To help you become more confident and comfortable with the sections of the CPA Exam, we've put together individual guides on everything you need to know. We'll cover the exam format, content, question types, and more.
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COVID-19 and the CPA Exam
News Updates:
- NASBA, AICPA, and Prometric have announced that the CPA Exam is considered "essential," and that certain test centers will begin testing on 5/1. Read more here
- NASBA has recommended that state boards extend all NTS’s expiring within 4/1-6/1 until 9/30. Read more here
- NASBA, AICPA, and Prometric have announced that they will invoke an emergency testing period between 6/1/2020 and 6/30/2020. Read more here
The COVID-19 pandemic has thrown a wrench in many candidates’ CPA Exam plans. Many candidates have transitioned to remote work and school and aren’t able to access mentors for professional development as easily as they were before. Prometric testing center, where CPA Exam testing takes places, has closed temporarily, forcing many candidates to push back their test dates.
But the truth is, there’s never been a better time to prepare for the CPA Exam! With an industry shortage of CPAs, this door-opening and lucrative credential is in high demand. Practicing social distancing means you’re (hopefully!) spending more time at home and, with so much remote work, your commute time can easily be repurposed for study time.
Surgent is here to help. Our team of experts is hosting “Office Hours” interactive webinars, where you can get the answers to your questions on COVID-19’s impact on the exam, and how you can best set yourself up for success in spite of it.
Sign up for an office hours interactive webinar here!
What is the CPA Exam?
The Uniform CPA Examination, otherwise known as the CPA Exam, is the credentialing exam for professionals seeking to become Certified Public Accountants. It is developed and graded by the American Institute of Certified Public Accountants (AICPA) and administered in conjunction with the National Association of State Boards of Accountancy (NASBA).
The CPA Exam is a four-part exam that tests the various skills entry level accountants need to practice public accounting. Each section of the CPA Exam is tested separately, with each test lasting four hours. Testing occurs at Prometric test center.
Until recently, CPA candidates could sit for their exams within four testing windows throughout the year. However, recently, the AICPA and NASBA announced that they would be introducing continuous testing, meaning candidates can sit for their exams whenever they please. The biggest difference? Whereas in the past, a candidate could not sit for a section twice in the same quarter, candidates can retake their failed section as soon as they receive their scores.
Passing the exam is only one requirement of licensure; candidates must also fulfill education and experience requirements, which are set by the local state board of accountancy. While the CPA license is a United States designation, non-US citizens can apply as well. Professionals who hold licenses with the following organizations may take the International Qualification Examination (IQEX) in place of the CPA Exam.
Click here for more information on eligibility requirements for the CPA license
CPA Exam Format
The CPA Exam is comprised of four separate exams (referred to as sections), is administered by the AICPA, and totals 16 hours (4 hours per section). The four sections of the exam are Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR), Regulation (REG), and Business Environment and Concepts (BEC).
Each exam section is broken out into 5 testlets, each containing sets of questions:
- Testlet 1: 36 MCQs
- Testlet 2: 36 MCQs
- Testlet 3: 2 TBS
- Testlet 4: 3 TBS
- Testlet 5: 3 TBS
- Testlet 1: 31 MCQs
- Testlet 2: 31 MCQs
- Testlet 3: 2 TBS
- Testlet 4: 2 TBS
- Testlet 5: 3 Written Communication Questions
- Testlet 1: 33 MCQs
- Testlet 2: 33 MCQs
- Testlet 3: 2 TBS
- Testlet 4: 3 TBS
- Testlet 5: 3 TBS
- Testlet 1: 38 MCQs
- Testlet 2: 38 MCQs
- Testlet 3: 2 TBS
- Testlet 4: 3 TBS
- Testlet 5: 3 TBS
CPA Exam by Sections, Time, and Question Type:
| Section | Section Time | Multiple-Choice Questions | Task-Based Simulations | Written Communication |
|---|---|---|---|---|
| AUD | 4 Hours | 72 | 8 | - |
| BEC | 4 Hours | 62 | 4 | 3 |
| FAR | 4 Hours | 66 | 8 | - |
| REG | 4 Hours | 76 | 8 | - |
CPA Exam Scoring by Section and Question Type:
| Section | Multiple-Choice Questions | Task-Based Simulations | Written Communication |
|---|---|---|---|
| AUD | 50% | 50% | - |
| BEC | 50% | 35% | 15% |
| FAR | 50% | 50% | - |
| REG | 50% | 50% | - |
CPA Exam Skills Tested by Section:
| Section | Remembering and Understanding | Application | Analysis | Evaluation |
|---|---|---|---|---|
| AUD | 30-40% | 30-40% | 15-25% | 5-15% |
| BEC | 15-25% | 50-60% | 20-30% | - |
| FAR | 10-20% | 50-60% | 25-35% | - |
| REG | 25-35% | 35-45% | 25-35% | - |
How to Pass the CPA Exam
Candidates need a score of 75 or more on each section to pass, and each section must be passed within an 18-month window, which begins as soon as the candidate passes the first exam.
Types of Questions on The CPA Exam:
Multiple Choice Questions: These are one sentence to paragraph length questions with four potential answers.
Task-Based Simulations: These are practical questions requiring candidates to type in answers, and may include a research question, journal entries, filling out a form with multiple questions, reconciling accounts, or filling out sections of reports.
Written Communication Tasks: Clearly and effectively communicating information is essential in the business environment, and these are questions that test a candidate’s ability to communicate through writing. Unlike task-based simulations, written communication tasks require candidates to give a written response to a question; this might be in the form of a memo directed at a specific audience.
CPA Exam Content Areas, Topics, and Weightings by Section:
Auditing and Attestation (AUD):
Area I: Ethics, Professional Responsibilities, and General Principles 15-25%
- Nature and scope
- Ethics, independence, and professional conduct
- Terms of engagement
- Requirements for engagement documentation
- Communication with management and those charged with governance
- Communication with component auditors and parties other than management and those charged with governance
- A firm’s system of quality control, including quality control at the engagement level
Area II: Assessing Risk and Developing a Planned Response 20-30%
- Planning an engagement
- Understanding an entity’s internal control
- Debtor-creditor relationships
- Assessing risk due to fraud, including a discussion among the engagement team about the risk of material misstatement due to fraud or error
- Identifying and assessing the risk of material misstatement, whether due to error or fraud and planning further procedures responsive to identified risk
- Materiality
- Planning for and using the work of others, including group audits, the internal audit function and the work of a specialist
- Specific areas of engagement risk
Area III: Performing Further Procedures and Obtaining Evidence 30-40%
- Acquisition and disposition of assets
- Sampling techniques
- Performing specific procedures to obtain evidence
- Specific matters that require special consideration
- Misstatements and internal control deficiencies
- Written representation
- Subsequent events and subsequently discovered facts
Area IV: Forming Conclusions and Reporting 15-25%
- Reports on auditing engagements
- Reports on attestation engagements
- Accounting and review service engagements
- Reporting on compliance
- Other reporting considerations
Click here to read our complete AUD CPA Exam Guide
Business Environment and Concepts (BEC):
Area I: Corporate Governance 17-27%
- Internal control frameworks
- Enterprise risk management (ERM) frameworks
- Other regulatory frameworks and provisions
Area II: Economic Concepts and Analysis 17-27%
- Economic business cycles
- Market influences on business
- Financial risk management
Area III: Financial Management 11-21%
- Capital structure
- Working capital
- Financial valuation methods and decision models
Area IV: Information Technology 15-25%
- Information technology (IT) governance
- Role of information technology is business
- Information security/availability
- Processing integrity (input/processing/output controls)
- Systems development of maintenance
Area V: Operations Management 15-25%
- Financial and non-financial measures of performance management
- Cost accounting
- Process management
- Planning techniques
Click here to read our complete BEC CPA Exam Guide.
Financial Accounting and Reporting (FAR)
Area I: Conceptual Framework, Standard-Setting, and Financial Reporting – 25-35%
- Conceptual framework and standard setting for nonbusiness entities
- General purpose financial statements: for-profit business entities
- General purpose financial statements: nongovernmental, not-for-profit business entities
- Public company reporting topics
- Financial statements of employee benefit plans
- Special purpose framework
Area II: Select Financial Statement Accounts 30-40%
- Cash and cash equivalents
- Trade receivables
- Inventory
- Property, plant, and equipment
- Investments
- Intangible assets
- Payables and accrued liabilities
- Long-term debt
- Revenue recognition
- Compensation benefits
- Income taxes
Area III: Select Transactions 20-30%
- Accounting changes and error corrections
- Business combinations
- Contingencies and commitments
- Derivatives and hedge accounting
- Foreign currency transaction and translation
- Leases
- Nonreciprocal transfers
- Research and development costs
- Software costs
- Subsequent events
- Fair value measurements
- Differences between IFRS and U.S. GAAP
Area IV: State and Local Governments 5-15%
- State and local government concepts
- Format and content of the financial section of the comprehensive annual financial report (CAFR)
- Deriving government-wide financial statements and reconciliation requirements
- Typical items and specific types of transactions and events: measurement, valuation, calculation, and presentation in governmental entity financial statements
Click here to read our complete FAR CPA Exam Guide
Regulation (REG):
Area I: Ethics, Professional Responsibilities and Federal Tax Procedures 10-20%
- Ethics and responsibilities in tax practice
- Licensing and disciplinary systems
- Federal tax procedures
- Legal duties and responsibilities
Area II: Business Law 10-20%
- Agency
- Contracts
- Debtor-creditor relationships
- Government regulation of business
- Business structure
Area III: Federal Taxation of Property Transactions 12-22%
- Acquisition and disposition of assets
- Cost recovery (depreciation, depletion, amortization)
- Estate and gift taxation
- Transfers subject to gift tax
- Gift tax annual exclusion and gift tax deductions
- Determination of taxable estate
Area IV: Federal Taxation of Individuals 15-25%
- Gross income (inclusions and exclusions)
- Reporting items from pass-through entities
- Adjustment and deductions to arrive at adjusted gross income and taxable income
- Passive activity losses
- Loss limitations
- Filing status
- Computation of tax and credits
- Alternative Minimum Tax
Area V: Federal Taxation of Entities 28-38%
- Tax treatment of formation and liquidation of business entities
- Differences between book and tax income
- C corporations
- S corporations
- Partnerships
- Limited liability companies
- Trusts and estates
- Tax-exempt organizations
Click here to read our complete REG CPA Exam Guide
Check out our other popular CPA Exam resources:
- CPA Exam Section Guides: Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR), Business Environment and Concepts (BEC),
- 7 CPA Exam Study Tips While Working Full-Time
- CPA Review Adaptive Technology Comparison: Compare Surgent against other CPA Review providers like Becker, Roger CPA Review, Wiley CPAExcel, and Gleim.
