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CBT-e Strategies: What To Do When You’re Still Sitting for the CPA Exam in 2011

Those of you who graduated in May should already be buried in your review books and planning to sit for some parts – if you haven’t already – but for some of you, the long wait to get your applications processed is anything but over OR you managed to procrastinate up until this point and haven’t even begun the process. I’ll resist the urge to smack you if you promise to submit those as soon as you’re done reading this post. Regardless of where you’re at in the process, chances are you’re tripping about 2011 changes. Not to worry, my big fat brain packed with CPA exam goodness is here to help.


Accounting Is Still Accounting – Even if they are testing IFRS in 2011, debits still go on the left (at least I’m pretty sure they still do under IFRS) and pension accounting is still really annoying. Keep in mind, IFRS isn’t the norm in the wild – at least in the U.S. at this point – and will not be for several years so it would be irresponsible of the AICPA Board of Examiners to heavily test rules that aren’t even widely accepted in practice. So relax, the changes are coming but they aren’t nearly as scary as you think.

FAR – If you are able to, get FAR done this year so you don’t have to worry about it next year. The first two windows of 2011 will say a lot about the AICPA’s strategy but knowing them, I wouldn’t expect 2010’s exam to be completely different from 2011’s. Those questions cost a lot of time and energy to make and the BoE isn’t about to trash all of them just so they can start testing rules that we don’t even use. With me on this one? Calm down.

CPA Review Materials – If you haven’t yet committed to a CPA review course, be sure to ask about 2011 materials and how changes affect the course you choose THIS year. A good review course will offer updates to the material but be on the lookout for additional product purchase charges or fees to update your materials. For BEC, REG and AUD the changes are minimal: international audit standards will appear here and there and a few things are moved around but for the most part the largest change in these areas will be the cosmetic change in BEC as written communications are moved out of the other three sections and stuck there. This does not change the content, only how you prepare and the point percentages for this section.

You can find the new 2011 CSOs via the AICPA here if you’d like a better look at what you’re in for next year but as I said, it doesn’t take long to figure out that next year’s exam really doesn’t look all that different from this year’s.

For Some Large Companies, IFRS Is the Financial Reporting Equivalent of Y2K but What About the Little Guy?

It turns out that for many of the largest global companies, all this IFRS anxiety might be completely overblown. Companies with massive accounting departments and gurus leading the IFRS charge don’t seem to be all that concerned about accounting adjustments or costs, two areas that could cause headaches for smaller companies that are forced to adopt IFRS.

At the accounting conference at Pace University last week, some of the accounting gurus from the largest global companies reacted to the switch with “meh”:

They will be “underwhelmed,” says Aaron Anderson, director, IFRS policy and implementation at IBM…”When I look at the impact on IBM and compare it to whether investors will care, frankly, I don’t think they will.”

He pointed out that if the company moves all of its financial reporting to IFRS — and some of its foreign subsidiaries are already reporting under the international standards — the change wouldn’t be material in areas that investors “care about,” such as service contracts and product backlog, which are “numbers that are not reported in GAAP, anyway.”

Unfortunately, not every company has the good fortune to have a “Director of IFRS Policy and Implementation.” For some small businesses, the IFRS adoption could very well be headed up by the CFO of the company, assisted by the controller, with a couple of senior accountants pitching in. If things really get complicated (we’re talking about accounting rules, after all), then consultants could be called in to straighten help out but at what cost?

But even companies that do have someone spearheading this effort have a few concerns. Alcoa’s IFRS implementation director said the company won’t be on board until the inventory and derivatives issues have been worked out but everything after that will be NBD:

Klingler said that Alcoa won’t bless a conversion to IFRS until issues around inventory accounting are settled. Currently, Alcoa and other U.S. companies receive a tax benefit from using the last-in, first-out (LIFO) accounting method, which is banned by IFRS. Being forced to dump LIFO could cost those companies significant cash tax payments.

Alcoa executives are also concerned with understanding how hedging rules will change, said Klingler, since the company is a commodities supplier. However, “everything else will be small numbers” with respect to accounting adjustments, he said.

So a couple big ticket issues that will certainly be resolved and then Alcoa will be marching to IFRS no problem. For small companies, dumping LIFO or figuring out hedge accounting (again) could have a huge effect.

Back to the money issue. Many are worried that since the last big change in the industry — Sarbanes-Oxley — resulted in huge compliance costs, companies will spend another king’s ransom to adopt IFRS. But again, for the largest companies, they’ve more or less got the cost of conversion nailed down and aren’t that concerned:

Anderson conceded that switching to international standards will require “a lot of work,” but added that IBM, which has already started the process of preparing for a switch, knows “within a tight range” what it will cost — and in relative terms, “it won’t be very much.”

The concession of “a lot of work” is the cause for concern for small companies. Naturally, the more complex a business, the more work will be required to adopt IFRS but at least those companies have the manpower and the resources to weather the initial learning curve. Smaller companies may find themselves short staffed which could result in need of outside expertise (and thus spending a small fortune) to make adoption happen.

Unfazed by IFRS [CFO]