The New Computerized CPA Exam

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The New Computerized CPA Exam

• Presentation for Beta Alpha Psiby Teresa
  GordonOct. 27, 2004

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Historic change!

• Last paper and pencil exam was November 5-6,
  2003
• CBT launched on April 5, 2004

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Reasons 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

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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

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The 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

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Comparison of SKILL Definitions

• Computer Based Exam
• Analysis
• Judgment
• Communication
• Research
• Understanding

• Pencil Based Exam
• Understanding
• Application
• Evaluation

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CPA EXAM When Can You Take It?

• Windows 2 months every Quarter

Open Closed April May June July
August September October November December
January February March
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Impact 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

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Score 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 havent been sent out promptly enough so
  far hopefully that will improve over time

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Complete 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 cant take that part again during that window

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Granting 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

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Completing the Exam

• Testing Windows Is 18 months enough time to
  complete?

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2004 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?

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Content of the Exam

• 4 Parts

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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

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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

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Financial 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

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Regulation 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

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General 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

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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

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Registration

• 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

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Applying 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)

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Registration 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

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Taking the Exam

• Upon 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

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At 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

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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

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Examination Format

• 80 Multiple Choice
• 20 Simulations

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Examination Format - Multiple-Choice

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

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Multiple Choice Questions
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Not 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

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Pretesting

• 20 of the questions
• Not counted in the candidates final score

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Candidate 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

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Examination 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

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AICPA 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)

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Simulations
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Moving Around in Simulations

• Constant Tabs
• Directions
• Resource

• 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 dont get back Be
sure to check ALL the tabs since necessary facts
may be under resources tab
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Simulation 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

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Simulations
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Simulations
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Simulations
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Simulations
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Simulations
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Simulations
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Simulations
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Candidate Problems so far

• EXCEL Spreadsheet like Activities continue to
  give candidate problems
• Formulas dont 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

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Authoritative 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

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Research

• 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

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Authoritative Literature
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Authoritative Literature
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Authoritative Literature
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Authoritative Literature
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Authoritative Literature
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Authoritative Literature
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Recommendations

• 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!

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Written 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)

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Simulations
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Candidate 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

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Important Web Sites

• http//www.cpa-exam.org
• http//www2.state.id.us/boa/HTM/cpaexam.htm or
  your State Board of Accountancy
• www.prometric.com
• www.nasba.org

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Candidate 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

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Thanks to Debra Hopkins who gave a Wiley Net-Cast
Presentation on this topic
How to Prepare Students for the Computerized
CPA Exam Debra R. Hopkins, CPA, CIA Director
Northern Illinois University CPA
Review dhopkins_at_niu.edu