Proposed CPA exam changes offer options for CPA candidates

The American Institute of Certified Public Accountants (AICPA) is proposing changes to the CPA exam. The proposed exam will test on core areas, and allow candidates to choose one optional area for testing The AICPA is seeking comments on an Exposure Draft of the exam's new design. 

Purpose of the new CPA exam design

The AICPA says its proposed CPA exam redesign results from growth in new rules, concepts, and standards, along with changes in the roles and responsibilities of newly licensed CPAs. According to the AICPA, this model establishes a foundation for the most important and relevant topics that all newly licensed CPAs need to know to protect the public interest while providing an opportunity for candidates to choose one of three disciplines.

Existing exam

The current CPA exam consists of four sections: 

• Auditing & Attestation (AUD); 
• Business Environment & Concepts (BEC);
• Financial Accounting & Reporting (FAR); and 
• Regulation (REG).

Candidates must pass all four sections within 18 months. Candidates must score a minimum of 75 on each section. 

The exam question format consists of multiple choice questions, task-based simulations, and, for the Business Environment & Concepts section, written communication tasks (e.g. essays).

Proposed exam

The AICPA has proposed requiring three core sections on the revised CPA exam, and offering a choice for the fourth section. The three required exam sections would be: 

• Financial Accounting and Reporting;
• Auditing and Attestation and Taxation; and 
• Regulation. 

In addition to the three required sections, each candidate would choose one of the following disciplines in which to demonstrate additional skills and knowledge: 

• Business Analysis and Reporting;
• Information Systems and Controls; or 
• Tax Compliance and Planning.

Under the proposed scheme, the former Business Environment and Concepts section has been reallocated among the revised exam sections. In addition, certain content previously assessed in the Financial Accounting and Reporting section will be assessed in the optional Business Analysis and Reporting Discipline exam section and certain content from the Regulation section will moved to the optional Tax Compliance and Reporting Discipline section.

Transition issues

The AICPA expects to start using revised CPA exam in January 2024. 

Credit expiration dates are not changing as a result of the new exam.

Candidates who pass all four parts of the existing exam before December 31, 2023 and retain credit for each part do not have to take the 2024 CPA Exam. They have met the testing requirement and must meet the other requirements (education and experience requirements, and in many states, an ethics examination) to obtain a CPA license. 

For candidates who have not passed all four portions of the exam as of January 2024, a transition policy chart is available on the National Association of State Boards of Accountancy (NASB) web site. The chart explains how a candidate's existing credit applies in 2024.

Experience requirements are also evolving

To become a licensed CPA, candidates must meet education and experience requirements in addition to passing the CPA exam. The CPA exam is the same for all candidates. However the education and experience requirements differ by jurisdiction. 

At one time, to obtain a CPA license, candidates generally had to work for a public accounting firm and perform certain specified functions, such as conducting an audit of a company. However, the state experience requirements are also evolving to reflect a CPA's more varied activities. A number of states now allow candidates to fulfill their experience requirement by working under a CPA--but not necessarily at a CPA firm or being required to perform specific auditing functions. Thus, for example, a government or private sector tax, finance, or information systems professional would not be barred from fulfilling the CPA experience requirement simply due to the type of organization for which they are employed, or the type of duties they perform.

CPA evolution initiative

The CPA exam revisions are part of a joint AICPA/NASBA CPA Evolution Initiative. Like the experience requirement changes at the state level, the exam changes reflect the evolving diverse roles of, and requirements for, a CPA. They are part of an initiative that, according to the AICPA, "aims to transform the CPA licensure model to recognize the rapidly changing skills and competencies the accounting profession requires today and will require in the future."