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The New Uniform CPA Examination Author: Shirley
Dennis-Escoffier, Ph.D., CPA
Editor's note: Dr. Dennis-Escoffier is a member of the AICPA Pre-certification Education Executive Committee. For more information about this article, contact Dr. Dennis-Escoffier at sdennis@miami.edu or (305) 284-5577.
Significant changes are in the works for the Uniform CPA Examination. The first entails a conversion to a computer-based test. The second is an expansion of the range of subjects and skills tested, to bring them in line with today's practice needs. Over the years, the profession has become increasingly dependent on computerized research techniques and the use of other computer tools in general. For example, effectively solving clients' problems requires CPAs to perform research online. This evolution has limited the effectiveness of a written exam to test important skills. The change to a computer-based exam allows candidates to access authoritative literature in case-based simulations and to use computer technology to develop solutions, such as narratives or spreadsheets. In addition to changing the exam's format, broadening its content will more closely reflect the wide range of business knowledge expected of practicing professionals. Computer-based testing can include the use of online tax reference material, archived financial reports and audiovisual clips. Candidates can also use other tools, such as spreadsheets, accounting packages, financial calculators and graphical analysis packages. In addition to mimicking traditional multiple-choice formats (using check boxes or radio buttons) and simple open-ended responses (using text boxes), candidates will be able to use case-based simulations to solve different business problems.
Background The AICPA surveyed thousands of CPAs to identify the entry-level knowledge (e.g., standards and regulations) and skills (e.g., communication, research, analysis and organization, understanding and judgment) critical to effective accounting practice. Armed with the results, the AICPA and National Association of State Boards of Accountancy formed a joint Computer Implementation Committee (CIC) to develop a computer-based exam. In January 2001, the Board of Examiners released an exposure draft, Proposed Structure and Content Specifications for the Uniform CPA Examination (available at www.aicpa.org/members/div/examiner/exposure.htm), and the CIC issued Briefing Paper #2: Computerizing the Uniform CPA Examination—Issues, Strategies and Policies: An Update (www.aicpa.org/members/div/examiner/brief2.htm), providing the details for the transition to a computer-based exam, with a target launch date of November 2003. The comment period for these documents ended on July 1, 2001. The CIC is reviewing and summarizing respondents' comments and will probably publish the key findings and any revisions resulting from the responses before 2002.
Procedures The CIC chose Prometric, Inc. to administer the computer-based exam. Prometric currently handles computer-based testing for other licensing exams (e.g., the U.S. Medical Licensing Examination, the National Council of Architectural Registration Boards and the National Association of Securities Dealers Regulation). The company has a network of more than 300 high-security testing sites across all 54 jurisdictions and operates test centers convenient to 90% of the U.S. population (see Briefing Paper #2, Appendix B, for a list of the cities in which Prometric has test centers). The computerized testing process would begin (as it does under the current system) when an individual applies to a state board to take the exam. The current application filing requirements, fee collection and other requirements are unaffected by the change in test format. Once a state board determines an individual's eligibility to take the exam, it would notify Prometric. After a candidate receives state board authorization, he would make an appointment to take the exam via Prometric's call center or Website. The test will have four sections (Auditing and Attestation, Financial Accounting and Reporting, Regulation, and Business Environment and Concepts), which candidates could take in any order. However, first-time candidates for the exam would have to take all four sections within 30 days. The four sections differ in completion time (see Exhibit 1). The computer-based test will take less time to finish than the paper-based one. Total testing time is expected to be about 12 to 14 hours.
Initially, the computerized exam will be offered in four three-month windows. Within each window, candidates could take the exam for two of the three months. The remaining month would be reserved for data analysis, distribution of new question pools and other maintenance tasks. For security reasons, candidates could take the exam only once during a three-month window. This means that they could take the entire exam up to four times a year, having up to 200 different days on which to do so. Also for security purposes, exams would be different (even though they would be equivalent). Each candidate's exam would consist of items drawn from a large pool of test questions. During an exam, a candidate would view only one question at a time. An entire test would never reside on the candidate's computer. A server would deliver questions unencrypted. After the candidate responded to the question, it would be returned to the server. The computer configuration prevents the candidate from copying information to a disk or storing it on the testing computer, for future retrieval. The grading system would be the same as the current one, even though the scale might be different. Candidates would not immediately receive a grade on completing the exam; distribution of grades would still be the responsibility of the state boards. Advisory grades and diagnostic information would probably be available within two weeks. Each board would decide the frequency with which it approves and releases grades. The boards would continue to establish the requirements for the conditions for passing an exam. The CIC recommends that candidates would have to pass all four sections within a two-year period (after they have attained conditional status), rather than the current three-year period. However, with the opportunity to take the exam up to four times a year, a two-year period would still provide two more testing opportunities than currently available. The CIC expects to finalize specific policies and procedures in late 2001, based on responses to the briefing paper, town-hall meetings and focus groups. The AICPA intends to post familiarization materials to its Website. A CD-ROM version will be available to state boards, state societies, schools and candidates. The CIC expects to have prototypes by the third quarter of 2002.
Structure and Content The AICPA Board of Examiners proposes an exam with four separately scored sections:
Exhibit 2 compares the content and weight of the current and proposed exams. Exhibit 3 presents the content for the tax portion of the Regulation section of the computerized exam. Exhibit 4 presents the content of the new Business Environment and Concepts section.
In the new exam:
For the new exam, knowledge of content covered primarily in one section may also appear in another section, to test a candidate's ability to integrate knowledge. For example, tax issues, tested primarily in the Regulation section, may come up in the Financial Accounting and Reporting section. Another suitable place for testing integration of taxation with general business is in the new Business Environment and Concepts section, under the business structure topic. For example, candidates might be expected to determine the tax implications of a choice of business entity and make a recommendation. Content outlines for the new exam currently lack detail. Therefore, it is difficult to determine the depth of knowledge expected of candidates. For example, estate and gift taxation appears in the outline, but it is unclear whether candidates would be expected to know technical topics (such as the generation-skipping transfer tax). Hopefully, the CIC will provide detailed outlines at a later date. Allowing candidates to use research tools and access authoritative literature is a welcome change that reflects the real practice environment. This might be an indication that the new exam focuses less on memorizing details and more on the skills needed to research and interpret the literature.
Transition The Content Oversight Task Force recommended that the current four sections of the exam be considered equivalent to the four sections of the new exam for purposes of transitioning candidates who have attained conditional status by the 2003 launch date. It would be unreasonable to recommend a transition model that would require a candidate to take more than a total of four sections. However, because of the significant differences in the two examinations, a perfect transition is not possible. One of the main issues is determining which section of the current exam is equivalent to the new Business Environment and Concepts section. Of the content areas to be tested in that section, business structure, which has the most weight, is currently tested in the Business Law and Professional Responsibilities section. Therefore, the task force concluded that this section and the Business Environment and Concepts section should be considered equivalent for transitioning purposes. Exhibit 5 presents equivalent sections.
Implications for Educators Until examples of the new exam's simulated-case questions become available, faculty can prepare their students for the new exam by including more case assignments or writing simulated cases. All of the changes in curricula proposed in the past few years reinforce the idea of moving away from the memorization of rules and toward an emphasis on improving students' abilities to conduct research, interpret findings and make sound recommendations to a client. Thus, educators should focus on research, planning and communication. Faculty should encourage students to take advantage of as many opportunities as possible to get accustomed to a computer-based testing environment. Faculty with access to computer-based testing (such as through WebCT or Blackboard) may want to increase their use of practice quizzes administered through these systems. Publishers also frequently provide study guides with online quizzes for students. Moving some topics to computer-based assignments has the added advantage of freeing up valuable class time that can be used for case discussions or other active learning assignments. Lack of sufficient opportunities to cover the necessary tax concepts and development of research skills may be a problem at some universities. Many of the tax topics listed in the proposed content outline are taught only in advanced courses, which are elective in many schools; some schools have even dropped these courses completely. The AICPA's Model Tax Curriculum (available at www.aicpa.org/members/div/career/edu/introc.htm ) states, "[w]e again emphasize at least six semester hours of tax should be included in programs preparing students to enter the accounting profession." Schools that currently offer only one tax course and have concern about preparing their graduates for the CPA exam should reconsider the inclusion of tax courses in their curricula. |
