The Uniform Certified Public Accountant Examination (Uniform CPA Exam) is the examination administered to most people who wish to become Certified Public Accountants in the United States.
The Uniform CPA Exam was developed and is maintained by the American Institute of Certified Public Accountants (AICPA), and is administered by the National Association of State Boards of Accountancy. The CPA exam is used by the regulatory bodies of all fifty states plus the District of Columbia, Guam, Puerto Rico, the U.S. Virgin Islands and the Northern Mariana Islands.
History
Until the 1990s, the Uniform CPA Exam was a 19 and a half hour test given over a three-day period, consisting of four subject areas (sections) which were tested in five sittings: Auditing (3.5 hours); Business Law (3.5 hours); Accounting Theory (3.5 hours); and Accounting Practice (Part I & Part II; 4.5 hours each). Although Accounting Practice I and Accounting Practice II were given in separate sittings, they were counted as one section for grading purposes (i.e., five exam parts, resulting in four separate scores). The exam was given only twice per year: on the first consecutive Wednesday, Thursday and Friday in May and November of each year. Test takers were allowed to use only paper and pencil (no electronic calculators or computers of any kind).
In 1992, the exam was restructured into a four-section, two-day exam. The subject matter was reorganized and redundant material was eliminated, primarily between Accounting Theory and Accounting Practice (Parts I and II). In addition, innovative machine-scorable test questions were incorporated to better assess the skills needed by CPAs to protect the public. For the first time, proprietary electronic calculators were provided to CPA candidates for the two new accounting sections. The four new sections were:
- Business Law and Professional Responsibilities
- Auditing
- Accounting & Reporting - Taxation, Managerial, and Governmental and Not-for-Profit Organizations
- Financial Accounting and Reporting - Business Enterprises
Until 1996, completely new versions of the CPA Exam were prepared every six months, and after each administration all questions and the keyed responses (correct answers) were published and available for purchase. Beginning with the May 1996 administration, almost all exam material was kept secure so that many high-quality questions could be reused. Though this is common practice in the world of large-scale testing, it was a policy decision that was momentous at the time, and made only after extensive comments were elicited from all key stakeholders, such as the 54 Boards of Accountancy, members of the CPA profession, accounting educators, CPA candidates, and testing professionals. By deciding to release only a small portion of each exam--to help candidates prepare for the examination experience--high quality exam material could be reused in the future. It also became possible for the first time to use statistical techniques for test equating and to use criterion-referenced passing scores.
Computer-based examination
Since April 5 , 2004 , the exam has been entirely computer based. Research skills are assessed, as are the ability to use electronic tools-of-art, such as rudimentary word processing and spreadsheets, as well as widely-used database software. In July 2009, the one millionth administration of the computerized CPA exam occurred.
The testing year is divided into four "windows". In each three-month window the candidates may take one or more sections, but may only take each section once.
Credit earned for passing a section is valid for 18 months. If a CPA candidate fails to pass all four sections within an 18-month period, credit is lost for any section passed more than 18 months earlier and must be retaken.
Sections and topics covered
The sections have been reorganized as follows:
- Auditing & Attestation (4.5 hours): (AUD) – This section covers knowledge of planning the engagement, internal controls, obtaining and documenting information, reviewing engagements and evaluating information, and preparing communications.
- Financial Accounting & Reporting (4.0 hours): (FAR) – This section covers knowledge of concepts and standards for financial statements, typical items in financial statements, specific types of transactions and events, accounting and reporting for governmental agencies, and accounting and reporting for non-governmental and not-for-profit organizations.
- Regulation (3.0 hours): (REG) – This section covers knowledge of ethics and professional responsibility, business law, Federal tax procedures and accounting issues, Federal taxation of property transactions, Federal taxation – individuals, and Federal taxation – entities.
- Business Environment & Concepts (2.5 hours): (BEC) – This section covers knowledge of business structures, economic concepts, financial management, information technology, and planning and measurement.
The Uniform CPA Exam tests primarily understanding and the ability to apply authoritative literature—such as auditing and accounting standards, the Uniform Commercial Code, and the Internal Revenue Code—that are universally adopted by all US jurisdictions or are federal in nature. Every effort is made to avoid asking about subject matter that may have different correct answers in different jurisdictions.
Testing method
Multiple-choice questions comprise approximately 70% of the exam, while the other 30% consist of simulations, with the exception of Business Environment and Concepts (BEC). Accounting knowledge is tested in simulations through a variety of tasks, some of which require searching databases, completing written communication exercises, and working with spreadsheets and forms. The skills that simulations are intended to measure are: analysis, judgment, communication, and research.
In all simulations, candidates are presented with a situation and are instructed to write a letter or memorandum on a specific topic.
Written communication responses are scored on the basis of three criteria:
- Organization - structure, ordering of ideas, linking of ideas one to another.
- Development - presentation of supporting evidence.
- Expression - use of standard business English.
Responses that do not address the assigned topic are not scored.
In Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR), and Regulation (REG), multiple-choice testlets account for 70%, and simulations (case studies) 30%, of the score. The 30% simulation portion is further divided into 10% for written communication and 20% for all other parts of the simulation. It has been said that only one of the two communications is graded for the full 10% and the other is not graded at all. In Business Environment and Concepts (BEC), multiple-choice questions account for 100% of the score, although the AICPA has planned to introduce simulations.
During the examination, candidates may take a break after completing a "testlet" (either a set of multiple choice questions or a simulation). Once a testlet is completed, however, the candidate is not allowed to return to it, so it is not possible to use the "break time" to improve one's score by looking up answers. The clock continues to run during breaks.
The "bank" of questions is much larger than the set presented to each candidate. Different candidates (even taking the examination at the same time) may therefore receive a completely different examination. This variance is accounted for in the scoring.
Adaptive testing
The Uniform CPA exam is administered using a modified adaptive testing model. Each CPA candidate begins the exam with a multiple-choice item testlet of moderate difficulty, after which an ability estimate based on item response theory is made. If the candidate's ability estimate is sufficiently high, the second testlet administered is more difficult. If the estimate fails to meet that threshold, another moderately difficult testlet is administered. After completing the second testlet, a new ability estimate is computed. If that estimate exceeds a predetermined threshold, a difficult testlet is administered as the third testlet. If not, a moderately difficult testlet is administered. On sections that contain simulations, these are administered after the third multiple-choice testlets. The simulations are not administered adaptively. That is, there is no relationship between a candidate's ability estimate and the simulations administered to the candidate.
A candidate is free to review and change any answers within a testlet or simulation until the candidate submits the work as completed. From that point on, the candidate may not review or change answers in a completed testlet or simulation.
The AICPA takes the position that adaptive testing allows the ability of a candidate to be assessed with fewer questions than would be required for a static, or non-adaptive, testing methodology.
Currently, the BEC portion of the exam is not adaptive and it has not been announced when it will be.
Scoring
The score represents the candidate's overall performance on the identified examination section. Scores are reported on a numeric scale of 0 to 99, with 75 as the passing score. The scale does not represent "percent correct." A score of 75 indicates examination performance that hypothetically reflects
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