The New Computerized CPA Exam

Presentation for Beta Alpha Psiby Teresa Gordon

Oct. 27, 2004

Historic change!Historic change!

Last paper and pencil exam was November 5-6, 2003

CBT launched on April 5, 2004

Last paper and pencil exam was November 5-6, 2003

CBT launched on April 5, 2004

Reasons for changeReasons for change

Based on “practice analysis”• Entry-level accountants need to be able to

examine a business situation and identify what, if any, accounting issues or auditing or business risks might be involved

• Need fundamental professional knowledge• But also need the ability to

• Analyze• Organize• Communicate

Based on “practice analysis”• Entry-level accountants need to be able to

examine a business situation and identify what, if any, accounting issues or auditing or business risks might be involved

• Need fundamental professional knowledge• But also need the ability to

• Analyze• Organize• Communicate

The Old Exam The Old Exam

The pencil & paper exam:• 15.5 hours long over a two-day period• Given twice a year in May and November• 4-function calculator provided• You could “condition” by passing two parts

and getting a minimum on the remaining parts

The pencil & paper exam:• 15.5 hours long over a two-day period• Given twice a year in May and November• 4-function calculator provided• You could “condition” by passing two parts

and getting a minimum on the remaining parts

The New CPA ExamThe New CPA Exam

Computer-based On-screen 4-function calculator Taken at Prometrics testing center Can be taken one section at a time Tests higher level skills Includes simulations in which candidates

will use databases, spreadsheets, and basic word-processing

New content on general business knowledge

Computer-based On-screen 4-function calculator Taken at Prometrics testing center Can be taken one section at a time Tests higher level skills Includes simulations in which candidates

will use databases, spreadsheets, and basic word-processing

New content on general business knowledge

Comparison of SKILL DefinitionsComparison of SKILL Definitions

Computer Based Exam• Analysis

• Judgment

• Communication

• Research

• Understanding

Computer Based Exam• Analysis

• Judgment

• Communication

• Research

• Understanding

Pencil Based Exam• Understanding

• Application

• Evaluation

Pencil Based Exam• Understanding

• Application

• Evaluation

CPA EXAM – When Can You Take It?CPA EXAM – When Can You Take It?

Windows – 2 months every Quarter Windows – 2 months every Quarter

Jan.Feb.

AprilMay

JulyAug.

Oct.Nov.

1 2 41 2 3 4

Open Closed

April – May June

July – August September

October – November December

January – February March

Open Closed

April – May June

July – August September

October – November December

January – February March

Impact on CandidatesImpact on Candidates

Candidates have more flexibility in terms of scheduling to test

Candidates can focus study on a section(s) as they feel comfortable

Can take one or more sections within a month, window or longer period

Take it anywhere• However, you apply for the exam in the state

in which you want to be certified

Candidates have more flexibility in terms of scheduling to test

Candidates can focus study on a section(s) as they feel comfortable

Can take one or more sections within a month, window or longer period

Take it anywhere• However, you apply for the exam in the state

in which you want to be certified

Score ReportingScore Reporting

Initially, advisory grades reported to State Boards at the end of each window

State Boards of Accountancy distribute grades • Frequency of release to State Boards of

Accountancy should increase within a year

AICPA wanted Pass/Fail Scores Only• Some States pass/fail• Some states issue scores zero to 99• Grades haven’t been sent out promptly enough so

far – hopefully that will improve over time

Initially, advisory grades reported to State Boards at the end of each window

State Boards of Accountancy distribute grades • Frequency of release to State Boards of

Accountancy should increase within a year

AICPA wanted Pass/Fail Scores Only• Some States pass/fail• Some states issue scores zero to 99• Grades haven’t been sent out promptly enough so

far – hopefully that will improve over time

Complete One Part at a TimeComplete One Part at a Time Must complete all 4

sections within 18 Month Rolling Time Period

If you fail a part in one of the testing windows, you can’t take that part again during that window

Must complete all 4 sections within 18 Month Rolling Time Period

If you fail a part in one of the testing windows, you can’t take that part again during that window

Granting of CreditGranting of Credit

Each section can be taken individually and in any order

Credit for a passed section(s) retained for 18 months

No minimum score requirement for failed sections

Each section can be taken individually and in any order

Credit for a passed section(s) retained for 18 months

No minimum score requirement for failed sections

Completing the Exam:Completing the Exam:

Testing Windows – Is 18 months enough time to complete?

Testing Windows – Is 18 months enough time to complete?

Jan.Feb.

AprilMay

JulyAug.

Oct.Nov.

1 2 41 2 3 4

2004 Scores Released2004 Scores Released

April 5 – May 31, 2004 Results are In!• First testing window 22,601 parts taken • Average pass rate 45%

• Pencil & Paper Exam was about 33% per part

• Pass rate info for July/August testing window not yet available, no information yet on pass rates for different parts

Candidate Procrastination• 57,000 sections approved, but not yet

scheduled• Why is this happening?

April 5 – May 31, 2004 Results are In!• First testing window 22,601 parts taken • Average pass rate 45%

• Pencil & Paper Exam was about 33% per part

• Pass rate info for July/August testing window not yet available, no information yet on pass rates for different parts

Candidate Procrastination• 57,000 sections approved, but not yet

scheduled• Why is this happening?

Content of the Exam

4 Parts

EXAM Sections EXAM Sections

The computer-based exam:• Auditing and Attestation (4½ hours) • Financial Accounting & Reporting (4 hours)• Regulation (3 hours)• Business Environment & Concepts (2½

hours)

• A total of 14 hours

The computer-based exam:• Auditing and Attestation (4½ hours) • Financial Accounting & Reporting (4 hours)• Regulation (3 hours)• Business Environment & Concepts (2½

hours)

• A total of 14 hours

Audit & Attestation Audit & Attestation GAAS Attestation Standards SSARS Yellow Book (governmental auditing) Assurance Services Integrated with other sections Sarbanes-Oxley – not until middle of

2005 Utilize database: SAS Professional

Standards

GAAS Attestation Standards SSARS Yellow Book (governmental auditing) Assurance Services Integrated with other sections Sarbanes-Oxley – not until middle of

2005 Utilize database: SAS Professional

Standards

Financial Accounting & ReportingFinancial Accounting & Reporting

80% Financial 20% Government/Not-for-Profit

(All multiple-choice – plan to add to simulations in 2005)• GAAP• OCBOA• GASB/FASAB• SOPs

Use FARS data base

80% Financial 20% Government/Not-for-Profit

(All multiple-choice – plan to add to simulations in 2005)• GAAP• OCBOA• GASB/FASAB• SOPs

Use FARS data base

Regulation of BusinessRegulation of Business Law 40%

• Plan to add simulation in 2006• Business Law except Business

Organizations• Heavy emphasis on:

• Ethics• Professional Responsibilities

Tax 60%• Prepare tax return schedules• Tax database

• Code, Regulations and Publication 17

Law 40%• Plan to add simulation in 2006• Business Law except Business

Organizations• Heavy emphasis on:

• Ethics• Professional Responsibilities

Tax 60%• Prepare tax return schedules• Tax database

• Code, Regulations and Publication 17

General Business Environment & ConceptsGeneral Business Environment & Concepts

Content formerly tested in pencil & paper exam – 30% OLD• Measurement (Managerial) 10%• Business Structure 20%

General Business Knowledge – 70% NEW• Information Technology 20%• Economic Concepts 10%• Corporate Financial Management 25%• Cost Measurement and Pricing 15%

• Lots on transfer pricing

Content formerly tested in pencil & paper exam – 30% OLD• Measurement (Managerial) 10%• Business Structure 20%

General Business Knowledge – 70% NEW• Information Technology 20%• Economic Concepts 10%• Corporate Financial Management 25%• Cost Measurement and Pricing 15%

• Lots on transfer pricing

COMPETENCIES Tested 2004 COMPETENCIES Tested 2004

Test Higher Level of Cognitive Skills Integration of Knowledge Communication Skills Analytical Skills Use “EXCEL-like” spreadsheet General Business Knowledge Data Base Research Skills

Test Higher Level of Cognitive Skills Integration of Knowledge Communication Skills Analytical Skills Use “EXCEL-like” spreadsheet General Business Knowledge Data Base Research Skills

RegistrationRegistration National Candidate

Database• New system created by

NASBA• Designed to track each

candidate with unique national ID

• All candidate data maintained within the NCD

• Ensures only eligible candidates test at appropriate times

• Secures candidate data, including grades

National Candidate Database• New system created by

NASBA• Designed to track each

candidate with unique national ID

• All candidate data maintained within the NCD

• Ensures only eligible candidates test at appropriate times

• Secures candidate data, including grades

Applying to take the examApplying to take the exam You will make

application to a particular state and pay your fees • Eligible candidates

will receive a Authorization to Test and Notification to Schedule allowing them to register to sit for exam section(s)

You will make application to a particular state and pay your fees • Eligible candidates

will receive a Authorization to Test and Notification to Schedule allowing them to register to sit for exam section(s)

Registration ProblemsRegistration Problems

NASBA payment coupon – system improved with second window

Some state boards take 6 – 8 weeks to issue an “Authorization to Test” (ATT)

Scores received too late to know if one section is passed before the candidate registers for the next exam section

NASBA payment coupon – system improved with second window

Some state boards take 6 – 8 weeks to issue an “Authorization to Test” (ATT)

Scores received too late to know if one section is passed before the candidate registers for the next exam section

Taking the ExamTaking the ExamUpon completion of

check-in, the candidate:• is seated at a

designated workstation

• begins the exam after proctor launches the session

• is monitored by a Test Center Administrator

• is video taped

At CompletionAt Completion

Upon completion of the examination, the candidate:• signs-out

• collects his/her belongings

• turns in scratch paper

• is given a Post Exam Information sheet

Upon completion of the examination, the candidate:• signs-out

• collects his/her belongings

• turns in scratch paper

• is given a Post Exam Information sheet

Problems so far …Problems so far … Forgetting to bring

proper ID Best to schedule

early to get day and time you prefer

Candidates report few problems with Prometric in either scheduling or exam proctoring

Forgetting to bring proper ID

Best to schedule early to get day and time you prefer

Candidates report few problems with Prometric in either scheduling or exam proctoring

Examination Format

80% Multiple Choice

20% Simulations

Examination Format - Multiple-Choice Examination Format - Multiple-Choice

MC – 3 Testlets MC 24 - 30 questions each Across Each Content Specification Area 4 options MC, radio bullet form

MC – 3 Testlets MC 24 - 30 questions each Across Each Content Specification Area 4 options MC, radio bullet form

Multiple Choice QuestionsMultiple Choice Questions

Not the same questions for everyoneNot the same questions for everyone

Your particular questions will be drawn from a pool of questions • Based on content specifications• Based on “psychometric” specifications• Difficulty level

You will not be allowed to change your answers after you leave each “testlet”

Your particular questions will be drawn from a pool of questions • Based on content specifications• Based on “psychometric” specifications• Difficulty level

You will not be allowed to change your answers after you leave each “testlet”

PretestingPretesting

20% of the questions

Not counted in the candidate’s final score

20% of the questions

Not counted in the candidate’s final score

Candidate Problems so FarCandidate Problems so Far Identical/similar questions appearing

more than once Time is very tight – esp. for financial

accounting and reporting section• No time to take a break• No clock – just a notation on how much total

time you have left Practice with on-screen calculator

• Use ten-key pad – much faster than pointing to the keys

• No commas on calculator

Identical/similar questions appearing more than once

Time is very tight – esp. for financial accounting and reporting section• No time to take a break• No clock – just a notation on how much total

time you have left Practice with on-screen calculator

• Use ten-key pad – much faster than pointing to the keys

• No commas on calculator

Examination Format - SimulationsExamination Format - Simulations

Case-based simulations (25-45 minutes each)• test integrated knowledge• more closely replicate real world• assess research, written communication and

other skills

Initially, the simulations will be limited to the following 3 parts

• Auditing and Attestation • Financial Accounting & Reporting • Regulation

Case-based simulations (25-45 minutes each)• test integrated knowledge• more closely replicate real world• assess research, written communication and

other skills

Initially, the simulations will be limited to the following 3 parts

• Auditing and Attestation • Financial Accounting & Reporting • Regulation

AICPA PlansAICPA Plans

Planning for two full simulation sections in each part of the exam by end of 2005

Simulation Question Types• Drop-down selection lists• Check boxes• Spread sheets (enter, drag & drop, formula)• Written communication• Research (access to professional literature

and other information)

Planning for two full simulation sections in each part of the exam by end of 2005

Simulation Question Types• Drop-down selection lists• Check boxes• Spread sheets (enter, drag & drop, formula)• Written communication• Research (access to professional literature

and other information)

SimulationsSimulations

Moving Around in SimulationsMoving Around in Simulations Constant Tabs

• Directions• Resource

Constant Tabs• Directions• Resource

Two Types of Tabs• Informational• Work Tabs (pencil

icon)• Gradable concepts

Two Types of Tabs• Informational• Work Tabs (pencil

icon)• Gradable concepts

Candidates had trouble with some of the simulations

Split screen and Minimize did NOT work like Windows

Caused some “freeze screens” which took up time which you don’t get back

Be sure to check ALL the tabs since necessary facts may be under “resources” tab

Simulation ToolsSimulation Tools Spreadsheet tool – it is not really

Excel! Word processing tool Cut, copy and paste Spellchecker Four-function calculator Access to professional literature and

other resources

SimulationsSimulations

SimulationsSimulations

SimulationsSimulations

SimulationsSimulations

SimulationsSimulations

SimulationsSimulations

SimulationsSimulations

Candidate Problems so farCandidate Problems so far

EXCEL Spreadsheet “like” Activities continue to give candidate problems• Formulas don’t work exactly like current

versions of Excel• Does not have “wizards” to help you write

formulas• Does not have most functions like present

value functions• You still have to use “time value of money

tables” to do present value problems

Exam typos $4,6005

EXCEL Spreadsheet “like” Activities continue to give candidate problems• Formulas don’t work exactly like current

versions of Excel• Does not have “wizards” to help you write

formulas• Does not have most functions like present

value functions• You still have to use “time value of money

tables” to do present value problems

Exam typos $4,6005

Authoritative LiteratureAuthoritative Literature

All simulations will include a research component

Candidates will be required to access authoritative literature:• FASB – Current Text and Original

Pronouncements• AICPA Professional Standards• Tax Database

• Code, Regulations and Publication 17

All simulations will include a research component

Candidates will be required to access authoritative literature:• FASB – Current Text and Original

Pronouncements• AICPA Professional Standards• Tax Database

• Code, Regulations and Publication 17

ResearchResearch FARS for Financial Accounting & Reporting

and AICPA Professional Standards for Audit free for 6 months – students must register on www.cpa-exam.org after they obtain an exam ID (NTS)

Tax for Regulation – what to use to practice? None for Business Concepts – planned for

early 2006; Could begin “Communications” as early as second quarter of 2005

FARS for Financial Accounting & Reporting and AICPA Professional Standards for Audit free for 6 months – students must register on www.cpa-exam.org after they obtain an exam ID (NTS)

Tax for Regulation – what to use to practice? None for Business Concepts – planned for

early 2006; Could begin “Communications” as early as second quarter of 2005

Authoritative LiteratureAuthoritative Literature

Authoritative LiteratureAuthoritative Literature

Authoritative LiteratureAuthoritative Literature

Authoritative LiteratureAuthoritative Literature

Authoritative LiteratureAuthoritative Literature

Authoritative LiteratureAuthoritative Literature

RecommendationsRecommendations

Each database works a little bit differently

Practice the part of the exam you will be taking A LOT so you will be familiar with how everything works before you get there

Bad speller?• Use spell checker in communications tab if

you are not finding anything in the database• matiriality will not bring up anything on

materiality!

Each database works a little bit differently

Practice the part of the exam you will be taking A LOT so you will be familiar with how everything works before you get there

Bad speller?• Use spell checker in communications tab if

you are not finding anything in the database• matiriality will not bring up anything on

materiality!

Written CommunicationWritten Communication Most simulations will require a written

communication question Must demonstrate knowledge of the

content or answer will not be scored• If what you write is not “on target” to the

issues, no points will be awarded

Will be scored for writing skills• Do not use abbreviations or acronyms• A “bullet” type format will not be accepted

• Looking for standard prose (complete sentences)

SimulationsSimulations

Candidate PreparationCandidate Preparation

Candidates need assistance learning technical material

Candidates should practice with database and computerized platform before attempting the real thing• www.cpa-exam.org

Many review courses offered within time blocks

Candidates need assistance learning technical material

Candidates should practice with database and computerized platform before attempting the real thing• www.cpa-exam.org

Many review courses offered within time blocks

Important Web SitesImportant Web Sites

http://www.cpa-exam.org http://www2.state.id.us/boa/HTM/cpaexa

m.htm or your State Board of Accountancy

www.prometric.com www.nasba.org

http://www.cpa-exam.org http://www2.state.id.us/boa/HTM/cpaexa

m.htm or your State Board of Accountancy

www.prometric.com www.nasba.org

Candidate ResourcesCandidate Resources CBT Tutorial available on www.cpa-exam.org

• Provides guided tour of revised exam• Demonstrates look and feel and available tools• Allows users to try functionality themselves

Two full sample exams for each part planned for early 2005• Condensed set of multiple choice and simulations• Will be downloadable from website• Replicate look and feel of CBT

CBT Tutorial available on www.cpa-exam.org• Provides guided tour of revised exam• Demonstrates look and feel and available tools• Allows users to try functionality themselves

Two full sample exams for each part planned for early 2005• Condensed set of multiple choice and simulations• Will be downloadable from website• Replicate look and feel of CBT

How to Prepare Students How to Prepare Students for the Computerized CPA Examfor the Computerized CPA Exam

Debra R. Hopkins, CPA, CIA Director

Northern Illinois University CPA Reviewdhopkins@niu.edu

Thanks to Debra Hopkins who gave a Wiley Net-Cast Presentation on this topic