As the AICPA’s recent practice analysis showed, higher-order skills—such as critical thinking, problem solving, analysis, communication, and professional skepticism—are increasingly essential to success in the CPA profession. As a result, the AICPA has proposed updating the CPA Exam to place a greater emphasis on assessing these skills. Among other proposed changes, test-takers would be required to complete more task-based simulation questions and integrate information from different content areas.
At Duquesne University, we’ve prepared for these changes by updating our curriculum. As part of a department-wide effort, each professor assessed how well his or her existing courses taught higher-order skills and revised them as appropriate.
Here are several examples of ways our faculty have revised the coursework in individual classes to better prepare students for the Exam. We hope they’ll spark some ideas if you’re thinking of updating your own classes.
We are giving students more opportunities to practice MS Excel, given that the proposed changes to the CPA Exam may include incorporating Excel into the simulation problems by 2018. We require students in managerial/cost accounting courses to use advanced Excel skills in exercises such as constructing a comprehensive budget for a company while allowing for continuous changes to their assumptions.
Students in the Accounting Information Systems and Auditing courses undertake a major project that develops their problem-solving, analytical, technology, and communication skills. Prior to the revisions to the curriculum, students used only one Enterprise Resource Planning (ERP) system in these classes. Now, students are exposed to Oracle PeopleSoft, NetSuite, and Microsoft Dynamics ERP software, which they use to create their own virtual company, process transactions, and analyze results. Using multiple systems enables students to compare and contrast the functionality of each.
Students are asked to verbally present unique transactions, demonstrate how they are processed through the ERP, and discuss which business professionals would process them and why they are relevant. They also improve their ability to troubleshoot during this project, as, often, they make errors that cause transactions to be processed incorrectly. Students must then determine why the transactions are wrong and take the necessary steps to correct them. They are also encouraged to determine how an effective accounting control could have either prevented or detected an error. For example, if a transaction is processed with the wrong accounting date, the students quickly realize that restricting the ERP calendar will prevent this error and aid in issuing accurate financial statements.
Taxation classes emphasize the application of tax topics to real-world situations. Often, tax courses are taught almost entirely as a conceptual review in which the only way students apply concepts to practice is by preparing a single tax return at the end of the semester. This forces students to prepare an exceptionally complex return without having become familiar with the forms and the process.
In our new approach, students are taught tax concepts and are then required to apply these theoretical ideas to the completion of numerous tax returns. These returns increase in difficulty as the semester progresses. The preparation of the multiple returns allows the students to become comfortable with the forms and increases their confidence in their abilities and skills.
Students are also required to research a current tax technical issue and then prepare a memo discussing the topic and providing a recommendation to a client. These research memos should help the students in completing the simulation exercises on the exam, as they encourage students to interpret a real-life scenario and apply tax theory to make an appropriate recommendation.
In Auditing, the capstone course of the major, students perform an integrated audit of a fictitious publically traded company. They must assess the adequacy of internal controls as well as opine upon the accuracy of the company’s financial statements. The students work in groups as audit teams to interview key employees (faculty members or video simulations) to understand the work process. This exercise enhances their critical thinking, as they are forced to comprehend each interviewee’s answers, determine whether controls are designed appropriately and functioning as intended, and identify missing controls.
Throughout the project the students learn to prepare written documentation as they collect and analyze audit evidence. For example, they perform an analytical review of the financial statements, calculate materiality, and determine the risk areas and sample sizes. They need to exercise professional judgment when determining what accounts should be selected for confirmation and what follow-up procedures are necessary once a customer responds.
At the end of the project, students further enhance their communication and critical thinking skills by presenting the outcome of their integrated audit to a mock audit committee, which is comprised of public accounting firm partners and managers as well as local CFOs, controllers, and university faculty.
We have also historically expected our students to comprehend analytical questions similar to the ones that will likely appear on the updated CPA Exam. On managerial/cost accounting exams, for instance, students are faced with unfamiliar scenarios. To resolve problems, they will need to incorporate multiple concepts, thus testing their understanding and critical thinking skills. For example, one such exam question might be:
Patterson Company's variable expenses are 55% of sales. At a $400,000 sales level, the degree of operating leverage is 5. If sales increase by $30,000, what will the new degree of operating leverage be?
This question requires full understanding of the effect of changes in sales on contribution margin, profits, and degree of operating leverage. To answer it, students must determine the original contribution margin and profits, thus calculating the original degree of operating leverage. After that, they need to determine the new contribution margin and net operating income (after calculating fixed costs), thus recalculating the degree of operating leverage.
We hope the enhancements made to our accounting program will help students master a higher level of skills in the areas of problem solving, analytical skills, communications, decision making, and professional skepticism, which will prepare them well for the updated 2017 CPA Exam.
The authors are accounting faculty at Duquesne University. Valerie Williams, CPA/CFF, is an assistant professor and the director of the Accounting Honors Institute and the Accounting Mentorship Program. Brian Nagle, CPA (inactive), Ph.D., is an associate professor and the director of the Master of Accountancy Program. Stephen Rau, Ph.D., is an associate professor. Robert Kollar, CPA, is an assistant professor. Amy Yurko, J.D., Ph.D., is an assistant professor. Yezen Kannan, Ph.D., is an associate professor. Bryan Menk, CPA, Ph.D., is an assistant professor. Bonnie Morris, Ph.D., is an associate professor.
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