnering at least 50 percent on the remaining two sections. Those who responded were predominantly concerned with the change in the exam format that allows candidates to sit for each section individually. This concern was highlighted in a conversation with a CPA who acknowledged not passing the exam under the old format after several attempts, but passed under the revised format.

To the individual’s pleasant surprise, the perception was that the technical aspects of the revised exam were no more difficult than the previous format. The individual confessed his belief that his ability to finally pass the exam was due to his ability to focus on one section at a time rather than all four sections at one sitting.

On the other hand, some may argue that there exist “old school” CPAs who would not pass the current revised exam, since most CPAs who passed the exam under the old format acknowledge passing within two to three attempts. Some believe that the ability to focus and prepare for several sections at one time as opposed to one section at a time, however, might be an indication of a candidate’s ability to perform successfully in practice.

While the bulk of candidates passing under the revised format probably would have passed under the old format, there is a perception among some CPAs that the ability to take one part at a time makes the exam easier and results in the CPA designation being granted to candidates who are not as qualified as candidates passing under the old format. While there is no hard evidence to support this perception, the perception exists.

When the authors polled members of public accounting, industry and academia, more than 80 percent of the respondents felt the revised exam was lowering the value of the CPA designation due to the perceived ease of taking the exam under the revised format. Some respondents went so far as to state they were aware of CPAs who failed miserably under the previous format, only to be successful under the revised format.

Based on this strong feedback, additional information was requested. Several responded with their belief that the reduction in hourly CPA billable rates was directly tied to this perception that “newer” CPAs were not as qualified as “older” CPAs. When the researchers pressed for additional feedback or evidence to verify this perception, none of the respondents were able to provide sufficient details to catalog.

While the debate will continue over whether the revised exam is easier to pass than the previous format of pencil and paper, a review of the pros and cons suggests that the quality of candidates passing the exam has not diminished. Candidates are being tested on a broader knowledge base and are required to use skill sets that are relevant in the workplace.

These and other factors suggest that revisions made by the AICPA ensures the exam will continue to reflect the knowledge and skill sets required in an emerging profession, thus enhancing the quality of candidates entering the profession. However, with such strong feedback regarding the revised CPA exam, the authors believe it may be advantageous for CPA societies to address public perceptions (within the society as well as by the general public) regarding the ease of the exam process (one section versus four sections).

The intention of this article is to provide anecdotal evidence as a catalyst to address the questions and concerns of the profession and potentially put some fears to rest regarding the impact of the revised CPA Exam on the preparedness of new entrants to the profession. It is hoped that after five years of testing under the revised exam, data will become available for the AICPA and researchers to make a true assessment of the impact of the Revised CPA Exam.

Anthony Masino, J.D., CPA, is an assistant professor of accounting, and Barbara L. Adams, Ph.D., CPA, is a professor of accounting, at South Carolina State University in Orangeburg, S.C.

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