| EXECUTIVE
SUMMARY |
 THE NEW EXAM REPRESENTS
STATE-OF-THE-ART technology and
provides a platform on which the content
can be continuously improved. PASS RATES FOR FIRST YEAR OF
THE CBT have overtaken pass
rates for the paper-based exam. The
higher pass rates may result, in part,
from more focused preparation by
candidates for the sections taken, a
greater percentage of partial-credit
candidates finishing needed sections
and/or more capable candidates.
CURRENTLY, EXAM CANDIDATE
VOLUME is below original
projections. A number of reasons might
explain the difference: There seems to be
a tendency for candidates to postpone
taking the exam until their professional
workloads lessen and the availability of
testing times may have diminished
candidates’ perceived urgency to
take and complete the exam.
EDUCATORS CAN TAKE STEPS TO
BETTER PREPARE students for the
CBT: Include more writing assignments in
coursework and grade them; include
assignments that help students deal with
ambiguity; require students to conduct
research using the professional
literature; give open-book and
computerized exams; and encourage
students to visit the www.cpa-exam.org Web site.
THE NEW EXAM MORE CLEARLY
REFLECTS THE WORK environment
candidates will be entering. Preparing
for the exam now is comparable with
preparing to enter the workplace, and the
testing of communication skills will
persuade candidates how important they
are in the business world.
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| WILLIAM W. HOLDER, CPA, is the
Ernst and Young Professor at the
University of Southern California, Los
Angeles. His e-mail is wholder@marshall.usc.edu. PAULA B. THOMAS, CPA, is the
Advisory Board Distinguished Professor
and Chair at Middle Tennessee State
University, Murfreesboro. Her e-mail is pbthomas@mtsu.edu. |
seminal event occurred just over one year ago
that changed the licensing process
forever—the launch of the computer-based
Uniform CPA Examination. It was the single most
significant change in the licensing of CPAs in
the profession’s 100-year history. The
computer-based test (CBT) took more than five
years to create and was a collaboration of
volunteers and the professional staffs of the
AICPA, the National Association of State Boards
of Accountancy (NASBA), Thomson Prometric and
individual state boards of accountancy. And the
results are encouraging: Post-exam surveys showed
that 97% of candidates were satisfied with their
test experience on the new exam.
The timing of the exam’s
appearance was fortuitous. Though it had been on
the drawing boards for several years before the
big business scandals hit the headlines, the
announcement of the new exam came out almost
concurrently with the breaking news of corporate
misconduct. While the image of the accounting
profession has undeniably been tarnished by those
scandals, the same events also made clear the
importance of CPAs in the functioning of the
nation’s economy and capital
markets—and of an exam that must ensure that
entry-level CPAs have the skills needed to
protect the public interest. Public outcry over
highly visible costly business failures led to
the passage of the Sarbanes-Oxley Act of 2002 and
highlighted the importance of the accounting
profession’s roles and responsibilities in
protecting the public interest. That protection
is the paramount objective of the CPA exam; it is
critical for those who rely on the work of CPAs
to have faith in the licensing process.
|
| The new
exam represents state-of-the-art
technology in testing and, equally
important, provides a platform on which
the content can be continuously improved.
|
Assuredly, the
revisions to content and administration are more
important than the new computerized format. The
knowledge and skills necessary to practice
competently are not static; the pace of change is
accelerating, and accounting pronouncements, as
well as the work that CPAs perform, are becoming
much more complex. For example, Dennis Beresford,
former FASB chair and now an accounting
professor, recently stated that in order to
practice competently accountants “must
search to see whether there is accounting
literature on point and then decide how it
applies to the issue under consideration. While
computers help greatly in the identification of
applicable literature, humans still must read the
material and decide how it should be
interpreted.”
THE
EXAM TODAY
The accounting
profession and the CPA exam must respond quickly
to changing demands in practice, and the CBT is
one mechanism for accomplishing that objective.
Ongoing changes in the exam should help ensure
that future professionals remain well-prepared
for an ever-changing workplace and enhance the
image of the exam with our constituents.
The new exam represents
state-of-the-art technology in testing and,
equally important, provides a platform on which
the content can be continuously improved. The
primary reason the exam was computerized was to
achieve a better alignment between the knowledge
and skills required of entry-level CPAs and the
requirements of current professional practice. It
is critical that exam candidates be tested using
tools that reflect, to the extent feasible, the
demands of the workplace they will be entering.
Through revised content, format and delivery, the
new exam strives to evaluate the research,
analytical, judgment and communications skills,
as well as the technical knowledge, of
entry-level CPAs.
A related component of a
CPA’s competency and financial expertise is
the ability to harness the power of technology.
The expanding universe of information with which
CPAs must be familiar is a powerful force that
has greatly affected the practice of accounting.
As the use of technology has become pervasive,
CPAs are able to obtain almost unlimited amounts
of information electronically. Accordingly, the
ability to use technology to address and resolve
client problems has become an important feature
of practice. Successful CPAs must have the
ability to find and use information as needed.
In the past, many candidates
prepared for the paper-based CPA exam by
memorizing rules. But the exponential growth in
the number of accounting and auditing
pronouncements and their growing complexity make
that approach less desirable. Memorized
information quickly becomes outdated and
forgotten. In today’s business environment,
CPAs must be able to research issues in order to
make appropriate business decisions.
Some professionals have
criticized the new exam for being easier since
candidates can “look up the answers.”
The reality is that candidates have access to
professional literature only during the
simulations, so the skill being tested is the
candidate’s ability to find the right
answer. A practicing CPA simply cannot know the
answers to many practice questions as they arise
but rather needs the ability to find
such answers. Well-trained candidates will focus
more on higher-order skills and develop a mental
framework for finding an appropriate solution.
Pass rates for the first year
of the CBT have exceeded pass rates for the
paper-based exam. However, it is difficult to
draw generalizations from such short time
periods, primarily because the first individuals
to take the CBT may not be representative exam
candidates. The higher pass rates may result, in
part, from more focused preparation for the
sections taken, a greater percentage of
partial-credit candidates finishing needed
sections and/or more capable candidates. The
pattern thus far: Most candidates are taking two
exam sections over a six-month period.
WORK
YET TO DO
While the promise
to deliver a computerized CPA exam has been
fulfilled, some kinks have yet to be smoothed.
Operational and administrative issues have been
identified and are being corrected. The AICPA,
NASBA and state boards of accountancy are working
diligently to reduce the time it takes to report
scores. Candidates also continue to gain
familiarity with the new examination and
administrative processes.
Candidates are encouraged to
review the exam tutorial and sample tests,
available at www.cpa-exam.org, as candidates who have reviewed these
materials have far fewer test-taking problems.
The computer-based CPA exam uses proprietary
software and systems, some of which have unique
functionalities and are different from commercial
and/or Internet-based products. Therefore, it is
extremely important that candidates become
familiar with these features before taking the
exam. However, the AICPA is improving the
functionality of the examination to reduce these
inconsistencies.
Other aspects of the CPA exam
vision are yet to become reality. For example,
one of the attractions of the computer-based exam
is the ability to incorporate changes quickly.
Historically, there was quite a lag between
issuance of a new pronouncement and its being
incorporated into the paper-based exam because of
the time it took to write and pretest exam
questions. Though the time span from
pronouncement to test questions is shortened,
it’s still longer than ideal.
Most important, perhaps, is
that a number of exam features should be further
developed to replicate practice more closely.
Simulations should continue to be enhanced to
require candidates to demonstrate greater
communication, research and analytical/critical
thinking skills. Such improvements would better
evaluate the ability of candidates to perform
competently in the complex and judgment-laden
environment that represents the contemporary
practice of accounting.
CANDIDATE
HEAD COUNT
Currently, exam
candidate volume is below original projections;
this has many long- and short-term implications.
Alarmingly, if candidate volume does not reach
projected levels on a long-term basis, the
profession faces a scarcity of qualified
professionals. And in the short term, volume
drives cost. Many constituents are concerned
about the higher cost of the CBT. Paradoxically,
as we are experiencing lower-than-anticipated
test volume, many accounting programs are
reporting increases in the number of students
enrolled. These seeming contradictions imply that
qualified candidates are not sitting for the exam
as quickly as they once did. A number of reasons
have been suggested to explain this. Foremost
among them is the Sarbanes-Oxley section 404 work
related to internal controls that has increased
the demands of practice; candidates may be
postponing taking the exam until workloads
diminish. Others have suggested the increased
availability of testing options diminishes
candidates’ perceived urgency to take and
complete the exam.
The AICPA, NASBA and Thomson
Prometric have formed a joint task force to
determine why the number of test sections taken
during the first year of the CBT was lower than
expected. This task force commissioned research
into employer and candidate attitudes, concerns
and examination-taking strategies. While the
final report is due out shortly, preliminary
results made clear that there was no single
reason for lower-than-expected volume and no easy
answers.
The research conducted to date
showed that candidates and employers continue to
view the CPA credential as valuable and an
important part of their career and business
strategies, but many potential candidates said
they didn’t have enough time to prepare for
the exam. This is something the profession must
address. One recommendation the task force is
considering is to work with employers in
accounting firms, companies and government to
develop and consistently implement programs that
support employees in taking the Uniform CPA
Examination. Generally, the programs should
 Reemphasize the importance
of setting the tone at the top of the firm that
becoming a CPA is a core value of the
organization.
Develop examples of
policies and procedures that employers can adopt
to ensure employees make becoming a CPA a top
priority.
Provide tools to educate
human resources departments on the role they can
play in encouraging employees to make becoming a
CPA a top priority.
Encourage the use of a
tracking system to follow employee progress in
preparing for and taking the exam.
IMPLICATIONS
FOR EDUCATION
Historically, many
schools took pride in not teaching to the CPA
exam, but that was before the exam began testing
the skills that are critical to competent
practice for today’s entry-level
professionals. Many schools already are
well-equipped to prepare students for the
computerized exam; others may need to change
curricula and pedagogy. Not all classroom changes
add cost. Following are steps educators can take
to better prepare students for the CBT:
 Include writing
assignments in coursework and grade them. Incorporate
some written assignment across the curriculum,
and be sure instructors grade them to underscore
the notion that writing skills (that is, the
ability to communicate clearly the appropriate
resolution of accounting problems) matter.
Include
assignments that help students deal with
ambiguity. Numerous studies have
shown that many students are attracted to
accounting because they perceive it to be
“black and white.” CPAs know how much
judgment is involved in the practice of
accounting, and it is the intent of simulations
to evaluate the use of that judgment. Educators
can do their part to prepare students by
including assignments that force students to work
with problems that have no clear-cut answers.
Require
students to conduct research using professional
literature. Include assignments
that require students to find appropriate answers
rather than to memorize them. Schools and
educators now can get access to databases of
professional audit and accounting literature at
substantially reduced cost. CPA candidates who
have applied to take the exam, been deemed
eligible by their state boards and received a
valid Notice to Schedule can get a free six-month
subscription to an online package that contains
AICPA professional standards, FASB current text
and FASB original pronouncements. Go to www.cpa-exam.org to find more information and
subscription links. The key is to become familiar
with professional literature.
Give some
open-book exams. We believe an
essential goal of accounting education (as it
relates to financial reporting, auditing and
taxation) is to teach search skills rather than
foster memory skills. Practice with open-book
formats makes students more comfortable
performing professional research in a reasonably
time-constrained environment.
Give exams on a
computer. It may seem like a simple
step, but students frequently react very
differently to computerized exams if they are
accustomed to only a paper-based format.
Educators should give students an opportunity to
develop self-confidence in a computerized testing
environment.
Encourage students to visit
the www.cpa-exam.org Web site to
Use tutorials.
Review sample questions.
Become familiar with the
examination’s user interfaces (see “Mastering the
Technology,”
below).
WHAT
IT MEANS TO FUTURE CPAs
The new CBT is
more appealing and marketplace-connected, and
more clearly reflects the work environment
candidates will be entering. The paper exam was
limited in that students could not research
technical issues and did not have access to word
processing and spreadsheets. Preparing for the
exam now is more comparable with preparing to
enter the workplace in that candidates are
focused on knowledge and skills that are relevant
to entry-level practice.
The testing of communication
skills will underscore just how important such
skills are in the business world.
Candidates’ career success will be
significantly affected by their ability to
communicate and interact with colleagues and
clients. While these skills have always been
critical success factors, testing writing skills
on the exam enhances their visibility.
Candidates must take
responsibility for their own exam preparedness.
Schools have different resources, so if their
university doesn’t adequately prepare them
for the exam, they must determine how to bridge
the gaps. Despite the fact that most
jurisdictions require candidates to have 150
hours to sit for the CPA exam, it is a rare
program indeed that covers all technical content
tested on the exam. Accordingly, candidates must
review the content specification outline (CSO)
(available on the exam Web site www.cpa-exam.org) and identify gaps in their individual
knowledge. Candidates also must be familiar with
exam interfaces. They should take the sample
tests and gain experience dealing with the
software so that valuable test time is not lost
learning these skills while taking the exam.
PRIDE
AND THE PUBLIC INTEREST
The successful
launch of the computer-based CPA exam and the
accompanying changes in content and
administration are a source of pride for the
profession and its stakeholders. The exam has
made great strides in testing skills that are
much more relevant for entry-level CPAs and
consistent with ensuring the public interest is
protected.
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