The AICPA recently issued an Invitation to Comment: Maintaining the Relevance of the Uniform CPA Examination. The purpose of this initiative is to ensure the CPA Exam remains relevant and continues to align with recent changes to the business and regulatory environments. Personally, I like invitations to comment- especially when I see lots of opportunity for improvement. Here are the top three changes I would like to see. I hope they get your wheels turning and inspire you to cast your own vote.
Banishing Blackout Months
If you read through the invitation to comment, this prospective improvement is not explicitly mentioned; however, a little bird over at the AICPA mentioned it is something they are considering. And why wouldn’t they? I seem to recall the initial purpose of the blackout months was to allow time for scoring. But it seems to me the exams are now scored on a continuous basis, as evidenced by the two waves of score released within each testing window.
The problem with the blackout months is they don't match the working conditions in the profession. Take, for example, a story that was recently shared with me. A new hire, who works for a Big 4 firm, was welcomed back from national training with a large serving of reality. She found herself immediately staffed on an audit that would require long hours. She let her supervisor know she had an exam scheduled for that week and asked if she should postpone her exam. The supervisor said she should. The problem is that this took place at the end of August. Which, in turn, meant the staff person would not simply postpone her exam for a week. But because September is a blackout month, she would be postponing her exam for a minimum of 5 weeks. That’s horrible! It ruins any momentum of the preparation process and also creates wasted time for all those weeks this staff person had already put in to studying.
There is a misconception that the computer-based exam is available to take anytime and rescheduling can be done with ease. The reality facing candidates is that client work takes precedence to the exam and schedules always change. The delivery of the exam should match the challenges that candidates are faced with in their work environments. If you agree on this point, complete the invitation to comment and add your thoughts to the very last question of the survey that reads “What other changes, if any, should be made to the CPA Examination.”
It Is About Time For Excel
The CPA exam currently offers candidates a basic spreadsheet tool that has limited functionality. This means candidates will either spend time on the AICPA Tutorial Site to learn how the AICPA tool works or they will fumble around and waste precious time during, what is likely to be, the most difficult exam of their life. I am sure nearly every candidate or newly licensed CPA would vote yes on Excel. The question is how much would you be willing to pay for it? Or do you even care because your organization is footing the bill?
I am in favor of making the investment in Excel. After all, according to the AICPA “The accounting profession evolves constantly.” Clearly, Excel isn’t an evolutionary tool. It is an essential one, used by both students and professionals of all levels. Yet I am also sensitive to costs. Rather than solely looking at what the cost of Excel would be, I would like for the AICPA to look at existing costs that can be cut.
Take for example the fees associated with NASBA’s Notice to Schedule (NTS). A candidate receives an NTS after they pay for the exam sections of their choice. Depending on one’s jurisdiction, the NTS will expire after 6 or 9 months. If a candidate has not taken the exam section(s) they paid for before the NTS expiration date, they forfeit the fees they paid for the exam section(s) not taken. This is no small change. Currently, it costs $190.35 to take FAR and AUD or $171.25 to take BEC or REG. I don’t understand why the NTS expire. It’s not like they are cartons of milk.
The other problem with the NTS expiration dates is that most candidates will need to obtain more than one NTS. Very few candidates are able to pass all four exam sections within 6 calendar months which, due to blackout months, is 4 testing months. In order to get a second NTS, candidates will be required to pay an additional fee before they can pay for more exam fees to get another NTS. Yes, you read that right. You pay a fee for authorization to pay a fee. In California, the reapplication fee is only $25. However, if you are in one of the 32 jurisdictions that is supported by NASBA’s CPA Examination Services, it will cost you an additional $115 for each NTS. Which begs the questions: why is cost the discrepancy so high and what are candidates really paying for?
An Integrative Exam Section to Replace BEC
One of the more innovative ideas the AICPA is considering is to replace BEC with an integrative section. First and foremost, BEC needs some work. When I took it, it felt like the junk drawer of the exam with a hodge podge of topics thrown in to one. According to the AICPA, the integrative section would “allow for greater testing of higher-order skills (in essay or business case study format) and would include questions that blend elements of taxation, auditing, and financial accounting and reporting…One example of a potential opportunity for integration of auditing, corporate income tax, and financial accounting concepts would be a case study on accounting for income taxes pursuant to FASB Accounting Standards Codification 740, Income Taxes. In this example, the candidate—in the role of an auditor—would be asked to review the adequacy of a client’s balance sheet disclosures for income taxes including gross deferred tax assets, gross deferred tax liabilities, the valuation allowance, and the net change in the valuation allowance. The candidate may also be asked to provide written documentation of testing (including spreadsheet calculations as support, if necessary) for the audit working papers. The candidate would be provided realistic materials such as prior-year working papers, client-prepared financial documents and statements, applicable authoritative literature, correspondence with the client and other audit team members, and audio/video of auditor and client discussions.”
I am favor of this innovation for a couple reasons. One, in order to protect the public interest, CPAs should be able to demonstrate high-order skills like critical thinking and problem solving. Memorization and an ability to answer multiple-choice questions is not enough. Second, while this would be a dramatic change to the exam, the world in which we work has experienced significant shifts.The exam should reflect a similar rate of change.
You can cast your vote and add your comments through an online survey, which is open through December 2, 2014. Hats off to the AICPA for taking a hard look at what needs to be done, what innovations can be made, and allowing each of us to cast our vote on the future of the CPA Exam.